Putin: Energy privatization a priority

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MOSCOW, July 13 (UPI) -- Privatization must remain a top priority, Russian President Vladimir Putin told the first meeting of his presidential energy sector commission this week.

Putin, addressing energy sector chiefs gathered Wednesday in Moscow for the first meeting of his Commission for Strategic Development of the Fuel and Energy Sector and Environmental Safety, indicated a $100 billion privatization campaign announced by former President Dmitry Medvedev would remain a national goal.

While cautioning he wants to avoid selling off state assets too cheaply, the Russian president reiterated the plans wouldn't be derailed by opponents.

"The state will continue to pursue the policy of privatizing state assets in line with the previous decisions (I want to stress this) and certainly taking into account the special significance of the fuel and energy sector's contribution to the federal budget and energy security," he said.

The comments came as political maneuvering over control of Russia's energy sector continued in the Kremlin, pitting Putin ally Igor Sechin -- recently appointed chief executive of the state-owned group energy holdings group Rosneftegaz -- and Arkady Dvorkovich, a liberal-leaning protege of Medvedev, who is now prime minister.

"Sechin is a proponent of privatizing [only a few single assets], and he wants the government to strengthen its positions in the energy sector, to accumulate oil and gas assets, perhaps selling them off later for a bigger profit," Dmitry Abzalov, an expert with the Center for Political Trends, told The Moscow News.

Medvedev, meanwhile, has advocated privatizing all energy company stakes on the open market, as has Dvorkovich, Medvedev's deputy prime minister for energy.

The establishment of Putin's strategy commission suggested that parallel power centers -- one within Medvedev's government and another controlled by the president -- were vying for political control over the privatization efforts, the Financial Times reported.

Although regarded as one of his closest allies, Putin's comments before the meeting seemed to indicate he is not 100 percent supportive Sechin, who has suggested Rosneftegaz could serve as a first buyer in government sell-offs.

Putin admitted that really wouldn't constitute "privatization."

"I would like to ask you that in the course of our discussion today you state your views on the participation of Rosneftegaz oil and gas company in privatization projects," he said.

"I have followed the expert discussion on this subject closely. Of course, strictly speaking, the participation of Rosneftegaz in the acquisition of state companies' shares can't be termed privatization in the true sense of the word."

Nevertheless, he said, it is allowed by law make such purchases.

"It does not mean that we should stop at Rosneftegaz' participation in privatization," Putin added. "Absolutely not."

The Russian leader also called for "clean privatization," saying the process of selling state assets "must be completely transparent and honest with respect to our citizens and the state."

Also, he said, the timing must be right for the sales to make sense, using as an example Russian hydroelectric power company RusHydro, which he said is currently "undercapitalized" at $7.5 billion.

But, because a pair of new power stations are coming online soon and its Far Eastern assets will be consolidated, "in the coming years the company's capitalization will grow to $40 billion. So we cannot sell now something that will absolutely certainly be worth $40 billion for $7.5 billion!"