18 Oct 2019 13:38

Econ ministry proposes to reduce state stake in United Grain to 25% + 1 share in 2020-2022, Agriculture Ministry opposed

MOSCOW. Oct 18 (Interfax) - Russia's Economic Development Ministry plans to include the reduction of the state's stake in United Grain Company (UGC) from 50% plus one share to 25% plus one share in the privatization plan for 2020-2022, but the Agriculture Ministry is opposed to this proposal so the final decision on this will be made by the government.

"We plan to include UGC in the draft privatization program for 2020-2022 in line with the proposals of the Finance Ministry. We want to propose to reduce the federal stake to 25% plus one share. But this does not mean that such a decision will be made and UGC will be included in the program, as the Agriculture Ministry does not support this proposal," Deputy Economic Development Minister Oksana Tarasenko, who is in charge of privatization at the ministry, said in an interview with Interfax.

"Therefore, taking into account the proposals of [state bank] VTB , we have now prepared a table of disagreements. The decision on this issue will already be made in the forum of the government," Tarasenko said. VTB owns the other 50% minus one share of UGC.

"The only issue that complicates privatization is that UGC is the only state agent for conducting purchasing and commodity interventions on the grain market and it is on the list of strategic organizations," Tarasenko said.

UGC was created in 2009 to develop the infrastructure of the grain market, realize the export potential of Russian grain, and intervene on the domestic market by selling and buying grain to ease price volatility. The Russian government contributed stakes in 30 companies located in 18 regions of the country to UGC's charter capital. UGC holds a controlling stake in Novorossiysk Grain Plant , one of the largest grain terminals in Russia.

VTB acquired 50% minus one share in UGC in February, when the stake was valued at 9.7 billion rubles. The stake was previously owned by Ziyavudin Magomedov's Summa Group, which covered debts to the bank with the UGC shares.

VTB recently proposed that the government consider privatizing 25% of shares in UGC. VTB head Andrei Kostin said that the bank itself would like to participate in the company's privatization.

"We just see that there is a state function - regulation of [grain] interventions, but the rest is commercial activities. If we're saying that the economy is too nationalized today, then why not sell those assets that can be sold now. Moving from direct state to sub-state participation is a step forward, I think," Kostin said in early September.