Having spent five years combining its nuclear power, engineering and research enterprises into the single entity of Rosatom, the Russian government now sees privatisation of the firm as part of a plan for industrial modernisation.
Rosatom is just one of several vertically integrated state holding companies Russia established to "discourage the decline of the more intellectual sectors of national industry" in the post-Soviet era, wrote Vladimir Putin in the Vedomosti newspaper on 30 January.
Currently in the role of prime minister, Putin served the maximum two terms as president from 2000 to 2008 and is now campaigning to return to that position in March 2012. He used the lengthy article to set out a range of government targets for Russia to develop its infrastructure, innovation and private enterprise while curbing corruption and improving the legal and investment environment for business.
Speaking of sectors such as aerospace, shipbuilding and nuclear energy, Putin wrote: "We had to consolidate those assets which were officially government-owned but managed disjointedly, and which had lost all links with their respective research and design centres."
Government efforts "were focused on restoring Russia's ability to compete in those sectors which involved only a few players on the global market," Putin wrote, emphasising that the "expansion of state capitalism" only occurred because there was no private initiative in those sectors. He stressed the scale of state action had no bearing on "our work to accumulate and restructure assets and get them ready for sale."
Accordingly, Russia has "compiled a plan for the reorganisation of each [state holding] company and their subsequent entry into the market."
"Russia's new economy will be a diversified economy where many competitive sectors will be developed alongside a modern fuel and energy industry."
Certain divisions of Rosatom manage Russia's military nuclear program and these will remain under full control of the state. However, its civil nuclear assets - for example nuclear fuel, reactor technology, supply chain, power plant operation, services and waste management - are to become a "public liability company" with its shares "subsequently sold off."
Rosatom director general Sergei Kiriyenko told the Regnum news agency: "The civil part of nuclear industry has already been developing with partnerships in mind. He added that he interpreted Putin's task as an "encouragement to continue developing partnerships in nuclear industry on prospective projects with not only state investments but also with the increasing share of private investment to be considered."
Rosatom had a preliminary agreement with Siemens to partner in nuclear energy in 2009, but this faltered and in 2011 it signed with Rolls-Royce to consider possibilities "for mutually beneficial cooperation in a comprehensive series of activities in Russia, the UK and third countries." And while Rosatom has a domestic supply chain, its subsidiary Atomenergomash nevertheless forged a joint venture with Alstom for nuclear power plant steam turbines. Today, this enterprise announced an €880 million ($1.1 billion) contract to supply turbines to the Baltic nuclear power plant in Kaliningrad. This new build project is itself the first for which Rosatom has held talks with potential private equity holders for a stake of up to 49%, entertaining CEZ, EDF, Enel and Iberdrola.
Putin said the government was expecting Russian capital to "take an active part in the privatisation process" for all the state holding companies, citing 2016 as a likely date "it may be possible" to reduce state involvement in non-commodity and non-military holding companies. He also set out a wide range of objectives in a program of modernisation for Russia, ranging from education and science to expansion of cities and their infrastructure to underdeveloped land. Bureaucratic corruption should be curtailed and the legal environment improved to improve business competitiveness.
"Russia's new economy will be a diversified economy where many competitive sectors will be developed alongside a modern fuel and energy industry," Putin concluded.