The decision came less than a week before the closure of an investment tender that was to have raised $185 million for Tyumen Oil. It will also put on hold an August cash auction for 47 percent of the company.
Vladislav Fumberg, deputy director of Nizhnevartovskneftegaz, a Tyumen Oil subsidiary and main production unit, hailed the court decision as "just." He said the ruling would give the government time to "think over" the terms of the sale and a chance to organize a fair investment tender.
"The present terms are absolutely illegal and give some very unjust advantages to one of the participants," Fumberg said.
Nizhnevartovsk has vehemently opposed the tender, accusing the State Property Fund of having connived with Tyumen Oil to rig the sale in favor of investor Alfa Group. Tender conditions specify that the winner must purchase oil refining machinery worth $40 million from an Alfa subsidiary called Alfa-Eko. Nizhnevartovsk alleges the equipment is worth just $2,000.
"We are not against privatization," Fumberg said, noting that funds are urgently needed for developing Nizhnevartovsk oil fields. "What we are against is rigged."
An official for the State Property Fund refused to comment, saying the fund has yet to receive any documents on the court decision. In the past, stakes in major companies were quietly sold to powerful banks for a song, but a clash of interests between different financial groups appears to have brought the usually secretive tenders into the limelight.
The battles around Tyumen Oil represent a conflict between Alfa and a mysterious company called Rosneftinvest, rumored to be connected to the powerful SBS-Agro bank.
Karen Vartanov, an energy analyst with Rye, Man & Gor Securities, said halting the privatization is a "positive" move under the circumstances.
Vartanov said Rosneftinvest had won Nizhnevartovsk's support earlier this year by paying two-thirds of the company's 3 trillion-ruble ($514 million) debt to the federal budget. In return it tried -- unsuccessfully -- to purchase the entire 91 percent stake of Tyumen Oil.
Fumberg declined to comment on Rosneftinvest.
Vartanov said the government decision to lift oil export quotas last month would explain Alfa's push for the stake in Tyumen Oil. Alfa's oil trading subsidiary Alfa Eko will face stiff competition under new export rules, and Tyumen would give it fresh sources of oil.
Nizhnevartovsk director Victor Paly won another tactical victory Friday when the company's board of directors openly opposed Tyumen by refusing to consider removing Paly at its next meeting.
The court decision to halt the Tyumen sale is the third consecutive privatization to run into trouble this year. Of the four big companies scheduled to be privatized in 1997, only telecoms holding Svyazinvest remains on the block after court decisions stopped share sales of insurance company Rosgosstrakh and oil major Rosneft.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.