Privatization: official acknowledgment of defeat
2011 privatization plan failed. According to preliminary data, the authorities managed to sell shares of only 38 companies, which is 4.7 times less than the plan, for the total amount of Br 170 billion, which is 7.6 times less than the expected proceeds (the sale of Beltransgaz was not a part of the plan).
The State Property Committee of Belarus canceled auctions scheduled for 7 and 16 December, and bids announced for 8 and 21 December for the sale of state-owned shares of 13 joint stock companies. The SPC press service reported that in December the government’s stakes in the following companies will not be sold: Gomelzhelezobeton, Gomel plant of building constructions, Zhlobin repair and engineering works, Concrete products plant (Baranovichi), Plant of reinforced concrete structures (Molodechno), Lelchitsy PMC-103, Mogilevzhelezobeton, Remmeh, Rogachevstroy, Rogachevzhelezobeton, Building Trust № 21 (Borisov), Stroymash, Holding management company “Zabudova”. All these enterprises were listed for privatization in the 2011 plan, approved by the government.
Overall, in 2011, according to preliminary results, the shares of 38 public companies were sold for a total of Br 170 billion.
Therefore specialists were proved right that all privatization plans of the authorities were declarative by nature. Privatization plan for 2011 provided for the sale of shares of 180 JSCs of the common book value of Br 1.3 trillion (the plan did not include the sale of Beltransgaz). So far, according to preliminary data, the authorities managed to sell shares of only 38 companies, which is 4.7 times less than the plan, for the total amount of Br 170 billion, which is 7.6 times less than the expected proceed.
It is worth to mention that in most cases buyers of Belarusian assets were mainly Belarusian investors that in one way or another have previously collaborated with them. Therefore, in fact, it was rather a formalization of the de facto ownership that had changed long before. At the same time, new investors, foreign in particular, are not interested in privatization by Belarusian rules, based on inflated asset prices and a variety of additional burdens on investors.
Summing up the results of privatization in 2010-2011, a forecast for 2012 is that privatization patterns would be similar. Namely, there will be several large non-transparent transactions in favor of the Russian capital and a couple of dozen of sales of medium-sized public companies, mainly in the favor of local investors with core business in the private sector.
President Lukashenka has met with the head of Chechnya Ramzan Kadyrov, who visited Minsk and the Minsk Automobile Plant. Minsk has always sought to have independent links with Russian regional elites, partially, to compensate for the Kremlin's diminishing interest in Belarus. In recent years, Belarus’ contacts with the Russian regions have been extremely intense. However, with some leaders of Russian regions, primarily heads of large republics, communication was more difficult to build. As many analysts in Minsk suggested, Minsk could regard contacts between President Lukashenka and the head of Chechnya as an additional communication channel for relieving tension in relations with the Kremlin. However, most likely, a trusting relationship with Kadyrov is a value for Minsk as such, provided Kadyrov’s broad business and political interests, and a high degree of autonomy for the Chechen leader from the Kremlin.