Shares in Bashneft jump as Sechin offers Putin $5bn for Kremlin stake

Sechin TASS:Mikhal MetzelShares in Bashneft jumped yesterday after Rosneft Chairman Igor Sechin, undeterred by Prime Minister Dmitry Medvedev’s reluctance to allow Russia’s largest oil enterprise to take part in plans to privatise its smaller competitor, went directly to his long-term ally President Putin and asked for permission to buy a controlling stake for a premium $5bn. If Putin overrules Medvedev and accepts the offer, it would pave the way for the Kremlin to pocket $11bn through the sale of its 19.5% stake in Rosneft itself, so landing it a total of $16bn – around half the amount it expects to need to meet this year’s projected budget deficit.
Bashneft shares jumped by more than 5% on the news before settling down at RUB 3,095, 2.4% higher than last week
The Russian PM has been resisting Rosneft’s attempts to participate in the sale of Bashneft on the grounds that it would run contrary to government plans to reduce the state’s role in the country’s economy. “Putin’s elite is fighting for a piece of the shrinking pie of national assets,” a money manager at Kapital Asset Management Vadim Bit-Avragim told Bloomberg. “This move would discredit the very definition of privatisation.” 
Allowing Rosneft to buy Bashneft would also entailed systemic risk because the oil giant would probably have to borrow the $5bn from state banks to fund the acquisition, he added. 
alrosa 5
Russia is using the disposal of state-owned of assets to help cover a budget gap brought on by a collapse in the price of oil and the impact of Western sanctions on its economy. 
Last month, the Kremlin raised more than $800m from the sale of its 10.9% stake in the Alrosa diamond mining company, and it is also considering privatising Sovkomflot, the 100% state-owned shipping company that specialises in petroleum and LNG transportation.

Source: Bloomberg