Will Atomflot be auctioned off?

Russian President Dmitry Medvedev has signed a decree that gives the green light to privatization of Federal State Unitary Enterprise Atomflot (part of State Corporation Rosatom) and its nuclear-powered icebreakers. This prepares the legal framework for corporatization of the state-owned enterprise.

The President’s decree (№ 12560) makes amendments to the list of state-run assets, which are prohibited for privatization. Now, according to the amended Federal program for privatization of state and municipal enterprises nuclear icebreakers and the berths serving them are allowed to be privatized.

As Rosatom said the decree authorizes the transformation of Atomflot into a public company. In this case, Rosatom points out, a 100 percent stake will be owned by the state through Rosatom and that the icebreakers will never be sold to third-party companies.

The transformation will enable Atomflot to take a lot of advantages of being public company. The future JSC Rosatomflot will be able to conduct economic and commercial activities. It will be easy for the joint stock company raise loans since the banks would be more actively cooperating with them than with federal owned company, Rosatom says.

The future status will also allow the company to implement a more flexible financial and tariff policy for icebreakers service on the Northern Sea Route. Now, when the Russian leadership undertakes a task to actively develop the Northern Sea Route it might help make the shipping lane a real alternative to the traditional route passing through the Suez Canal.

The Rosmorport’s nuclear-powered icebreakers are also used in commercial tours in the Arctic, and support diesel-electric icebreakers operations during winter season in the Gulf of Finland.

The fact that the state will own 100% shares of Atomflot if it turns into a joint stock company, does not rule out that a part of its shares could subsequently be implemented through an IPO or otherwise. For example, the strategic state-owned enterprises such as United Shipbuilding Corp. and Sovcomflot plan IPO.  Besides, Russian President Dmitry Medvedev has announced his plans to shrink the state participation in the economy.

Another aspect is the construction of new-generation icebreakers. According to Russian Minister of Transport Igor Levitin the government has allocated some RUB 20 billion for the next three year for the newbuilds. The contractor is to be selected this October. The corporatization is believed to give Atomflot more opportunities for getting loans for the construction of new vessels.

Noteworthy, the presidential decree says the diesel-electric icebreakers are still prohibited for privatization, but Rosmorport, the vessels owner, is on the list of state-run companies to go public.

Vitaliy Chernov.