Russia to get first dibs on Belarus privatisations

Belarus seems finally to be getting its privatisation programme going, and it is not shy about who will be buying up the bulk of its state-run industries – Russia.

"We are opening the economy for real, and facilitate access for our Customs Union partners," Prime Minister Mikhail Myasnikovich said in an interview with the Russia Today satellite TV channel. "Our Russian partners will always be our first option."

Russia has long had its eye on some of the state firms that dominate Belarus' economy – selling off a host of state-owned companies was a condition that Moscow forced Minsk to accept in return for the $3bn Eurasec bailout loan – but some Russian companies are so far playing hard-to-get.

According to Prime news agency, Myasnikovich said Belarus is negotiating selling stakes in Grodnoazot to Sibur and Rosneft, in Naftan to Lukoil, in Beltransgaz to Gazprom, and in Mozyr NPZ oil refinery to Rosneft, and in MAZ and in Integral to Rostekhnologii. He complained, however, that Lukoil is dragging its feet over Naftan, while Rosneft denies any talks are going on. "Take the chemical complex – Lukoil has been considering Polimir, which is part of a complex with Naftan, for two years, and we would like to hear a yes or a no," Myasnikovich said in the Russia Today interview, warning: "We have alternative proposals."

That is a familiar refrain from Belarus, but there rarely seems anything to back it up.

Experts say Russian majors appear unexcited about Belarus' petrochemical sector. "The [Russian] interest in oil-processing assets in Belarus is not an active process and highly depends on the market situation," Oleg Andreyev, chief M&A specialist with Alfa Bank in Belarus, told Prime .

"On Grodno Azot, Russian Sibur and Rosneft responded in the negative, and I suppose the key factors here are the price of raw stuff and value of the asset," Andreyev said, adding that Lukoil's acquisition of Naftan was discussed in 2007 and 2009, but nothing came of it.

Another much-discussed Russian acquisition – fertilizer producer Belaruskali – has apparently stalled too.

Uralkali has not sent its proposals about its role in the privatisation of Belaruskali, Myasnikovich said on Russia Today: "I don't know, maybe they don't want it."

Meanwhile, the director of the national energy security fund of Russia, Konstantin Simonov, says the acquisition of Mozyr NPZ by Rosneft was not reasonable under the circumstances – Gazpromneft and TNK-BP already hold stakes in the Belarus-based refinery. However, Simonov said at least one purchase would go ahead, with Gazprom likely to acquire the remaining 50% stake in pipeline monopoly Beltransgaz.

Still, Russia is determined the privatisations will go ahead.

Belarus only received the first $800m trance of the Eurasec loan in June, but Russia is already warning of the consequences if its smaller neighbour doesn't live up to its side of the bargain.

Russian Finance Minister Alexei Kudrin said the terms may be revised if the Belarusian government doesn't take serious steps to address its economic crisis. He reiterated that privatisation could provide additional resources for the economy. "If the government is not ready to use this reserve, I believe credit support to be less justified," Kudrin is quoted as saying by Prime . "Belarus should be assisted only after it starts acting."

BusinessNewEurope, Jule 21, 2011