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In February, the government also considered proposals on organization of construction of housing by citizens non-for-the-profit housing associations. At its meeting in March, the government supported the RF Ministry of Regional Developments standpoint, that is, to drop the idea to cut down the financing of the federal target program Housing. According to the RF Minister of Regional Development, as much as Rb. 4.7bn will be allocated from the federal budget to procure the finished housing for the military and young families. At the same time, in the frame of the federal target program Housing the government will continue providing subsidies worth a total of Rb. 3.5bn to regional budgets to build the road infrastructure in new neighborhoods where a large-scale house construction is in progress.

The RF President demanded from regional governments to set minimum prices for land allocated for the individual and low-rise house construction.

According to the national printed media, in 2009, the managing company Finam plans to invest Rb. 56m in buying up to 50,000 hectares of land lots in the southern Russia and in Altay. The company is keen to take advantage of a 3- to 5-fold price downfall for land against the 2008 figures. For example, the average price for land lots in the south of Russia varies from Rb. 15,000 to 50,000/hectare vs. the last years 150,000.

In Moscow oblast, prices for land lots plunged twice vs. the 2008 level, with practically no deals in progress. The discount rate applied to huge land lots has already reached 70-75%, depending on the area and category of land.

January 1, 2010 is the deadline for the permit for domestic industrialists to buy land beneath their enterprises or to lease it on beneficial terms. In March, the MPs plan to consider amendments to the Land Code which extend the said timeline for another 3 years until January 1, 2013, while as far as power lines, communication lines, pipelines and other linear objects are concerned, it is proposed to be extend the timeline through January 1, 2016.

On March 1, 2009, there appeared a new government agency in the country, that is, the Federal Service for the State Registration, Cadastre and Cartography. The agency mandate has united land development works, running real estate records, and the public registration of rights for immovable state and transactions pertaining to it.

PRIVATIZATION PROCESS: TRENDS AND PROSPECTS PRIVATIZATION PROCESS: TRENDS AND PROSPECTS A.Radygin, G.Malginov The main trends in privatization process and the related aspects of national policy in 2008.

The possible scenarios for the development of property relations in the Russian economy under the impact of financial and economic crisis are under review.

By the end of 2008, it became apparent, that the privatization process has significantly slowed down, if not completely terminated. Financial problems of potential buyers, as well the reasonable reluctance of the State to dispose any assets for trifling sum in the face of crisis provoked the decline of privatization of medium and small businesses, while the major deals in this area have not been frequent during preceding years (although for other reasons). In autumn 2008, in particular, there were suspended such methods of privatization that could force down the price for the objects, which were under minimum demand.

According to official data of Rosimuschestvo in mid-January 2009 in the register of the federal property there were 1293788 objects movable and real property (including more than 1.1 million objects in private ownership about 107,000 of the state treasury property).

The register also includes approximately 3600 blocks of shares, owned by the Russian Federation and nearly 67,000 plots of land. There are also about 5700 FSUE in the property of the Russian Federation.

The plan for 2008 included the sale of securities and shares in 404 public joint-stock companies and 440 federal state unitary enterprises privatization (corporization). The plan for 2009 (approved in September 2008) provides for the sale of public shares in joint-stock companies and the corporatization of 235 FSUEs. Herewith, it is expected that revenues from privatization of federal property in 2008-2010 should make RUR 12 billion annually.

Initially there were no large businesses in the plans of privatization for 2008-2009, but this is due not only to conservation of the public sector in the context of state capitalism strategy, trivial conflict of interests and resistance to authorities. Among the objective reasons, one should point out the rejection of privatization techniques as a means of the budget replenishment and some technical issues. First of all, a 1-year term is insufficient (according to the official plan of privatization) for such transactions even for a number of small and medium-sized businesses. Moreover, in accordance with the effective legislation, the transactions, failed to be finalized before December 31, should be automatically transferred to the plan of the next year or even removed outside the scope of the privatization process.

Prior to the detailed analysis of privatization and property issues of the past year, it is necessary to mention that in spring of 2008, the Federal Agency for Federal Property Management was transformed into the Federal Agency for Management of State Property with the functions assigned to it a specialized state agency under the Government of the Russian Federation Russian Federal Property Fund. Its authority includes the arrangement of the sale of privatized federal property, the sale of property, distrained pursuant to judicial decisions or acts of authorities who have been granted the right to make decisions on property seizure and disposal of the confiscated, movable ownerless, seized and other property, transferred to the public ownership in accordance with the Russian legislation. Therefore, the long conflict was resolved between Russian Federal Property Fund and Federal Agency - - RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES for Federal Property Management, which wanted to limit the autonomy of the Fund and provoked the slow-down the privatization after 2004.

According to the information, provided by A. Petrov1, Head of Rosimuschestvo, in the federal budget revenue from privatization made RUR 7.19 billion (for comparison, that indicator of the preceding year was RUR 19.3 billion), and the budget estimates are fulfilled less than for 60 per sent. The situation with the proceeds of asset management, i.e., with renewable sources (dividends, profits of unitary enterprises, income from the rent of property and land) was more favorable. Under all of these items the annual budget estimates were exceeded and the income was significantly higher than revenues from privatization.

This trend is based on the lack of sales of shares of the large and major joint-stock companies, while the majority of objects of the federal property privatization were medium and small businesses. Revenue from utilization of public property were being received, when the crisis in the Russian economy was not experienced yet (thus, the dividends for the federal block of shares were paid as a result of economic activity in 2007).

