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The first
round of privatization was launched in September 1991. State property was
sold via investment vouchers that were distributed to all Lithuanian
citizens (mass privatization). During the first stage of privatization,
5,714 state enterprises were sold for 3.4 billion litas. Nearly all small
businesses and some 60 percent of industrial enterprises initially were
privatized through the voucher scheme. The first phase of
privatization in Lithuania also comprised the sale of apartments to the
tenants, the citizens of Lithuania. The privatization vouchers were
accepted as payment for 80 per cent of the price. A significant part of the
mass privatization was completed in the agricultural sector. About 1,160
state companies, formerly known as "kolchozes", were privatized
under the Law on Privatisation of Agricultural Enterprises. The second
phase of privatization started in July 1995, when the Parliament adopted
the Law on the Privatisation of State-Owned and Municipal Property. The
second phase was different from the first one in that state-owned and
municipal property was sold for cash to natural and legal persons under
market conditions and in that local and foreign investors had equal rights
in the privatization of state-owned and municipal property. The sale of
land began in 2001.
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The
State Property Fund, set up in 1998, is responsible for conducting privatization
of state property. The Privatization Commission, which is accountable to
the Parliament of Lithuania, is charged with supervising the privatization
of state and municipal property as well as approving privatization programs
and transactions. Municipalities can privatize municipal property on their
own account, for which the municipal council must establish a privatization
commission to perform the functions. Municipalities, however, may also
delegate these functions to the State Property Fund. The privatization
process is governed by the Law on
Privatization of State-Owned and Municipal Property and a number of privatization-related
regulations. It is supported by the IMF's Stand-By
Credit and the World Bank's Second
Structural Adjustment Loan.
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By the end of the first phase, 88 percent of
the total assets offered for sale had been privatized. In 1998, a 60 percent stake in Lietuvos
Telekomas was sold to a consortium of Swedish Telia and Finnish Sonera for
$550 million, the largest privatization deal todate. As of the end of 2001,
a total of 2,605 state enterprises and other entities had been sold for a
total of 4.15 billion LTL ($1.2 billion). Among the most significant
privatization deals in 2000 and 2001 were the sale of 81 percent of the
shares of the oil exploring and production company Geonafta, the sale of a
further 25 percent of the Lithuanian Telecom company by a public offering
in Lithuania and internationally, and the sale to Estonian Hansabank (in
turn owned by Swedish Swedbank) of the Lithuanian Savings Bank. In 2002,
German investors have bought one third of the shares of Lietuvos Dujos, the
Lithuanian gas utility, and the Lithuanian Agricultural Bank has been sold
to German Norddeutsche Landesbank, thereby completing the privatization of
the banking sector.
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- In the future, the privatization of the remaining state-owned
medium companies, remaining small blocks of shares and real estate
properties will continue.
- The sale of a one third stake
in Lithuanian Gas to Russian Gazprom is expected by the end of 2002.
- The Lithuanian Power
Company and Lithuanian Railways are also scheduled for privatization.
Before privatization these companies are going to be restructured.
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