MOSCOW Russia has instructed its top oil producer Rosneft to submit proposals for its privatization by Dec. 1, keeping Moscow on track to receive funds from the sale by the end of the year.
The government is preparing to cut its stake in Rosneft by selling 19.5 percent of state energy holding Rosneftegaz's 69.5 percent stake in Rosneft in a potentially complex deal that is due to be completed by Dec. 5.
"I have sent a letter to Rosneft management ... for them to draw up proposals on privatization options by Dec. 1," Kremlin economic aide Andrey Belousov, who also chairs Rosneft's board of directors, told reporters on Tuesday.
Russian officials have said an option whereby Rosneft buys back the 19.5 percent stake this year would be a "transit operation" for the budget to receive privatization funds this year, preventing the country's budget deficit from widening.
Rosneft should then resell that 19.5 percent stake in the first quarter of 2017.
A banking source and a source close to Rosneft said that the company may buy only a part of its stake set for privatization, which the banking source called a 'left-over' if a strategic investor or investors decide not to buy the entire 19.5 percent stake. Rosneft declined to comment.
Belousov said if Rosneft were to buy back its own shares from Rosneftegaz this year, it should hold a board meeting to vote on the move. If another investor were to appear, then Rosneftegaz should hold a board meeting.
Rosneftegaz's board is chaired by Igor Sechin, the influential chief executive of Rosneft.
Belousov added that one or several investors could take part in Rosneft's privatization, but did not elaborate.
The sale of the stake in Rosneft is expected to bring in around 711 billion rubles ($11 billion) for the Russian budget at a time when revenues are depressed due to weak prices for oil, which is the country's main export.
Sources told Reuters this month that Rosneftegaz could help Rosneft to partially fund a possible share buyback.
Rosneft's board also approved a domestic bond program worth 1.071 trillion rubles this month, although a company source said at the time Rosneft does not plan to use funds yet to be raised from bonds to finance its own privatization.
(Writing by Katya Golubkova; Editing by David Evans and Alexander Smith)