Creation of the “Belneftekhim” holding

Alexander Lukashenko ordered a merger of all “Belneftekhim” companies into one holding. The holding will include Belaruskali, refineries and petrochemical plants, allowing for effective cross-subsidies within it (translation of loses from one company to another), and will hamper privatization of its companies.

Following an order of Aleksander Lukashenko, all Belarusian petrochemical enterprises subordinate to thew “Belneftekhim” will be merged into one holding company. In the beginning of 2011 the initial plan envisaged the establishment of three holdings of companies of the concern. According to Head of the “Belneftekhim” Zhilin, the creation of a large petrochemical holding company is an attempt to counteract the competitive Russian companies following the creation of the SES.

Comment

According to Head of the “Belneftekhim” Zhilin, the creation of a large petrochemical holding company is an attempt to counteract the competitive Russian companies following the creation of the SES.

The new holding company will be particularly huge, which will certainly affect the quality of its management. On the positive side, the holding will include Belaruskali, refineries and petrochemical plants, allowing for effective cross-subsidies within it (translation of loses from one company to another), and will hamper privatization of its companies (holding companies can only be bought with the “burden” of debts of other companies or an obligation to collaborate with them). Therefore using the administrative tools the authorities are trying to protect their businesses from the expansion of Russian capital within the SES, given other (tariff and non-tariff) measures have no effect anymore.