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Home > Privatization Alert - June 2008
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Privatization Alert - June 2008
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Focus: Post privatization concerns in emerging markets
Nigeria: In 2006, the government divested 51% of its stake in NITEL, the country's telecom operator, to Transcorp for US$500 million in the hope that privatization would turn around its performance and improve services. Following the divestment, accusations of fraud and corruption emerged, coupled with failure to invest in the company and to pay wage arrears, leading to labor unrest and poor service. It was soon clear that NITEL had been unable to meet the objectives that its privatization hoped to achieve, which included developing fixed and mobile telecom services, improving efficiency and establishing effective customer services, even after entering into a technical partnership with British Telecom. The government is now seeking a new investor who would acquire 27% of Transcorp’s share in NITEL and also buy another 24% of the state’s remaining 41% share and take control of the company.
Kosovo: Since its establishment in 2002, the Kosovo Trust Agency (KTA) has sold a significant share of the country's state-owned enterprises through spin-off and liquidation methods. As of November 2007, there were about 650 state-owned enterprises administered by KTA, about 320 companies privatized and about 110 firms placed in liquidation. After the last wave of privatization (the thirtieth) carried through the early part of 2008, KTA is winding down its operations in its present format and structure, and will re-emerge as a privatization agency under the Ministry of Economy and Finance. A recently released report by the Organization for Security and Co-operation in Europe on KTA and the privatization process carried out under its auspices concluded that its rules have been complex, there has been lack of transparency (e.g. lack of publication of decisions), as well as concerns that some privatized assets might have been illegally expropriated. Despite the success of the privatization process in terms of numbers of enterprises sold, there have also been concerns about the effects of privatization on the performance of these firms and eventually on the country’s economic performance. These concerns are mostly focused on the privatization of large enterprises and the post privatization reform of public utilities. As well, concerns exist for companies that have not yet been sold, such as the Brezovica ski resort, as well as for companies whose privatization has been initiated but not yet completed, such as the Trepca mine.
Status and upcoming transactions
Europe and Central Asia: Turkey's
petrochemical company, Petkim, has been sold to the consortium Socar-Turcas-Injaz Joint Venture for nearly US$1.7 billion.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Middle East and North Africa: Algeria has delayed the privatization sale of Algerie Telecom.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Sub-Saharan Africa: Kenya's initial public offering of Safaricom, the country’s largest mobile service provider, is reported to be oversubscribed by over 500% by domestic and foreign investors.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
East and South East Asia: Krakatau Steel, Indonesia's largest steel producer, is slated for privatization this year. The company has seen its profits increase in response to the growing demand for steel, but has been unable to increase production accordingly owing to financial and capacity constraints. Although the formal process of privatization has yet to be launched, several steel producers from the developing and industrialized world have expressed interest in acquiring a stake.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
South Asia: Pakistan has received 19 expressions of interest for the sale of SME Bank Ltd.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Latin America: It has been announced that the privatization of Brazil's power generator Cesp, a leading energy producer in Sao Paulo, will not take place this year.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
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