Slavneft sell-off is a lesson for India, says Infraline director

Our Economy Bureau
09 December 2002

New Delhi: India has a couple of lessons to learn from the sell-off of the Russian oil and gas company Slavneft, especially the ‘lightening fast speed’ at which the decisions are taken and executed, says Infraline Technologies director Yogesh Garg. Infraline (www.infraline.com) is a leading consulting and information company in the infrastructure sector.

In India the saga of divesting BPCL and HPCL does not seem to conclude ever, but the Russians are all set to auction their ninth largest oil company through an open auction in just four months, he adds. “The Russian method of an efficient, transparent and sensible disinvestment process should be emulated by the Indian government.”

In October 2002, the Russian government announced its plans to sell its controlling share in Slavneft. Prime Minister Mikhail Kasyanov signed an order for the privatisation of the oil and gas company, one of Russia’s top 10 oil producers, by the end of this year.

Kasyanov has called for the sale of the state’s entire 74.95-per cent stake, which is likely to become the largest ever privatisation deal in Russia’s history. By selling its stake in Slavneft the government hopes to fill up budget holes, while analysts assume that after the sale is made, the balance of power in Russia’s oil industry will shift substantially.

Earlier the government said it was planning to sell 19.68 per cent of its shares in the company at an open auction. The sale would have brought some $300 million to the country’s budget. But the ministry for property relations submitted a draft plan to the government calling for the sale of the state’s entire stake in Slavneft. The document, which was reviewed and endorsed at lightening speed, was signed by the PM.

Kasyanov’s order calls for amendments to the 2002 privatisation plan by adding Slavneft to the list of enterprises for sale this year. At the same time, Kasyanov ordered Slavneft be excluded from next year’s privatisation programme. Kasyanov instructed the ministry for property relations to prepare the sale of the state’s share in Slavneft at an auction with open bidding, and to choose the buyer by December.