The Russian Post is expected to be privatized. The Ministry of Communications suggests turning the Federal State Unitary Venture into a joint-stock company

The draft law “On peculiarities of turning the Russian Post FSUV into a joint-stock company and on making amendments to certain legislative acts of the Russian Federation” stipulates turning the FSUV into an OJSC without including the Post into the prognostic plan of privatization. The very decision on privatization, according to the draft law, is taken by the Federal agency on managing state property upon agreement with the Ministry of Communications. All shares of the Russian Post become property of the Russian Federation; pursuant to the draft law, the Ministry of Communications will perform the proprietor’s functions.

Also, the Ministry of Communications published yesterday the draft decree of the President of the Russian Federation on exclusion of the Russian Post from the list of strategic enterprises and JSCs, where the FSUV was put in March. The Deputy Minister of Communications Mikhail Evraev explained to “Kommersant” that the ventures on that list cannot be turned into JSCs unless excluded from it. Mr. Evraev said: “We are convinced that the Post will be removed from the list of the strategic enterprises, turned into a JSC and reintroduced into the list. Nobody believes that the Russian Post will cease to be a strategic enterprise”.

Besides, the decree amends the State privatization program approved by Boris Yeltsin back in 1993. According to the explanatory note to the draft decree, said program fixes a prohibition to privatize the objects of the Federal Post Department under the Ministry of Communications of Russia. Even though that body no longer exists, an “ambiguous interpretation” of that provision is possible, so it is suggested to remove it. The B.Yeltsin’s program also bans the privatization of the civil defense objects owned by the Russian

Post, so the draft decree suggests not including the FSUV into the provision’s scope. Dmitry Peskov, Spokesman for the President Vladimir Putin, was unavailable for comments yesterday.

The State has been planning on turning the Russian Post into a JSC for 10 years. The then Director General of the Post Igor Syrtsov in the FSUV’s annual report of 2004, stated: “I am convinced that the process of uniting the Russian Post will be complete in 2005, and that the venture will enter the final stage of the restructuration – turning into a JSC”. In 2012, the proceeds of the Russian Post amounted to 128,9 billion roubles, losses on sales – 4,9 billion roubles, and debt 0f 22 billion roubles.

Nikolay Nikiforov, the Head of the Ministry of Communications, declared last year that the Ministry will prepare a special law on turning the Russian Post into a JSC similar to the law of turning the RZhD OJSC into a JSC. However, as Partner Evgeny Zhilin of the Law Firm "YUST" points out, the RZhD was created by a resolution of the Government and not by a federal law, and “from scratch, and property of many public ventures was included there”.

The draft on turning the Russian Post into a JSC contains many provisions regarding the quickest possible transfer of titles to land plots and other public property to the Russian Post, E.Zhilin says. In particular, the provision saying that the absence of borders of the land plots to be privatized is no hindrance for inclusion of such land plots in the act of transfer of the FSUV’s property to the property of the OJSC. The expert is convinced: “It feels like federal officials wrote that, who have no connection to the reality in the regions. The regions will consider the land to be theirs”.

According to Mr. Zhilin, “several months are sufficient” to turn the FSUV into a JSC. However, the evaluation of the property in order to introduce it into the OJSC’s charter capital as well as the transfer of the property titles will hardly be completed before the end of 2015. M.Evraev points out that the time limits for the turning of the Russian Post into a JSC will be set during a Government meeting, though the Ministry plans on completing the procedure as early as 2014.

The Deputy Chairman of the Government Arkady Dvorkovich held yesterday a work meeting on the strategy of development of the Russian Post FSUV till 2023, the Deputy Minister of Communications Mikhail Evraev told Kommersant. According to him, the strategy was mostly approved and returned for improvement with remarks. He said: “The next stage is the meeting with the Prime Minister in November”. The secretariat of A.Dvorkovich informs that the Deputy Chairman of the Government charged the Ministry of Communications with improving the financial model of the Russian Post and the schedule of structural transformations within one month.

Mr. Evraev says that the new strategy of the FSUV includes the complete modernization of the venture, increased salaries and expanded services of improved quality. According the information of Kommersant, the modernization of the Russian Post will require over 100 billion roubles of the FSUV’s own and borrowed funds by 2023.

See here for more details.