Moscow, January 16

The Russian government is looking to privatise a 19.5 per cent stake in state oil giant Rosneft to ease a budget crunch as oil prices slide, Finance Minister Anton Siluanov said today.

“We must make a decision now where to get the money,” Siluanov said in an interview to Rossiya-1 channel.

“Firstly, we are talking about a stake that should have been sold several years ago, it is a stake in Rosneft, 19.5 per cent,” Siluanov added.

Cutting ownership in Rosneft, a sprawling energy holding in which state ownership is now 69.5 per cent, has been discussed by the government for years.

The 19.5 per cent stake was set for sale in 2013 before the government decided to push the decision back.

Privatisation has now been increasingly brought up by officials due to the economic slump, despite worries of unfavourable market conditions and a collapse of the Russian rouble which may complicate the deal.

Siluanov has said that the government seeks to raise around a trillion roubles (about $12.9 billion at current rates) through a renewed privatisation drive.

President Vladimir Putin said last month that both Rosneft and Russia’s national carrier Aeroflot have been mentioned as possible privatisation targets but added that ‘it’s hard to guess whether the state of the market is the right one’.

Siluanov said that current oil trends are becoming a serious challenge: “The price of oil has dropped to one-fourth of what it was,” he said. “We must build the state budget with new realities and shrinking means.”

He said that VTB bank and Sberbank — Russia’s top banks — could also be candidates for privatisation drive.

While Russia still has a sizeable ‘safety pillow’ in form of massive reserves to balance its budget, Siluanov cautioned that the money may deplete quickly.

“We can eat through these reserves this year if we don’t take other measures.”