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Russia will open its most ambitious privatization program since the 1990s to foreign investors, its economy minister said on Thursday, while the government gave its initial approval to the planned $29-billion (U.S.) in asset sales.

Thursday's government meeting gave the preliminary thumbs-up to the three-year privatization plan as part of draft budgets for 2011-2013.

"We currently have an excessive state share [in the economy]and it must gradually decrease. The privatization is also a possibility for us to influence the structure of our economy," Economy Minister Elvira Nabiullina told reporters.

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"We will allow foreign investors to take part in privatizations," Ms. Nabiullina said, adding that the government would also ask Russian and foreign banks to act as consultants. She said some stakes in state companies could be fully sold on the open market, while some could go to strategic investors.

"Our ministry is holding meetings with foreign investors, showing them privatization possibilities," Ms. Nabiullina said.

The plan will be outlined in September and finalized towards the end of the year.

The sales, if carried out, would be Russia's most ambitious since President Boris Yeltsin's era, when well-connected tycoons snapped up some of the biggest oil and metals firms at low prices.

During the economic crisis in 2008-2009 many assets such as a blocking stake in miner Norilsk Nickel de-facto returned to the state as debt collateral after their owners sought government help in refinancing foreign loans.

Most investors have applauded the plan to sell minority stakes in major state firms but have said they are keen to see how transparent the process will be.

Ms. Nabiullina said more than 200 billion rubles ($6.6-billion) worth of assets will be put on sale next year. She said that even higher-than-expected revenues were unlikely to stop the sale.

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The extra revenue would help the Kremlin plug budget holes ahead of a 2012 presidential election which will encourage the authorities to maintain high vote-winning social spending.

Government officials have said sales could include minority stakes in firms such as Russia's biggest oil producer Rosneft, lender VTB and oil pipeline monopoly Transneft.

The plan ensures Russia will keep control of the firms in a clear signal the Kremlin is not parting from the resource nationalism it has developed over the past decade of high commodity prices.

Russia has made clear that it is more interested in buy-and-hold investors such as large private equity, pension and sovereign wealth funds than speculators who fled the country's market en masse following the oil price slump in 2008.

Prime Minister Vladimir Putin, who personally oversees all large business deals in the country, has held a flurry of meetings with potential investors in recent months.

Russia will also recommend state companies to pay out 16-18 per cent of net profit as dividend next year, a move that should increase their attractiveness ahead of sales, Ms. Nabiullina said.

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