Pumping up the price WHEN Russia’s government floated the idea that its supposedly ambitious privatisation plans should include selling Bashneft, a state-controlled oil firm, to Rosneft, another state-controlled oil firm, many officials were opposed. One presidential adviser called it “idiocy”. Even President Vladimir Putin said it was “not the best option”. But Igor Sechin, the head of Rosneft, is a persuasive man. On October 9th the government announced that Rosneft’s 330 billion rouble ($ 5.3 billion) bid had been accepted.
The main imperative was the government’s urgent need for money. The quasi-privatisation “helps them to resolve the budget problem, but doesn’t reduce the role of the state in the economy,” says Oleg Kouzmin of Renaissance Capital, an investment bank. Rosneft’s offer was above the value an independent analyst had put on the company. Leonid Fedun, vice-president of Lukoil, Russia’s largest remaining privately held oil firm, said his company could not have matched such a high bid, but for a state-owned company like Rosneft that is too big to fail, “it doesn’t matter how much they pay.”
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