Ishayev fears disaster (299 words)

Published: 3/7/2001

Khabarovsk territory Governor, Viktor Ishayev, announced on Tuesday that the Russian government had drafted a presidential order and a government resolution authorising the long-awaited privatisation of the Komsomolsk-on-Amur aircraft production association (KnAAPO). The privatisation envisages the sale of 74% of KnAAPO's shares to private shareholders, although the restriction of foreign shareholding to a maximum of 25% of the company, given its defence contracts, will limit foreign interest. It seems likely that the ownership of the newly privatised company will pass to Sukhoi, incorporating the entity in the new joint-stock company as originally planned. The announcement of the privatisation was not welcomed by Ishayev, believing that it could be a potential disaster for a region dependent on KnAAPO - reported to constitute 55-78% of the region's industrial production. The privatisation moves are also unlikely to be well received by the entity's workforce, which has strongly objected to the change in the plant's State Unitary Enterprise status and its incorporation into the vertically integrated Sukhoi, since the plans were announced in August 1998. The workforce is fearful of work being transferred from the remote facility, by its new owners. KnAAPO's General Director, Victor Merkulov, has also suggested that the export revenues generated by the plant will be siphoned-off, leaving the plant to bear the costs and struggling to keep highly qualified personnel. The privatisation is going ahead, according to Ishayev, despite President Putin's assurance that KnAAPO would never be privatised. He has suggested that the minister responsible, Ilya Klebanov, is ignoring Putin's wishes. The draft privatisation documentation has been prepared by the Ministry of State Property, the Ministry of Industry and Science and the Russian Aerospace Agency (RAKA) and has apparently received initial approval. .

Article ID: 2395