> Sechin has suggested slowing the plans to privatize Rosneft, Transneft, RusHydro and Federal Grid Company, as the budget is in surplus and there is no need for immediate additional revenues. His arguments, presented in Kommersant, are diverse. He notes that privatized companies will have a higher cost of capital, hindering growth. He is concerned that if energy companies are privatized, they will be unable to take on strategic but unprofitable infrastructure projects (we cite Transneft's additional East Siberian and Arctic pipelines as examples). He further stated that energy companies could lose the ability to develop offshore projects, as only state-owned companies can develop the shelf according to Russian law. Sechin is worried that immediate plans to sell state energy companies should be delayed at least until tax laws are amended to account for exemptions from shelf production, which could improve the valuations of offshore projects for state energy companies to the tune of 15-20%. The deputy prime minister is also keen to use share swaps as Rosneft did last year. Finally, Sechin suggests that new privatization deals should only occur at prices exceeding those at which the previous blocks were sold by at least 4% (in ruble terms, Rosneft is trading above its IPO price, and it is unclear whether Sechin is referring to ruble or dollar prices). Total privatization proceeds in dollar prices at the current exchange rate are estimated to be at least $124 bln through 2017. If stakes are sold at no less than dollar IPO prices, total proceeds would be at least $162 bln, or at least $38 bln more in dollars.

> Sechin's view is unsurprising, as he is a known advocate of state capitalism and state presence in the economy. His arguments appeal to much of Russia's current political elite, and are some distance from the more liberal views of the part of the elite that is firmly hanging onto the idea of reducing the government's presence in the economy.

> From another angle, the deputy prime minister's ideas could be concerned with building value for whatever is going to be privatized. He is slightly more concerned with the economic aspects of privatization than the political impact of reducing the state's presence in the economy.

> The next government is widely expected to be much more liberal than the current one. As such, privatization plans are likely to go forward, the only obstacle being market conditions.

> Even if Sechin's additions go through, this will only remove the overhang in some names and will focus the management teams of state companies on building value prior to privatization deals.

> Previously, the privatization plans for 2011 were delayed to 2012. The plan for this year includes the government selling a 15% stake in Rosneft for R200 bln; a 10% stake in VTB for at least R94 bln; a 25% stake in Sovcomflot; and a stake in RusHydro, according to the Economics Ministry.

> The state has been planning to sell stakes in Transneft, Zarubezhneft, InterRAO UES, Sovcomflot, ALROSA, Russian Agricultural Bank, Rosagroleasing and United Grain Company in 2013-14. The sale of a stake in Russian Railways was expected no sooner than 2014.

> The Economics Ministry has also been working on a proposal to privatize regional MRSKs.

> A 7.5% stake in Sberbank was supposedly ready to sell, and was only awaiting a suitable window on the market, according to the bank's management.

> The government was planning to raise R300 bln in 2012, R380 bln in 2013 and R475 bln in 2014 from privatizations. Overall 2012-14 sales could bring in R1,000 bln in revenues, while the 2014-17 plans could generate over R6,000 bln.