February 1, 2016 / 7:54 PM / 4 years ago

Russia could cut Bashneft stake in 2016 privatisation programme -sources

MOSCOW (Reuters) - The Russian government could reduce its stake in mid-sized oil company Bashneft (BANE.MM) as part of its privatisation programme this year, two government sources told Reuters on Monday.

The potential privatisation is part of efforts to support Russia’s budget as the state grapples with weakness in oil prices that are a cornerstone of the economy.

President Vladimir Putin held a meeting on privatisation on Monday, the sources said, adding that oil company Rosneft (ROSN.MM), shipping firm Sovkomflot, diamond miner Alrosa (ALRS.MM) and state-controlled bank VTB (VTBR.MM) were also among companies discussed as possible privatisation targets.

The state owns 69.5 percent of Rosneft, 43.9 percent of Alrosa via the state property agency and a further 33 percent via the Republic of Sakha. It owns the whole of Sovkomflot and 75 percent of Bashneft, split between the state property agency and the Republic of Bashkortostan.

Russia also holds a 60.9 percent in VTB, Russia’s second-biggest bank by assets.

The sources said that these assets were on the state’s shortlist for stake reductions this year, though the list remains under discussion.

The privatisation programme is expected to bring in a total of between 500 billion roubles ($6.5 billion) and 800 billion roubles this year, potentially avoiding additional budget cuts apart from those already announced, one of the sources said.

The various sales could be held in the second half of the year if market conditions allow, the source added.

President Putin emphasised on Monday that the state should retain control of strategic companies and that any disposals should not be made at give-away prices.

Spokesman for Igor Shuvalov, first deputy prime minister in charge of privatisation, was not available for comment late on Monday.

Reporting by Margarita Papchenkova and Darya Korsunskaya; Writing by Katya Golubkova; Editing by David Goodman

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