The composition of the state sector is also monitored by the Russian Statistics Service (Rosstat). It will be recalled that according to Decree of the RF Government, of 4 January 1999, No 1, the state sector includes economic subjects of the three major types existing on the federal and regional levels:
– state unitary enterprises operating by right of economic jurisdiction and operative management (federal treasury enterprises);
– state institutions;
– economic societies with the authorized capital where more than 50% of stocks (or participatory shares) are in state ownership.
According to this document as amended by Decree of the RF Government, of 30 December 2002, No. 939, the state sector of the economy also includes the economic societies with the authorized capital where more than 50% of stocks (or participatory shares) are owned by economic societies belonging to the state sector.
This definition of the state sector has a number of drawbacks, including the following:
– it does not include into the state sector the commercial and not-for-profit organizations with the participation of federal and regional unitary enterprises, or at least those of them where the participatory share of unitary enterprises exceeds 50%;
– in actual practice, it is not always necessary to own more than 50% of stocks (or participatory shares) in order to exercise control over an economic society. It would be more correct to speak in terms of more than 50% of the voting shares, which is especially true of those enterprises where, in the course of mass privatization in 1992–94, one quarter of capital was transferred free of charge, in the form of preference shares, to the personnel (as under the first version of benefits during corporatization), and where, at the same time, the limitations on privatization caused by the branch specificity (for example, in defense industry) required that the controlling block of shares should remain in state ownership. As a result, the size of the block of shares consolidated to the State amounted to 38% of the authorized capital and to more than one half of the voting shares;
– not included in the state sector are those economic societies where the aggregate participatory share of the Treasury and the economic societies with more than 50% of stocks (or participatory shares) in state ownership exceeds one half of their capital, although the individual participatory shares of the Treasury and the economic societies with the prevalence of state capital amount to less than 50%;
– same is true of the situation with regard to those economic societies where, in the aggregate, more than one half of capital is owned by the Treasury, and those where more than 50% of the authorized capital in the form of stocks (or participatory shares) belongs to other economic societies related to the state sector, that is, by those societies where the State’s share in the authorized capital exceeds 50% participation in their authorized capiSection Institutional Problems tal, although their individual shares amount to less than 50% each12; and same is true of the situations when control over an economic society can be ensured by adding-up the participatory shares of the economic societies belonging to the state sector and the participatory shares of the economic societies controlled by them;
– there is no transparency with regard to the affiliations (“daughter” companies) and dependent companies included in the business-groups formed on the fringes of the organizations belonging to the state sector, which are being controlled indirectly, via several levels (“granddaughters” “great granddaughters”, etc.), or via less than 50% shareholding.
On the basis of Rosstat’s data, the quantitative dynamics of economic subjects in the first half-year of 2007 was as follows (Table 8).
Table The Number of Organizations of the State Sector of the Economy Registered by the Territorial Agencies of the FAFPM and by the State Property Management Bodies of RF Subjects in the year 2007, units Economic societies where more than 50% of SUEs includ- stocks (participatory shares) in authorized capiing federal tal are owned Date Total State institutions treasury enby economic societies terprises by State belonging to state sector of economy As of 1 January 2007 82,410* 12,735 64,295 3,920 1,As of 1 July 2007 81,076 11,351 64,159 4,111 1,* Including the organizations whose constituent documents do not specify the concrete types of activity, which results in the overall number of organizations of the state sector exceeding that of SUEs, institutions, and economic societies, though exclusive of joint-stock companies with more than 50% of stocks (or participatory shares) in joint, state and foreign, ownership.
Source: O razvitii gosudarstvennogo sektora ekonomiki Rossiiskoi Federatsii v 2006 godu [On the development of the state sector of the economy of the Russian Federation in the year 2006]. Moscow: Rosstat, 2007, p. 111.
As is evident from Table 8, the first half-year of 2007 saw a rather considerable drop in the number of SUEs (almost by 11%, or by 1,384 units), an insignificant reduction in the number of state institutions (by 0.2%, or by 136 units), and a rise, by approximately 5% (or by 191 units), in the number of economic societies whose authorized capital in the form of stocks (or participatory shares) was more than 50% owned by the State. There were no changes in the number of economic societies whose authorized capital, in the form of stocks (or participatory shares), was more than 50% owned by economic societies belonging to the state sector of the economy.
