Publication: Monitor Volume: 3 Issue: 142

Despite last-minute efforts by local officials to block the deal, on July 18 the sale of a 40 percent stake in the Tyumen Oil Corporation (TNK), Russia’s fifth largest oil company, went ahead as planned. (See Monitor, July 14) As anticipated, Alfa Bank won the stake, with a bid of $810 million. The bid is much larger than expected, since the minimum price was $160 million. Alfa Bank pledged to come up with $210 million of the money within one month, in order to pay off the 1 trillion rubles in federal taxes owed by the Nizhnevartovsk oil extracting company, the largest component of TNK. Observers doubt whether Alfa will be able to come up with such a large sum. And even if it does, Alfa’s struggle to gain control of TNK will not be over: another 49 percent of its shares will go up for sale in October. (Kommersant-daily, July 22)

On July 22, bidding started for the state’s 38 percent stake in the giant Norilsk Nickel combine. Oneksimbank has held the shares in trust for the past year, and one of its subsidiaries is organizing the current auction. The UK-based Trans World Group lodged a formal complaint on July 18 that the conditions of the tender are unfair.

The government’s renewed enthusiasm for pressing ahead with these deals is simple: it needs the money to plug the budget deficit and meet its promises to pay off wage arrears. The flurry of privatization activity no doubt helps explain the sharp upsurge in feuding between banking groups in recent weeks. Shares worth 4.5 trillion rubles ($800 million) in another half dozen oil companies will go on sale over the next two months. While the politicians are resting, the bankers will have a busy summer.

Russian-American Uranium Deal.