After 20 years of privatisation, proceeds to the Treasury are 10 times lower

“Privatisation is a dynamic and continuous process. There will always be assets that the State will be willing to get rid of,” said Emil Karanikolov, Executive Director of the Agency for Privatisation and Post -privatisation Control.
According to various statistics, over the past two decades, some 95-98% of the state-owned assets, worth BGN 35-50 bn, have been transferred to the private sector. In practice, however, the real proceeds from the privatisation process to the Treasury are ten times lower.

What will be offered for sale this year

“The majority of the state-owned assets suitable for privatisation have been privatised,” stated an analysis of the agency. Currently, there are merely 22 companies with more than 50% state participation on the agenda. There are still unclear legal issues related to the companies’ ownership in some cases, while in others the procedures depend on actions and decisions which have to be taken by various ministries and administrations. The so-called list of companies banned from privatisation includes 173 other enterprises. Part of them can be privatised after the enforcement of appropriate legislative changes. The agency will offer for sale minority stakes in some 126 enterprises. In 76 of them, the state share is below 10%. Most of the packages offered are from companies that are not public which makes them unattractive for investors. The sale of 40 state minority shares is blocked because of restitution claims.

Privatisation priorities in 2011

The privatisation of the state-owned share (about 80%) in the capital of Bulgartabac Holding will be of the highest priority for the Privatisation Agency this year. So far, there have been three unsuccessful attempts for divestment of the tobacco holding - in 1998, 2002 and 2005. In 1998, when the first privatisation procedure was launched the holding consisted of 22 tobacco-processing and cigarette companies, including one company for cigarette packaging.
The Government of GERB (Citizens for European Development of Bulgaria) declared the privatisation of the holding as a priority at the outset of its mandate. In February 2010, Citigroup Global Markets Limited was selected as a consultant on the deal and the official sale procedure was initiated a day ago. The new owner of Bulgartabac is expected to be announced in September. The ongoing procedure is for the sale of three companies - Blagoevgrad BT, Sofia BT and the tobacco-processing company in the village of Yasen in the region of Pleven. According to experts, these enterprises are the most attractive part of the holding with good positions both on the domestic and on the international market. Therefore, the transaction is expected to be completed relatively easily.

Currently, the holding company is doing well – it reported BGN 1.319 mln profit for the first quarter of 2011. Only a year earlier, the financial result was a loss of BGN 1.675 mln.

The offered acquisition price, as well as commitments on the part of the investors for the purchasing of tobacco over the next 5 years, are among the most important criteria for the selection of buyers in this transaction. Currently, several investors have shown interest in the holding, including strategic companies and financial institutions.

The sales of minority state shares (up to 33%) in the electricity distribution companies - E. ON Bulgaria Sales JSC, Varna, and E. ON Bulgaria Networks JSC. Gorna Oryahovitsa, and in CEZ Electro Bulgaria (which carries supplies electricity in North-western Bulgaria) and EVN Bulgaria (which supplies electricity in the South-eastern part of the country) will be a priority as well.

The sale of VMZ-Sopot is another major deal expected to be concluded this year. The enterprise is included in the list of companies banned for privatisation and it can be sold only after Parliament adopts the privatisation strategy. This document has been passed by the Council of Ministers.

List of companies banned from privatisation

According to experts, the list of companies banned from privatisation will be reviewed and enterprises in the acquisition of which firm investor interest has been expressed and which can be sold at a desirable price will be removed from it. The free-trade zones, the Information Services company, the construction enterprise Technoexportstroy along with its research institutes are an example of such enterprises. Transport companies such as the National Railway Carrier BDZ, the National Railway Infrastructure Company (NRIC) and Bulgarian Posts are included in the list of banned companies as well. The agricultural enterprises Irrigation Systems and Lesproekt should be privatised as well. The repair factories Terem in the defence industry sector, which are owned by the Ministry of Defence, are also on the list of companies banned from privatisation. The Plovdiv Fair JSC is banned from privatisation as well. Currently, law suits are underway with respect to the company’s ownership between the Ministry of Economy, Energy and Tourism and Paldinturinvest - a private public enterprise which gained control over the enterprise via a capital increase

The list of companies banned from privatisation also includes enterprises whose ownership cannot be changed but they  may be leased under concession agreements - such as the water and sewage companies across the country, airports and ports. The hospitals in the country, whose privatisation will be carried out under a special law, are included in the list as well.

Прочети цялата новина

Свързани новини: