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Home > Privatization Alert - May 2009
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Privatization Alert - May 2009
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Focus: Tools on how to partner with the private sector in infrastructure projects
As privatization is winding down in many countries, countries are pursuing new initiatives to engage the private sector in infrastructure development through public private partnerships (PPPs). While most PPPs proceed uninterrupted, cancellations, although rare, do occur. A recent article by the Public-Private Infrastructure Advisory Facility (PPIAF) examines what triggers such cancellations, and finds that macroeconomic shocks, such as a sudden exchange rate depreciation, as well as political sensitivities, especially when foreign investors are involved, are amongst the most important factors. When the private sector “exits” a partnership with the state, the impact on confidence is born by both the private and public sectors.
To make the most of private sector participation in infrastructure development, key principles of good partnerships should be followed. Several multilateral initiatives exist aimed at addressing the growing need of governments to engage effectively with the private sector. In March 2007 the OECD Council approved the OECD Principles for Private Sector Participation in Infrastructure - a set of regulations aimed at helping governments work with private sector partners to finance and implement infrastructure projects. In 2007, PPIAF and the Asian Development Bank published a toolkit on cross-border infrastructure development. Specifically addressing the ownership issue, the toolkit provides useful country and project case studies. The European Commission has also issued a set of guidelines on this topic, titled Guidelines for Successful Public-Private Partnerships (March 2003). Specific tools also exist for individual sectors. For example, OECD published this year a practical guide for governments wishing to engage the private sector in water infrastructure (Private Sector Participation in Water Infrastructure: OECD Checklist for Public Action). Also this year PPIAF published the second edition of a toolkit on PPPs in roads and highways.
Status and upcoming transactions
Europe and Central Asia: In the first four months of this year Azerbaijan has privatized around 250 small enterprises and has established 4 joint stock companies. The country is expecting to complete the round of privatizations of small-sized enterprises by the end of this year. Ukraine's ArcelorMittal Kryviy Rih has postponed some of its investment commitments under an agreement with the State Property Fund that amends the terms of its privatization tender. Serbia has postponed the sale of RTB Bor copper mine after rejecting the offer of an Austrian bidder as incomplete. Kosovo has launched a new round of company privatizations.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Middle East and North Africa: In April 2009 Iran issued a decree that makes compulsory the acquisition of identification numbers for domestic and foreign companies and foreign individuals.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Sub-Saharan Africa: Ethiopia has privatized 19 state-owned enterprises over the past nine months. Zimbabwe is not planning to go ahead with full privatization plans, but will instead develop plans to ensure that key state-owned enterprises are operating efficiently. With the bid submission deadline for the sale of a 51 percent stake in NITEL (Nigeria) having passed, the sale of the company is expected to be completed by September of this year. Burundi plans to privatize the state-owned Onatel by the end of this year.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
East and South East Asia: Vietnam has announced its intention to privatize the Bank for Investment and Development of Viet Nam this year.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
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