Sale of Russian oil giant is due before year-end

Significance

Rosneft's purchase of the Bashneft oil company prior to its own privatisation raises questions about the Russian government's commitment to market liberalisation, since the deal amounted to a transfer of assets from one state-owned entity to another. The decision to hold a quick sale without an auction undermined perceptions of transparency.

Impacts

• Uncertainty surrounding the Bashneft bidding increases perceptions of political risk for domestic and international investors.
• The privatisation campaign will drag on into 2017.
• Employment and social programmes at Bashneft are likely to remain largely intact.