The Russian government has sent a draft decree on creating a grain-trading company on the basis of state-owned assets to President Dmitry Medvedev for signing, powerful grain industry lobby said on Monday. "Once the decree is signed it will take one month or one month and a half to effectively transfer the assets," Arkady Zlochevsky, the head of the lobby, the Russian Grain Union, told Reuters in a telephone interview.
Zlochevsky said the assets include state-owned stakes of 25 to 51 percent in some 28 companies, which include two sea export terminals with a joint capacity to export up to five million tonnes of grain a year. The other assets are flour mills and grain elevators with a combined storage capacity of around two million tonnes.
The government intends to persuade private companies to contribute their assets to the new firm preliminarily named the United Grain Company, in which it wants to have a blocking stake of 25 percent.
The government will be represented by its Federal State Unitary Enterprise Food Market Regulation Agency. The stake of private companies will depend on the value of the assets they will be ready to contribute, Zlochevsky said. "The signing of the decree is just the start. I believe in the next month or a month and a half ater it is signed the state will hold talks with private companies," he said.
Zlochevsky did not say which private companies he expects to participate, or when the new firm will be created. "Some companies have been invited and a joint position has been eleborated, but because of the crisis this position may be adjusted as there may be disagreements over the value of contributed assets, which became much cheaper with the crisis."
Zlochevsky said the new company may also act as a government export agent if the government decides to use grain from its intervention stocks as humanitarian aid or sell it under loans provided by Russia to other countries. Zlochevsky does not believe the new company will monopolise the Russian grain market as its share accounts for a relatively small portion of more than 108 million tonnes of grain harvested in Russia this year. "Also the state has a maximum of 51 percent in the firms, which it contributes," he said.
"This means that at least 49 percent of shares belong to private investors. Some board members in the new company will represent minority shareholders. And there will be independent directors as the law stipulates." Andrei Sizov Sr., CEO of SovEcon agricultural analysts agreed that the new company would not be a monopoly. "But a new major player with two large export terminals is likely to emerge. And it will definitely enjoy the support of the state, which others may not have," he said.