At the same time, the information contained in Rosstat’s data with regard to the number of organizations of the state sector being classed with federal and regional property, and those being classed with property under joint jurisdiction of the Russian Federation and its subjects, is not sufficiently subdivided into the said organizational and legal forms, which does not make it possible to separately analyze such changes by each of the forms of ownership.
The part played in the contemporary Russian economy by organizations of the state sector is also worthy of notice. Below are Rosstat’s data on their share in the production of goods This was more or less true of the structure of the capital of the OJSC “Gazprom” before the plan for increasing the state share to the controlling value began to be implemented, although the federal block of shares amounted to less than 50% (38.37%).
RUSSIAN ECONOMY IN trends and outlooks (or services, or work) during the past three years, in regard to the major indices and branches, with the most important positions being specified; also indicated is the share of those where the State’s input was no less than 10% (Table 9).
Table The State Sector’s Share in the Production of Individual Types of Products and in Other Indices, in 2005–2007, in % First half-year Index 2005 1 2 3 Industrial production Extraction of mineral resources* 5.5 6.0 12.- common salt (extraction) 16.0 15.0 18.- coal 5.1 4.7 5.- extracted oil, including lease condensate 1.2 0.8 0.- natural inflammable gas 0.3 0.2 0.Processing industries* 8.9 8.2 7.- soda ash, 100% 55.8 58.7 57.- freight cars (for main lines) 56.1 49.8 42.- ethyl alcohol distilled from edible raw materials 44.1 42.4 38.- timber sleepers for wide-gauge railroads 36.8 34.0 35.- metal-cutting machine tools 21.3 25.5 28.- washing machines 46.8 34.0 24.- tractor-driven sowers 36.9 22.1 22.- vodka and products of spirits-making 21.1 21.9 19.- civilian aircraft 21.4 16.7 – - commercial timber 16.1 16.6 16.- polystyrene and styrene copolymers 21.1 15.9 14.- shaped timber 15.8 14.3 14.- trolleybuses – 8.4 12.- motor cultivators and power cultivators with detachable tools 24.1 10.9 12.- stop timbers for switches of wide-gauge 20.5 12.2 – - pharmaceuticals 19.3 22.3 12.- civilian helicopters 19.6 11.0 11.- rolling equipment 10.5 12.6 – - radio receivers 13.3 6.6 11.- non-ore building materials 13.2 11.0 10.- domestic refrigerators and freezers 10.4 10.6 9.- microbiological fodder protein (commodity product) 21.4 7.6 8.Production and distribution of electrical energy, gas and water* 13.7 10.7 11.- electrical energy, total 19.0 16.5 16.- electrical energy generated by nuclear power plants 100.0 100.0 100.- electrical energy generated by thermal power plants 4.7 0.9 0.- electrical energy generated by hydroelectric power plants 1.4 0.3 0.Section Institutional Problems Table 9 (continued) 1 2 3 Agriculture and forestry - eggs** 19.7 18.7 18.- vegetables** 15.3 15.0 – - wool** 13.5 11.9 11.Reforestation work 99.9 99.9 – Construction - putting residential houses into operation 5.6 5.2 3.- work performed by organizations on their own 5.5 4.4 3.Transport Volume of commercial freight carriage (or dispatch)*** 44.9 67.2 74.- by railroad transport (main lines) 100.0 100.0 100.- by air transport (transport aviation) 22.8 20.5 19.- by sea transport 14.8 10.9 13.- by internal waterways transport 9.2 9.8 12.Commercial freight turnover*** 41.8 93.9 94.- of railway transport 100.0 100.0 100.- of air transport (transport aviation) 15.0 12.9 12.- of internal waterways transport 8.5 10.6 10.Passenger turnover**** 68.7 68.5 66.- of railroad transport (main lines) 100.0 100.0 100.- of automobile transport 44.8 43.9 43.- of air transport (transport aviation) 33.1 31.3 26.- of sea transport 19.4 27.0 31.- of internal waterways transport 10.7 13.4 15.Volume of freigh-dispatching by pipeline transport (trunk pipelines) 0.4 0.5 0.Freight turnover of pipeline transport (trunk pipelines) 0.1 0.1 0.Internal costs of research and development 69.3 70.4 72.Paid services provided to population (VAT included) 18.5 17.2 16.- services of educational system 48.8 47.6 46.- transport services 34.7 33.2 34.- services of sanatoria and health resorts 23.8 25.7 26.- medical services 21.1 21.4 22.Investments in fixed assets 14.9/ 14.4/ 11.8/ 19.1***** 18.1***** 15.4***** Net proceeds of the sale of goods, products, and services (minus VAT, excises and 11.2 10.2 9.other similar mandatory payments) Average listed number of workers (regular staff) 25.6 26.0 25.* The volume of dispatched goods and of work and services performed with the executor’s own efforts.
