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Since the Government's adoption of the new privatization
strategy in 1998, privatization of medium and large-scale enterprises has been
accelerated. In the second half of 1999, the Government pushed ahead with
privatization in the electricity sector. Merrill Lynch was selected to
serve as a financial advisor on privatization of enterprises in the sector.
At the
end of 1999, 900 of the 1250 medium and large-scale enterprises had been
privatized. However, the majority of enterprise equity still remained in
Government hands (estimated at over 75 percent of the original state-owned
portion), as most enterprises sold were relatively small with low asset
value. The European Bank for Reconstruction and Development
reports that small and medium-sized enterprise privatization is now
complete, and some large enterprises have been sold to foreign strategic
investors.
A major success has been the privatization of the
electricity distribution and generation company assets, which began at the
end of 1999 and, in most cases, was completed in the first quarter of 2000.
The purchase of the Tbilisi electrical distribution company
"Telasi" topped the list of transactions. 75 percent of the
company was sold to the U.S. company "AES" for an equivalent of
US$25.5 million via international tender. The Government has been working
with the World Bank and other organizations on reforms that would expand
private sector participation in the energy sector.
Privatization results in the other
sectors have been mixed. 50.59 percent of Kaspi Cement has been sold
through a repeat tender to Intertransi Ltd. The Ministry of State Property
Management has announced tenders for majority shareholdings in a number of
large state-owned industrial enterprises, but has failed to attract any
bids. The list included companies such as Elmavalmshenebeli, which
manufactures electric locomotives; Kimbochko chemical fiber plant; Kolkhida
truck manufacturer; and Sakabreshumi silk factory.
According to the U.S. Department of Energy, Energy
Information Administration, attempts to private Tbilgaz, the municipal
natural gas distribution company serving Georgia's capital, have failed
repeatedly. In June 2001, Georgia once again offered an international
tender for an 85 percent stake in the Tbilisi distribution network. With
the network only 25 percent operational, no bids were received.
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