=DJ UPDATE: Russia's Ministries Tweak List Of Asset-Sale Candidates

(Rewrites, adds context)

   By Ira Iosebashvili
   Of DOW JONES NEWSWIRES

MOSCOW (Dow Jones)--Russia's Finance Ministry and Economy Ministry have agreed on a list of 11 large state companies that will sell minority stakes between 2010 and 2013, which doesn't include railroad monopoly Russian Railways, or RZhD, the Economy Ministry said Wednesday.

The list of company's that may participate in the asset sale--Russia's largest since the 1990s--includes state oil champion OAO Rosneft (ROSN.RS), national savings bank OAO Sberbank (SBER.RS), number-two lender VTB Group (VTBR.RS), agricultural bank Rosselkhozbank, hydroelectric utility OAO RusHydro (HYDR.RS) and pipeline monopoly Transneft (TRNFP.RS).

RZhD, which was on the original list, was excluded because discussions on state railway reform haven't been completed, an Economy Ministry spokesman said.

The Economy Ministry also said the government's stake in Transneft shouldn't be below 75%, rather than the 51% previously mentioned.

The government will decide whether to go through with the asset sale at a meeting Thursday.

Russia is looking to raise money after it ran its first budget deficit in nearly a decade last year amid the deepest economic contraction in 15 years.

Unlike the privatizations of the 1990s, where state assets ended up in the hands of a small group of powerful oligarchs, the government seeks to retain control with over 50% of shares of the companies on the list.

Russia's budget gap will be less than 5% of gross domestic product this year, a narrower deficit than previously forecast by the government. But spending may balloon as the government allocates money to social programs ahead of the 2012 elections, analysts said. Prime Minister Vladimir Putin has called for deficits to be eradicated by 2015.

-By Ira Iosebashvili, Dow Jones Newswires; +7 495 232 9195; ira.iosebashvili@dowjones.com

(Alexander Kolyandr contributed to this story)

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(END) Dow Jones Newswires

July 28, 2010 12:14 ET (16:14 GMT)