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There was a considerable drop in those budget revenues that were directly derived from the results of current economic activity, that is, the dividends paid by joint-stock companies with state stakes and part of the profits gained by federal state unitary enterprises (FSUEs). Against this background, a relatively better situation was observed with regard to revenues from leasing-out federal property (a slight decline) and land (growth) when the State, while being the rent receiver, was actually not involved in organizing the business processes of the lessee companies, and its relationships with those companies were determined in accordance with the agreements that were concluded, as a rule, for a specified term, with the lease rate being specified in advance.

However, on the whole, in contrast to 2008, revenues from renewable sources were no longer playing the role of a buffer: their indexes only slightly exceeded those recoded in the early 2000s (when the 1999 Concept of State Property Management and Privatization in the RF was only beginning to be implemented), while proceeds from privatization and sales of various properties dropped to their lowest point since 2000.

In 2009, the main trends in ownership relations were as follows:

a slowdown in the privatization process (in comparison with 2008, the budget revenues from privatization received by Rosimushchestvo have dropped 3.7 times, while the number of sold blocks of shares has fallen fourfold);

1 www.rosim.ru, 12.03.2010.

2 www.rosim.ru, 30.03.2010.

RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES renewable sources of proceeds continued to be predominant in the general structure of federal budget revenues from privatization and management of state property; their share has been rising on the annual basis throughout recent years (even when taking into account the revenues from sales of various properties carried out by agencies other than Rosimushchestvo);

the continuing integration of assets belonging to the State the scale of which was comparable with that of the year 2008 (on the whole, in 2009, the objects designated for privatization by way of contributing assets into the authorized capital of vertically integrated structures included shares in 109 joint-stock companies and 216 federal state unitary enterprises, while a year earlier privatization had encompassed 65 state unitary enterprises and blocks of shares in 250 joint-stock companies, without taking into account the enterprises and the shares in the joint-stock companies designated for inclusion in the Open-End Joint Stock Company Oboronservis and State Corporation Rostekhnologii (which was then being formed) and for contribution into the authorized capital of Open-End Joint Stock Company Atomenergoprom);

the emergence, in the Russian legal field, of a new legal organizational form - a state company that was designed to manage the use of state property; the first representative and so far the only one of this legal category has been the company Rosssiiskie Avtomobilnye Dorogi (Russian Motor Roads, Avtodor), the nation-wide operator of the federal road network. The company has been assigned to render state services and to execute some other powers in the field of road communications by way of using state property on the basis of trust management;

a change in the approach to state corporations (SC) whose creation had been one of the new directions for the property and structural policy of the State in the preceding two years. The November 2009 Presidential Message to the RF Federal Assembly clearly indicated that in the future all state corporations should be transformed into joint-stock companies controlled by the State, while the state corporations with a fixed time limit for their operation should be liquidated on the expiry thereof. At the same time the Message did not set any specific timelines for the above transformation of state corporations;

minimization of the governments direct property expansion in the course of implementation of anti-crisis measures, when recapitalization at the expense of budget resources was offered largely to the companies in which the state is a sole or majority stockholder (e. g. Agenstvo po Ipotechnomu Zhilishchnomu Kreditovaniiu (the Agency for Housing Mortgage Lending), Rossiiskie Zheleznye Dorogi (Russian Railroads), Rosselkhozbank, Rosagrolizing and the system-forming defense companies), while the potential of a possible indirect increase of the public sector with the help of the banks and development institutions acting as the governments agents with regard to provision of support to individual companies has remained largely unnrealized.

Bearing in mind the formal character of the States representation on the boards of directors of many companies with state stakes, where top executives still have the upper hand, the authorities have begun to reduce the number of officials on the boards of directors of state companies while simultaneously increasing the number of professional directors1. The replacement process was begun nearly two years ago by Rosimushchestvo in cooperation with the RF Ministry of Economic Development and Trade in pursuance of the assignment of the RF President resulting from his meeting with representatives of the Russian Union of Industrialists and Entrepreneurs in April 2008.

According to Deputy Minister of Economic Development and Trade Alexandra Levitskaya, in 2009 the State on the whole secured the election of 619 professional directors to the managerial bodies of more than 270 joint-stock companies with state stakes, including 38 out of the 46 joint1 In accordance with the existing tradition of the corporate governance of joint-stock companies with state stakes, the boards of directors members elected by a vote of the voting shares owned by the State as a shareholder can be divided into the following categories: (1) representatives of the States interests civil servants whose official status obliges them to vote in accordance with the owners directives; (2) representatives of the States interests non-civil servants (professional agents) who are obliged to vote in accordance with the owners directives on five specific issues only, and are free to vote at their own discretion on all other issues (this mechanism for safeguarding the States interests emerged as early as 1996 but was not widely used until quite recently); (3) independent directors voting on the basis of their own professional experience and judgments; these should be appointed in accordance with the established selection criteria. According to representatives of Rosimushchestvo, for the sake of generality, persons belonging to the second and third categories can be called professional directors.


stock companies entered on the special list1 of highly important companies in regard to which, as far as the most crucial issues are concerned, the position of the State as a shareholder was to be determined by the Government itself or by its Chairperson or, on his or her assignment, by the Deputy Chairperson of the Government.

