Chances for Belavia privatization in 2012-2014 are high

Belarus is considering the privatization of the national air carrier Belavia. To all appearances, the pressure exerted on Belavia implies Russia’s interest in the company. Accordingly, the pressure will continue until the desired result is achieved.

“Belarus is considering the privatization of the national airline Belavia”, the Minister of Transport and Communications of Belarus Ivan Scherbo said. According to him, all the republican unitary enterprises, except the Belarusian Railway, will be privatized in the near future, before 2015.

It becomes clear that privatization of Belavia is a pilot project implemented by Russia, meant to elaborate a privatization model for Belarus: departmental pressure, prices dumping and accumulation of losses by the company (i.e. devastating competition model).

The Minister repeated what Lukashenko said before, i.e. that any enterprise could be privatized. Therefore in the near future joint-stock companies will be formed. Their sales will be targeted, depending on the proposed prices, interest from investors, situation, etc. To all appearances, the pressure exerted on Belavia implies Russia’s interest in the company. Accordingly, the pressure will continue until the desired result is achieved: on the one hand, the enterprise will accumulate losses, being unable to withstand the competition. On the other hand, on the macro level, the Belarusian commitments to sell USD 2.5 billion worth of assets will be will watched carefully. Therefore chances are high that Belavia will be sold in 2012-2014. It becomes clear that privatization of Belavia is a pilot project implemented by Russia, meant to elaborate a privatization model for Belarus: departmental pressure, prices dumping and accumulation of losses by the company (i.e. devastating competition model).