Russia sells stake in tanker giant as war costs strain its finances
Vladimir Putin (photo: Getty Images)
The Kremlin plans to sell part of its stake in a major state-owned company to help cover the budget deficit. This time, Moscow has decided to part with shares in Sovcomflot, The Moscow Times says.
Russia's Federal Agency for State Property Management has begun looking for organizers to sell a 7.8% stake in Sovcomflot, Russia's largest shipping company and a key operator of the shadow fleet of oil tankers. The Russian state currently owns 82.8% of the company, meaning that roughly one-tenth of its stake is set to be put up for sale.
Before the full-scale invasion, Sovcomflot operated the world's largest fleet of medium-range Aframax tankers. The company also owned 10 icebreakers.
Vladimir Chernov, an analyst at Freedom Global, estimates the stake planned for sale at about 15 billion rubles. This is the amount the Russian Finance Ministry could potentially raise from the deal. However, the final proceeds could be lower than initially estimated.
According to Chernov, if the shares are offered to a broad pool of potential buyers, they will likely have to be priced below their market value to ensure sufficient demand.
The proceeds from the privatization will go to Russia's federal budget. At the same time, the Kremlin plans to increase military spending again next year, allocating 17.1 trillion rubles to military needs, or 35% of all government spending. This is a one-third increase from the 2026 budget.
Despite another tax hike, the third in the past three years, Russia's Finance Ministry forecasts a budget deficit of 5.4 trillion rubles in 2027. The situation is not expected to improve significantly over the following two years: a deficit of 5.1 trillion rubles is projected for 2028 and 5.2 trillion rubles for 2029.
Meanwhile, it was previously reported that Russia no longer believes in the US peace plan and is preparing to intensify its attacks on Ukraine.
Moreover, Kremlin leader Vladimir Putin said that Russia is ready for war with Europe.
