OECD raps Russian state control

The OECD singles out Gazprom for particular criticism

Increasing state ownership is a "step back" for the Russian economy, the Organisation for Economic Cooperation and Development (OECD) has warned.

The global think tank said Moscow's growing nationalisation of key industries, such as energy and metals, risked a rise in corruption.

It also said that such moves could increase business inefficiency.

The OECD's latest report on Russia singled out state-owned gas monopoly Gazprom for particular criticism.

'State interference'

It said the fast-growing Russian economy - which grew at an average 6.7% per year from 1999-2005 - could slow sharply if Moscow does not reverse its nationalisation trend.

"The corporate governance of many state-controlled companies is problematic and state interference in the operations of such companies often distorts the development of the firms themselves and the markets in which they operate," said the OECD.

It added that Gazprom was "of particular concern" due to its "seemingly insatiable appetite for asset acquisitions, often at the expense of its core business".

State-owned Gazprom, one of the world's largest gas companies, has been on an acquisition spree over the past two years.

In that time it has bought Russian oil firms Sibneft and Rosneft and a host of other businesses ranging from electricity companies to media groups.

The Russian government has also been accused of using the energy giant as a foreign policy tool, with Gazprom cutting gas supplies to Ukraine last winter, and threatening to do the same to Georgia this time around.

Gazprom counters that it is simply renegotiating contracts with Russia's near neighbours to ensure they pay a price that is more reflective of global market levels.