Банкеръ Weekly

Briefs

THE SACRED COWS OF PRIVATISATION

Periodically, a state-owned enterprise suddenly becomes so important that MPs, experts and syndicates rush to protect it from being privatized. As a rule, the national interest is pointed out as an argument in such cases.Thus, during the week the deputies from the parliamentary Commission on Culture had to make efforts in order to understand the complex scheme for the divestment of the cinema producer Boyana, with which they have disagreed long ago. The show will continue till the end of the month, but the players this time will be the MPs from the Healthcare Commission. They should have they final say about the privatisation of hospitals. What does the national insterest involve and why should it be better for an enterprise to remain in the State's hands? The answers to such questions have been left to the imagiantion of the audience. Indeed, it is not reasonable to sell the Kozlodoui N-plant to an accidental investor or to let one step into activities that are a monopoly of the State. The national infrastructural sites, especially at their present stage (unfinished, unreformed and waiting for money from the EU) do not seem very suitable for divestment either. Let's assume that this holds true as well about the enterprises that are subsidized by the Treasury for social considerations. (Not because they cannot be private, but because they are money-losers and nobody is willing to buy them). Thus, a group is formed including the Bulgarian State Railways (BDZ), the ports, airports, the water and sewage companies, and a heap of strategic firms (a total of 128) from the type of the regional Music agencies, the Alliance language centre in Sofia, etc. Lessons can be drawn from the so-called prohibitive list, which included 38 enterprises in 1996. Another 44 had to keep 51% state participation (among them are the long ago privatized Despred and Transimpex). It is curious that all automobile firms engaged in transportation of passengers were added to the second category. Later on, however, common-sense prevailed and what had remained of them was sold out. It is still more interesting that among the companies which were banned from privatisation eight years ago were the already bankrupt Balkan, the successfully divested NIHVI, Sofia Film, Glavproject, and Geopribor, and the ones that are being prepared for privatisation - Bulgarian River Shipping and Navigation Maritime Bulgare (Navibulgar). Everybody knows the result of the protected state interest in Balkan Airlines. We should not forget either that some years ago the idea about the privatisation of the Bulgarian Telecommunications Company (BTC) caused protests. The truth is that the first prohibitive list did not last long and was replaced by entire branches (the energy sector, transport infrastructure, postal services, the territorial cadastre, the free trade zones and forestry farms for a certain period of time). Specialized hospitals, water and sewage companies and all those connected with education and science, were added in 2002. But that list of the national interest was also short-lived. The Privatisation Act was passed in March 2002, expanding to 97 the list of companies not liable to divestment . The first addition was made in the summer of the same year and concerns International Plovdiv Fair EAD. The intended sale of 49% of the company against compensation instruments of payment caused heated debates. The main arguments against that idea were the fears that the real estates won't be used as per their purpose and statements that the state's policy should be pursued through that company. Moreover, local deputies and councillors demanded that the municipality should also get shares from it. As a result of all that International Plovdiv Fair EAD was not only deleted from the list of privatisation against non-cash instuments of payments, but its sale was altogether cancelled until approving a strategy for its divestment. The company's director Yordan Radev tried to propose such a strategy a year later. On behalf of the Board of Directors he launched the idea that the Fair should remain under the state's control, 10-15% of its shares to be purchased by the municipality, and offer 10% to 40% of its stocks on the capital market. Those who should solve that issue - the Ministry of Economy, the PA and the MPs (because changes in the prohibitive list are made only by Parliament) have not said a word on Mr. Radev's project. This shows that postponement is the most effective ban. In March 2002 the entire chapter from the Healthcare Establishments Act, concerning the divestment of hospitals, was revoked, by which their sale was stopped until a second order. Some were afraid of the bad private owners who would turn the hospitals into commercial establishments, others feared they would be purchased by MEBOs at knock-out prices, still others wanted the medical personnel to be treated preferentially as buyers. As the responsible people failed to come to an agreement, they decided to postpone the decision. Two months ago the MPs remembered the unsettled problem and began thinking how to lift the moratorium on the privatisation of hospitals. The decision is expected to be made by end-February. Judging from the words of deputies from the ruling majority, the number of medical establishments banned from sale will be decreased from 300 to 230. The new prohibitive list will include one of the former regional hospitals in each district town, the university clinics and dispensaries. Moreover, the price will be the only criterion for the divestment and doctors shall not be treated preferentially as buyers. According to preliminary intentions at least, the new owners shall be obliged to maintain the hospitals' subject of activity within five to ten years. It is already certain that compromise should be made with both national and other interests which cannot be included in a single list.

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