One of the noteworthy recent events was the March 2010 statement issued by Rosimushchestvo to the effect that, for the first time since 1991, the Registry of State Property should be considered definitive and its formation completed. This news has clearly illustrated the actual quality of the governments administration of economic policy even in the sphere of its direct competence. Suffice it to say that almost twelve years have already passed since the confirmation of the Regulation on Federal Property Registration and on Keeping the Register of Federal Property by Decree of the RF Government, of 3 July 1998, No 6962; not to mention the fact that such information was already urgently needed as early as the first half of the 1990s or at least until mid-1994 when voucher privatization had already been completed but the general process of privatization was still going on at a relatively intense rate. At the same time, the definitiveness of the register in its present form is open to question because Rosimushchestvo itself admits that approximately 1.5 thousand juridical persons have so far failed to submit information on whether or not they have any federal property at their disposal.

Thus, according to Rosimushchestvos official data, as of 1 January 2010, the Register of Federal Property comprised 1,276,572 objects of movable and unmovable property (vs. 1,293,788 a year earlier) and 126,721 land plots (vs. almost 67 thousand by the beginning of 2009). So, it can be stated that, over 2009, the number of federally-owned objects of movable and unmovable property dropped only in purely symbolical terms (by 1.3 %), while the number of land plots listed on the Register of Federal Property increased nearly twofold.

This dynamics could be considered expectable. According to the data contained in the abovementioned report by Yu. Petrov, Rosimushchestvo considers the degree of completeness of its work pertaining to registration of federal property rights to land plots to be high. Thus, by early 2010, the property right of the Russian Federation had been registered with regard to 6,765 land plots of agricultural designation with a total area of 41.6 mln hectares, which accounts for more than 85 % of their total number and area. It had also been registered with regard to the 20,893 forest plots with a total area of 41.6 mln hectares previously owned by agricultural organizations, which accounts for 44.4 % of their total number and 94.4 % of their total area.

On the whole, state registration of the Russian Federations property right to land plots is planned to be completed in 2010, which clearly cannot be said of the other initiatives put forth in the sphere of land relations (e. g. delimitation of state land ownership by level of public authority, the dacha amnesty, etc.).

At the same time the number of commercial organizations using state property in one way or another has considerably reduced.

Thus, according to representatives of Rosimushchestvo, at present about 3 thousand federal state unitary enterprises fall under the category of federal property3, while, judging by the Forecast Plan (Program) of Federal Property Privatization for the Year 2010 and the Main Directions of Federal Property Privatization for the Years 2011 and 2012 confirmed by Decree of the RF Government, of 30 November 2009, No 1805-r, as of 1 January 2009 the Russian Federation was the owner of the property of 3,765 federal state unitary enterprises.

As of the beginning of 2010, the number of federally owned blocks of shares in joint-stock companies (2,646 according to the Register of Federal Property) was more than 20 % lower than the number of those joint-stock companies (3,337) where the Russian Federation was a shareholder as of the beginning of 2009. It should be noted that such a considerable drop took place against the backdrop of microscopic privatization sales of state-owned blocks of shares although, quite 1 www.economy.gov.ru, 13.04.2010.

2 Became invalid in connection with the issuance of Decree of the RF Government, of 16 July 2007, No 447, On Improvement of Property Registration, in accordance with which federal property registration should be carried out on the basis of a new Regulation.

3 www.rosim.ru, 02.04.2010.

RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES naturally, the process of their inclusion into the authorized capital of integrated structures (and their withdrawal for other reasons) was going on uninterrupted.

Judging by the above data, the volume of state-owned property and the content of the anti-crisis measures taken by the State has made possible the materialization of a number of privatization scenarios, depending on the Russian economys prospects to achieve an exit from the global financial and economic crisis and on the necessity to cover the budget deficit. This multiplicity of possible scenarios is reflected in the great variativity of the parameters of the privatization program for the current year.

The Forecast Plan of Federal Property Privatization for the Year 2010, initially approved by the RF Government in late November 2009, comprised blocks of shares in 449 joint-stock companies as well as 56 other property objects owned by the State Treasury of the Russian Federation, including objects of immovable property and sea and river vessels. The document also mentioned the completion of privatization of about 250 federal state unitary enterprises whose privatization procedures started in 2009. Taking into account the additions introduced in mid-March 2010, the objects designated for privatization by this years privatization program include 690 joint-stock companies, 230 federal state unitary enterprises and 74 treasury-owned properties.

The variability of the financial parameters of the 2010 privatization program is also very substantial. Despite the initial favorable predictions that in 2010 revenues from sale of federal property could amount to about 100 bn Rb, the official forecast of the current years federal budget revenues from privatization puts the figure at 18 bn Rb. However, if the RF Government takes the decision to privatize shares and other investment-attractive property, the volume of revenues from sale of federal property could become significantly higher in excess of 70 bn Rb. Between 54 and 55 bn Rb of that amount could be generated from selling federally-owned blocks of shares in joint-stock companies if the latter are excluded from the list of strategic enterprises and jointstock companies.

In late 2009, in order to stimulate the process of privatization, the RF Ministry of Economic Development and Trade drafted a package of alterations and amendments to the existing Law on Privatization that were designed to extend the time horizon of the privatization for the planning period, to upgrade the information support for privatization and to promote the application of electronic bidding in the course of privatization transactions.

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