In 2008 the decisions were made on privatization terms for 213 FSUEs (against FSUEs in 2007), and 209 packages of shares of joint stock companies were sold (against 377 FSUEs in 2007) without regard for more than 274 share-holding companies, subject to be privatized through the transfer to the authorized capital of integrated structures.

In 2008 privatization was accomplished through the transfer of the authorized capital to the integrated structures of 65 unitary enterprises and 250 joint-stock companies shares (regardless 41 more of joint-stock companies, not included in the privatization program and subject to the transfer to the authorized capital of JSC Atomenergoprom).

For comparison, it should be note, that in 2007 Rosimuschestvo has made decisions on making a contribution to the authorized capitals of integrated structures of 98 jointstock companies. For this purpose, the privatization of 60 unitary enterprises was implemented, and another eight companies have been reorganized through merges.

The main trends of property relations in 2008 were:

- like in 2006-2007, backlog in the aggregate volume of the proceeds from the privatization against the estimates;

- privatization process slowing down (as compared with 2007, fiscal revenues from privatizations have declined by 2.7 times, the number of the sold federal shares and the state unitary enterprises, for which the decisions on privatization were taken, has reduced by 43-44 per sent);

- predominance in the overall structure of the federal budget of revenues from privatization of state property and management of renewable sources, whose share is growing for several years (even taking into account the proceeds from the sale of various assets, implemented by other departments, excluding Rosimuschestvo);

- integration of the state-owned assets in holding companies was continued. For example, there was completed the formation of JSC Tactical Missile Weapons Corporation, Marine Underwater Weapons Gidropribor Group, formation of the integrated structure, on the basis of FSUE SPC Gazoturbostroenie Salut in the military-industrial complex.

There was further expansion of the earlier established JSC Concern PVO Almaz - Antey and Research and Production Corporation Uralvagonzavod, and in six more integrated structures measures, preceding the consolidation of assets were taken. It is worth noting, that outside the defense industry preparations for the integration of 78 JSCs with the JSC Rosneftegas and more than 40 JSC with JSC Rosspirtprom;

1 Interview with Yuri Alexandrovich Petrov, Head of Federal Agency for the State Property Management. - Rossiyskaya Gazeta 50 (4874), dated of 25.03.2009. The official report, unlike the last year, has not been published.

PRIVATIZATION PROCESS: TRENDS AND PROSPECTS - unlike 2007, no new businesses were established in the legal form of public corporations (PC), but the scope of property impact of certain PCs, formed in 2007, has significantly extended. A large conglomerate on the basis of Rostehnologies was being formed, consisting of several hundred of FSUE federal shareholdings and a variety of industries, transferred to this PC as a property contribution of the State. The structure of the property of the PC Rosatom was also identified;

- in the area of activities of the existing public holdings, it is worth highlighting the formation of the new structure if the electricity sector after the liquidation of RAO UES of Russia and further restriction of direct government participation in that industry operation mainly to the infrastructure and hydroenergetics (although the major shareholders of many power-generation companies are the state-owned companies, for example, Gazprom, Rosneft), as well as bringing up the share to the control stake (from 37 per sent to 51 per sent) in the Russian diamond monopoly AK ALROSA, achieved by the transfer that share in the authorized capital of PNA Yakutalmaz research and production association;

- a expressed reduction was noted in the list of strategic enterprises and joint stock companies, subject toe inclusion in the privatization program only by the decision of the RF President, although the majority of the assets, excluded from the list have been transferred to the PC Rostehnologies.

- another innovations were measures on restriction the participation of public officers in the Boards of Directors accompanied by a gradual increase of the number of independent directors, especially in those shareholding companies, where the state owns the 100 per sent package (in 2008, in the context of enhancing the effectiveness of corporate management, Rosimuschestvo has attracted over 50 professional directors and managers of six management companies to participate in the administration of joint stock companies).

The affect of financial crisis on the Russian market of corporate management is still not entirely clear. On the one hand, the lower price of assets makes them a natural incentive for potential mergers and acquisitions on the part of both, public and private companies.

On the other hand, already accumulated debt load and the loss of the earlier easy access to credits should be promoting the sale of assets or at least hindering the new acquisitions.

Much will depend on the scope and format of the public support, that should be provided to the Russian banks, priorities, selected by them for crediting the real sector of the national economy, as well as the extent of government participation in the stock market operations.

For those business groups, which have no access to the government support, the financial crisis, that has severely restricted the possibility of borrowing, will become a catalyst for companies restructuring with the prospect of a possible change of ownership.

The future will show, how deep and wide the restructuring will be applied to public companies. As one can see from the accumulated experience (and sustained dynamics of financial markets during economic growth), the sale of accumulated assets, can become a component of the restructuring, which would change the role of the companies with the government share in the capital in the market of mergers and acquisitions, turning the major buyers in the major sellers. Naturally, one can not completely exclude an opportunity, that the targets of mergers and acquisitions by companies with the government share in the capital could become the new companies, operating in various industries.

Herewith, an inevitable question arises on the role of the state, which will be forced to act indirectly, as with the standard privatization procedures, as indirectly, through their representatives in the management bodies of such companies, by authorizing or suspending such transactions. As a related issue, there is a dividend policy (in terms of surplus revenues from sales of assets in access of other income from current activities) and the government intention to retain their participation in the capital.

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