Both companies need to attract significant investment to develop: Aeroflot for refurbishing its fleet and Svyazinvest for scrapping its extensive analog equipment. The government has several options to secure the required investment, through an initial public offering, their sale to private companies or funding from the federal budget.
"This issue must be solved within a couple of years," German Gref said warning that both companies could become uncompetitive otherwise.
"We discussed a privatization program for 2008 today," Gref said. "The privatization of Aeroflot and Svyazinvest will not take place. And we have not determined privatization mechanisms for Technopromexport [power equipment exporter]."
The Ministry of Economic Development and Trade earlier proposed to sell 100% of shares in Technopromexport, a power engineering construction company, through an open auction in 2008.
Gref said the plan was being discussed in the context of the structural reform of energy monopoly Unified Energy System. "It [Technopromexport] could join one of the holdings planned to be created in the process of the reform," he said.
Gref said now that mass privatization was finished, companies should go public to improve their competitiveness.
A government source said Wednesday that Russia plans to privatize a total of 573 state-owned enterprises, and sell state share in 557 shareholders associations in 2008.
The revenue from privatization in 2008 is estimated at 12 billion rubles ($465.12 million). The government is expecting to receive the same amount during privatization in 2009 and 2010, the source said.
