Belarus freezes petrochemical industry privatisation

April 22, 2016 18:54

The Belarusian authorities have launched an anti-corruption campaign in the petrochemical industry in order to delay privatisation that would work in favour of Russian business. With no other means to stave off pressure from the Kremlin to privatise, the Belarusian authorities have resorted to old tricks to delay the process – launching a criminal investigation against the industry’s top managers and putting forward unacceptable conditions for the sales of assets. The Belarusian authorities may recycle this approach when dealing with other companies from the Russo-Belarusian list of joint integration projects.

The law enforcement officers launched a criminal investigation and arrested the Deputy Director General and several other ‘Naftan’ top-managers, as well as other  top managers in the industry.

This is not the first criminal case against the petrochemical industry’s senior managers in recent times. In early July, the media reported the arrest of Ivan Zhilin, “Belneftekhim” Head for abuse of power. While the law enforcement agencies did not confirm this information, at a meeting on improving anti-corruption legislation President Lukashenko talked about the former “Belneftekhim” Head: “If a person compensates for the damage, he is not so terribly corrupt. It is a bad thing that he caused a great damage to the state. Do not grab him and drag behind bars once he has compensated”.

Interestingly, “Naftan” is included in the list of joint Russo-Belarusian integration projects envisaging assets privatisation. However, in Q1 2014 ‘Naftan’, leading profit maker in Belarus, continued to slip down the ranks of Belarus’ most profitable joint stock companies, and landed in fifth place in terms of net profits.

An unprofitable enterprise will mean that Belarus’ negotiating position will be more vulnerable if Russia decides to increase pressure on Belarus to speed up privatising the refineries Russian counterparts had sought to privatise ‘Naftan’ for over 15 years, to no avail. However, in early 2013, the Belarusian government was prompted to include the company on the list of Russo-Belarusian integration projects.

Recently, the Kremlin has put forward clearer conditions for Belarus to receive Russia’s financial aid – to implement the agreed privatisation plans, which include large state assets. For example, Belarus still has not received the sixth and final tranche from the EurAsEC Anti-Crisis Fund, which was conditioned by the privatisation of state assets.

‘Naftan’ is one of two oil refineries in Belarus where the state has a 99.83% share in authorized capital. This contrasts with the Mozyr refinery, almost half of which is owned by Russian companies. On average, ‘Naftan’ processes about 50% of oil supplied to Belarus by Russia– 10 million tons. ‘Naftan’ mainly works with two Russian companies – ‘Rosneft’ and ‘Surgutneftegas’. Russian experts consider ‘Rosneft’ and ‘Lukoil’ to be the main competitors for this Belarusian refinery.

The dismissal of the former Russian citizen Ivan Zilin from managing the ‘Belkneftekhim’ concern (in 2009-2011 he headed JSC ‘Grodno Azot’) may also be associated with an attempt to disrupt the privatisation deadlines for Belarus’ petrochemical assets.

It is worth noting that the sales of the blocking stake (25% + 1 share) in ‘Grodno Azot’, planned for July, did not take place. But in May 2014 First Deputy Prime Minister, Vladimir Semashko, said that four Russian companies were interested in buying stakes in JSC ‘Grodno Azot’: ‘Rosneft’, ‘Gazprom’, ‘EuroChem’ and “an enterprise from the Urals”. Belarus put forward fairly stiff conditions for the sale of the enterprise, which were unacceptable for Russian companies.

The Belarusian government will continue attempts to stave off pressure from the Kremlin to privatise by creating technical difficulties for the transfer of Belarus’ assets to Russian business.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.