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Home > Privatization Alert - July 2007
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Privatization Alert - July 2007
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The Economist Intelligence Unit reports that FDI flows into Eastern Europe reached a record level of US$ 112 billion in 2006 compared with US$ 77 billion in 2005. Eastern Europe is now the second largest emerging-market region in terms of FDI flows following Asia. Privatization still accounts for a significant share of that investment in several Eastern European countries. About a quarter of Romania's FDI flows in 2006 (US$ 11.4 billion) was due to the sale of a stake in Banca Comerciala Romana to Erste Bank of Austria. Slovakia's FDI flow of almost US$ 4 billion in 2006 partly reflected proceeds from the sale of the power generator Slovenske elektrarne to Enel (Italy). Croatia's US$ 3.5 billion in FDI was based on the sale of pharmaceutical company Pliva to Barr for US$ 2.5 billion and to another round of privatization of the oil and gas company INA (for some US$ 500 million). Lithuania's FDI of US$ 1.8 billion in 2006 was boosted by the sale of the government's stake in the oil company Mazeikiu Nafta to Poland's PKN Orlen for US$ 852 million.
The Economist Intelligence Unit argues that since privatization has been a prominent driver of Eastern Europe's FDI performance, and given that in many countries privatization is winding down, weaker FDI flows can be expected in 2007 and beyond. For example, Hungary is winding down its privatization program by enacting a new state property management law that will assign a new bureau, the National Property Management Zrt., the task of managing all remaining property under state ownership. The Economist Intelligence Unit therefore forecasts a small decline in FDI flows to Eastern Europe in 2007 (except in the Commonwealth of Independent States) to US$ 100 billion.
Status and upcoming transactions
Sub-Saharan Africa: Ghana has offered for sale two thirds of the equity shares of the Ghana Telecommunications Company Ltd. to a strategic investor with the objective of promoting investment and expansion of the company.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
South Asia: Pakistan reports privatization proceeds of around US $ 2 billion for FY2006-2007, the highest value ever recorded.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
East and South East Asia: Philippines is planning the sale of the government's remaining shareholding in the Philippine National Oil Company - Energy Development Corporation, the country's largest producer of geothermal power, by the end of this year. Indonesia's PT Krakatau Steel is slated for partial sale (35 percent) to a strategic investor in 2009.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Europe and Central Asia: Kosovo has successfully completed the 25th round of privatizations, selling 38 state-owned enterprises for EUR 35.8 million. New rounds of privatization were launched on June 20, 2007 (with a deadline of August 22, 2007) and on July 18, 2007 (with a deadline of September 19, 2007). In the energy sector, Russia is in the process of selling off the assets of Unified Energy System, the country's electric utility supplier. In an auction held recently, Enel, an Italian utility company, won the bid to purchase a blocking stake in OGK-5, one of Unified Energy System's assets. Georgia is in the process of amending its law on the Privatization of State Owned Property to redefine the types of assets that are eligible for privatization to include rail transportation infrastructure, water supply systems and several properties. The new amendment will pave the way for the sale of state-owned Georgian Railway Ltd., whose privatization will be carried out through direct sale by auction. Kyrgyzstan has voted in favor of a proposed legislative amendment that will allow the privatization of the giant Kambarata-1 and Kambarata-2 hydropower stations, the national power grid and urban heating facilities. Serbia is in the process of finalizing the privatization plan for Jat Airways, having already received several offers. The sale of Turkey's PETKIM Petrokimya Holding A.S. has been completed, with a consortium based in Kazakhstan (TransCentralAsia Petrochemical Holding) offering US $ 2.05 billion. Upcoming sales include the Port of Derince, Tekel (tobacco, salt and alcohol) and TEDAS (the electricity distribution company).
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Middle East and North Africa: Tunisia has slated for privatization several state-owned enterprises across different sectors. The bidding process for the sale of Société Tunisienne des Industries Automobiles has closed recently. Iran has recently released the names of twenty-one companies slated for sale, including five companies that belong to the National Iranian Oil Company.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
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