A. Abramov

Large-scale reluctant privatization: Contradictions and challenges under sanctions

The article discusses the practicability for privatizing some large Russian state-owned enterprises (SOEs) under sanctions. Privatization remains a significant trend in the economic policies of many countries, including Russia. The revenues from privatization demonstrate a steady upward trend worldwide. The effect of external sanctions which create significant difficulties in conducting privatization in Russia does not remove from the agenda the issue of privatization of large companies, but also makes it more relevant. Privatization is an effective tool for forming a competitive environment, increasing the efficiency of SOEs and reducing the presence of the state as a direct participant in market relations. The article contains not only theoretical arguments in favor of privatization, but also its relevance, especially considering the sectoral structure of the economy and the performance indicators of large SOEs. A particular feature of the research methodology is the evaluation of the performance of 29 large SOEs on the basis of a universal set of financial indicators. As a benchmark, we use the financial indicators of 144 Russian private companies and wide samples of foreign competitors for each SOE. The results show that the consolidated financial characteristics of SOEs tend to be inferior to those of private companies and foreign competitors. In addition, the total return, including dividend yield, on the state-owned enterprises’ equity is below the return of market benchmark with lowest risk.