Privatization: a strategic fight for terms and conditions
Head of the State Property Committee of Belarus Georgy Kuznetsov announced at a press-conference that Belarus will sell to Gazprom the remaining 50% of the stake in JSC “Beltransgaz” for USD 2.5 billion before the end of 2011.
According to Kuznetsov, Belarus has imposed a lot of additional conditions regarding prices, tariffs and other issues that hampered negotiations. However in the autumn the parties will agree on all terms and the transaction will be completed.
Russian JSC “MTS” offers to pay USD 400-500 million for the state-owned shares of the Belarusian subsidiary, said Kuznetsov, noting that Belarus would like to receive USD 1 billion for the asset. According to the State Property Committee, it has been tasked to assess Belarusian assets’ maximum value in order to negotiate it in the future to reach the acceptable compromise.
It is likely that Belarus will have to cede to “Gazprom” on the issue of privatization of “Beltransgaz”, creating a precedent that would anticipate further concessions to Russian investors in the course of imminent privatization.
Belarus has to sell “Beltransgaz”, it is the only asset that has been prepared for the privatization, and is able to enrich the gold and currency reserves with USD 2.5 billion.
Russia understands this. It proposed to postpone talks until September. On 19 July in an interview with BelaPAN Russian Ambassador to Belarus Alexander Surikov said, Russia was considering the purchase of “Beltransgaz” “largely as a remedy for Belarus because of the rising gas prices that took place during the transition to mutually beneficial market relations”.
Russia was considering the purchase of “Beltransgaz” “largely as a remedy for Belarus because of the rising gas prices that took place during the transition to mutually beneficial market relations”.
The majority of Russian investors are not satisfied with the prices for Belarusian assets. They believe the market assessment made by Belarus is overly exaggerated and it is impossible to reach an acceptable compromise. Consequently, Russia will work to change this approach, while supporting the Belarusian economy at the cost of sale of the “Beltransgaz”
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.