MOSCOW, April 21 (RIA Novosti) - Addressing the government at a session on Wednesday, the minister of economic development and trade, German Gref, said that the newly created legal foundation had made it possible, in many respects, to break the deadlock on the privatization process in Russia.

According to Mr. Gref, in 2003, 571 state enterprises and 630 state holdings were privatized. He compared this data to 2001, when 25 enterprises and 25 state holdings were privatized.

Mr. Gref said the stage by stage reduction of the state property sector through privatization creates favorable prerequisites for increasing the competitiveness of the Russian economy.

At this session the minister suggested that a two-year program for state property privatization be reviewed.

"Yesterday, Minister of Industry and Energy Viktor Khristenko's proposal was made public. He suggested that the privatization program be approved not for one year, as was the practice earlier, but for two years, and I agree with him," Mr. Gref said.

According to him, in 2004-2005 a mechanism should be developed to fulfill a new two-year privatization program for 2006.

Arguing in favor of his position, Mr. Gref said that due to regulatory problems, the privatization program had not been completely fulfilled year after year and the state owned facilities that were intended to be but not privatized, passed to the next year's plan.

According to him, 1,915 federal state unitary enterprises and state holdings in 2,222 joint-stock companies will be offered for sale in 2004.

"However, I am sure that it is impossible to sell all of them in 2004 because of regulatory problems and because the existing structure will not be able to digest such a great number of facilities," Mr. Gref noted.

"I am afraid that we will not be able to implement 100% of the 2004 privatization plan," admitted the minister.

In 2003, 59% of the federal state unitary enterprises and 32% of the state's holdings in joint-stock companies, included into the plan, were privatized.

In the opinion of Mr. Gref, in a month, the privatization list for 2004 will need to be revised "to make it more realistic." Any additional proposals for privatizing enterprises that are received by May 15, will be included in the 2005 plan, the minister said.

Mr. Gref also pointed out that until August 1, the Ministry of Economic Development and Trade expects to receive the concepts that determine the state's goals for its joint-stock companies and state unitary enterprises from federal ministries and agencies.

According to him, the government departments also must present a timeframe and the forms of privatizing the property, which they do not need to perform their functions.

By September 1, the Ministry of Economic Development and Trade will submit, to the government, a list of enterprises and state owned facilities that must remain state property to ensure that the state can fulfill its functions, the minister added.

At the same time he admitted that about 10 % of the enterprises being privatized in Russia are being "closed privatized," i.e., after they are included on the privatization list, bankruptcy procedures begins, Mr. Gref said.

The minister said that in 2003 bankruptcy procedures were started for 158 enterprises meant for privatization. After the publication of the privatization lists for 2003 such procedures started with regard to more than 100 enterprises.

The Russian Security Council proposed to expand the list of strategic enterprises for consequent privatization, Mr. Gref said.

According to him, this question has to be solved within a month. The minister noted that the legislative basis provides for many restrictions thus making it impossible to privatize about 3,000 enterprises. "The analysis of the legislative basis has shown that 60 federal laws and 18 presidential decrees contain restrictions for privatization," Mr. Gref said.

He suggested that the government should draft an appropriate resolution on revising all earlier established limitations for privatization. This will also concern historical and cultural facilities and strategic enterprises, Mr. Gref noted.

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