** Against the overall volume of production of agricultural organizations.
*** Less organizations of pipeline transport.
**** Less organizations of city passenger electric transport.
***** Without taking into account small businesses.
RUSSIAN ECONOMY IN trends and outlooks Source: O razvitii gosudarstvennogo sektora ekonomiki Rossiiskoi Federatsii v 2005 godu. [On the development of the state sector of the economy of the Russian Federation in the year 2005]. Moscow: Rosstat, 2006, pp. 8, 19– 20, 61, 71, 84, 85, 89, 92, 93, 94, 103, 107, 111, 115, 119, 137, 139, 146, 167; O razvitii gosudarstvennogo sektora ekonomiki Rossiiskoi Federatsii v 2006 godu. [On the development of the state sector of the economy of the Russian Federation in the year 2006]. Moscow: Rosstat, 2007, pp. 8, 19–20, 58, 68, 81, 82, 86, 89, 90, 91, 100, 104, 108, 112, 116, 134, 136, 143, 164; O razvitii gosudarstvennogo sektora ekonomiki Rossiiskoi Federatsii v 1-m polugodii 2007 goda. [On the development of the state sector of the economy of the Russian Federation in the first half-year of 2007]. Moscow: Rosstat, 2007, pp. 8, 18–19, 57, 71, 75, 78, 79, 80, 91, 95, 99, 103, 107, 117, 119, 126, 147.
As is apparent from Table 9, the state sector monopolizes only a few types of activity (generation of electrical energy at nuclear power plants, reforestation, and freight and passenger railway carriage) or dominates therein (soda). In the majority of other cases its share is less than 20%, except for alcoholic products, sleepers, some types of machine-building production (freight cars, metal-cutting machines, washing machines, and tractor-drawn sowers), and all types of paid services, where the largest share of the state sector is registered in education (slightly less than 50%). A certain growth in the state sector’s share is detectable only in freight and passenger carriage by internal waterways and sea transport, internal costs of research and development, services of sanatoria and health resorts, and medical services. However, a period of less than three years long is clearly too short to discern any definite trends.
Much more importantly, the classification used by Rosstat (or something else) has not made it possible to register, within the framework of the state sector, the volumes of production in such big companies with state participation as “Gazprom”, RJSC “UES of Russia”, “Rosneft”, “Transneft”, and “Transnefteprodukt”, which becomes apparent when comparing the registered share of the state sector with the universally known facts concerning the leadership of the afore – said companies in the Russian economy, let alone the presence of the State in the financial sector. It seems plausible that the data shown in Table 9 are sketchy in yet another respect, and that defense industry is represented in them, for the most part, by its conversion segment (individual types of machinery, equipment, household appliances, and civilianaviation technology).
In these conditions, it is vitally important to bring the system of statistical observation into correspondence with a company’s belonging to some or other sector of the economy (first of all, to the public one, which should be properly singled out13). However, it is evident that the determination of the poles of actual control, in contrast with the formal rights of ownership to some or other enterprise, is a very complicated task. Let us cite several examples concerning the power industry.
For example, the OJSC “Atomenergomash” (a 100% subsidiary of the JSC “TVEL”) owns 50% plus 1 share in the plant “ZiO-Pdol’sk” and 96% of shares in the engineering company “Ziomar”. At present, “Atomenergomash” is preparing to organize a joint venture for the production of steam-turbine equipment for nuclear power plants with the well-known French company “Alstom”14. It remains to be reminded that 100% of shares in the OJSC “TVEL” itself are in state ownership, that they should be contributed to the authorized capital of the holding company “Atomenergoprom” (AEP) being established by the State, and that the shares therein would be, in their turn, used for creating the state corporation “Rosatom”. It All the aforesaid is also true for the municipal level and the participation in the capital of economic societies owned by bodies of local self-government.