Meeting of the Expert Group “State Property Governance and Privatization”

On 31 May 2011 Gaidar Institute for Economic Policy hosted a meeting of the Expert Group formed to develop recommendations on urgent issues of socio-economic strategy of Russia through 2020 on “State Property Governance and Privatization” (Group 15), which addressed the issues of governance, monitoring and unitary enterprises reform.

G.N. Malginov, Head of the IEP’s Corporate Governance Ownership Department, in his report addressed the issue of evolution of the institution of unitary enterprises, including the advantages and disadvantages of options for ongoing transformation of economic entities of the organizational-legal form, principal institutional constraints and conceivable approaches to further of this sector reform.

G.S. Nikitin, Deputy Head of the Federal Agency of the State Property Governance (Rosimushchestvo), related about the latest findings of the Agency of Inventory and Optimization of the federal state unitary enterprises. He emphasized the new format of interaction with them, as well as the fact that in the future, approval of their development strategies will be a mandatory element of practical work with companies.

M.N. Teplovodsky, Head of Land and Ownership Relations Department of the Yaroslavl oblast, in his presentation elaborated on the issues of the SUEs (state unitary enterprises) performance on the regional level. Among them were mentioned: a negative attitude to privatization on the part of population, commitment of the sectoral governing bodies to preserve public enterprises as a means of insurance of government in supervised areas, the limited choice of tools required for affecting enterprises, high invulnerability of their managers. SUEs performance improvement is associated with their transformation into JSC or state enterprises.

Dmitry Vasiliev, Managing Director of the Institute of Corporate Law and Governance, in his presentation touched upon legal aspects of transformation of unitary  enterprises, specifically, the plight of their property. As feasible scenarios were mentioned transfer of their property to the state enterprises, formation of other legal entities on the basis of unitary enterprises (eg, autonomous non-profit organizations when it comes to socio-cultural or household purposes), etc.

M.E. Nikolsky, Investment Director of UE "Leader", focused on the issues of reforming unitary enterprises in the sphere of utilities (supplies of water, heating, and gas, etc.). He stressed that in the municipal sector instead of privatization of property, privatization of governance should be effected must be made no privatization of property and privatization of management. The best, in his view, result of such an approach can be expected in large cities, where there are economies of scale.