Russia’s transparency hopes dashed with opaque deal: Fuel for Thought

When Russian authorities first announced they would privatize some major state-run assets several years ago, they cited improving the investment climate by increasing transparency and efficiencies among its main goals, but the deal to privatize Rosneft is unlikely to help meet them. In fact the opposite effect could be said of Russia’s 2016 privatization round. This included the sale of a controlling stake in then Russia’s sixth-largest crude producer Bashneft and a 19.5% stake in Russia’s top oil company Rosneft, with output at over 4 million b/d. The deals have sparked plenty of controversy and speculation, which has raised new reputational risks, and is likely to have a wide-ranging negative impact on the market as a whole. “It is remarkable how a relatively simple task to sell a stake in the publicly listed company has turned into a complicated and opaque mechanism …with unclear structure of the capital,” analysts at Sberbank CIB said in a mid-December note. In early December, while many in the market continued to guess why the government was going ahead with selling nearly a fifth of a key asset in a weak market environment, the authorities announced it had reached a deal with a consortium of

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