After approximately two decades of transition, privatisation is pretty advanced across the region and more or less complete in many sectors of the economy. Nevertheless, there is still a privatisation agenda of some sort in all SEE countries. The process has largely stalled in the past two years, because of reluctance to bring politically sensitive companies to the market on the one side, and lack of confidence of international investors on the other. However, with modest signs of an economic upturn now apparent, the time may once again be appropriate to reinvigorate the process. This note outlines briefly, on a country-by-country basis, some of the major assets that still remain to be sold, and the current plans (if any) for their sale.
Albania The main state-owned assets up for sale in 2011 include Albpetrol Sh.A., the country’s sole extraction company, for which a 100% stake was offered last year but that has failed due to lack of interest – the company is over-staffed and has limited operational capacity. A new tender for INSIG s.c., the state-owned insurance company, was launched in July 2010 but has also failed to attract any investors so far. The authorities are planning to resume its privatisation efforts for both companies this year, and will additionally offer for sale five small hydropower plants with a combined capacity of 81.7 MW, and a number of military facilities. However, no dates have been set.
Bosnia and Herzegovina In the Federation of Bosnia-Herzegovina, the government is hoping to raise between €0.5 and €0.8 billion in FDI this year, mainly through the privatisation of state-assets in 11 large companies, all of which had been included in previous privatisation plans. The most prominent companies are Aluminij d.d. Mostar, Energoinvest Sarajevo, the construction company Hidogranja, BH Airlines, and telecoms company HT Mostar. In Republika Srpska, the privatisation plan for 2011 envisages a majority sale of 14 strategic companies, some of which had been offered previously for privatisation. In addition, a considerable number of minority stakes are planned to be sold through the Banja Luka stock exchange.
Bulgaria The authorities are planning to offer 11 large state-owned companies for sale in 2011. In early January, the parliament especially endorsed amendments to the privatisation act in order to exclude several companies from the “not-for-sale” list, as per a request by the government in order to increase privatisation revenues. The main focus in 2011 will be the long-expected privatisation of the tobacco producer Bulgartabak Holding, which controls over 50 per cent of the domestic tobacco market. In early 2010, Citigroup Global Markets was selected as the consultant advising in the privatisation process, and the Bulgarian authorities are expecting to raise at least €100 million from the privatisation. A tender is scheduled to be published in the coming weeks. In addition, the state is likely to sell some shares in several power distribution companies and in Bulgaria’s largest defence industry plant, VMZ Sopot. A number of minority shares are also planned to be sold. Another tender (the fourth) is also expected to be published for the bankrupt steel mill Kremikovtsi, in which the state has a 25 per cent share. Lastly, concessions may be offered by the government for the Black Sea port in Burgas and for two regional airports.
Croatia A large number of companies still await privatisation. The state holds a minority stake in over 600 companies, and more than 50% assets in over 60 companies, including major strategic companies such as Hrvatska Postanska Banka (71.8% state-ownership), insurance company Croatia Osiguranje (80.3% state-ownership), the oil company and oil pipeline JANAF (52.2% state-ownership), Croatian Airlines (state-ownership 98.38%) and Hrvatstka Elektorprivreda (state-ownership 100%). In addition, in early March, the government decided to offer for sale 33 enterprises which are currently undergoing bankruptcy proceedings, and plans to sell further assets later on in the year.
The main privatisation issue in the country surrounds the six remaining state-owned shipyards, whose sale or closure is required by the European Commission in order to complete the competition policy chapter of the EU accession negotiations. After a failed attempt to privatise the shipyards in 2009, the authorities launched a second tender in February 2010 which, however, was delayed numerous times. 3.Maj, Brodotrogir and Brodogradjevna Industrija Split received 4 bids, which however, are subject to approval by the European Commission (EC). The sole bid for 3.Maj has already been rejected by the Croatian Privatisation Fund (HEP), citing financial difficulties of the Austrian bidder A-Tec. A third tender is currently under preparation. In late- February 2011, the EC approved the restructuring plan of an interested bidder for Brodosplit, which lays the path for the full privatisation of the company in the coming months.
FYR Macedonia In 2010, the authorities resumed their efforts to privatise four major loss-making companies and launched a fifth privatisation tender for the following enterprises: a 65% stake in one of the leading electrical engineering companies in the region, EMO; an 84.4% stake in tobacco producing company Tutunski Kombinat; a 100% stake in the military equipment producer company 11 Oktomri-Eurokompozit and a 75.63% stake in chemical manufacturer Ohis. The tender for all four companies failed due to lack of investors’ interest. It currently remains unclear how the government will respond but a further privatisation attempt seems likely. Furthermore, the government intends to resume its efforts to sell a 49% stake in the state-run postal operator Makedonska Posta. In 2008, a first tender was launched to select a consultant to advice in the privatisation process, which however failed. In a second international tender in spring 2009, international consultancy firm KPMG was selected as advisor, but progress has stalled since then. However, according to recent media reports, KPMG is expected to submit a study on the privatisation prospects in early 2011, upon which the government will decided how to proceed further.
Montenegro Although the 2011 privatisation plan has not yet been published, several planned privatisations incorporated in previous privatisation plans are expected to be offered for sale again. These include Montenegro Airlines, in which a 30% stake, combined with a potential acquisition of a majority share within 2 years, is on offer. A first tender failed in late 2010 due to lack of interest, although several investors had bought the tender documents. Furthermore, a tender for the port operator Luka Bar, in which the state holds a 54% share and that has been launched in 2010 but failed due to lack of interest, could be offered again this year. In the railway sector, the government launched a tender for the privatisation of the railway cargo company MonteCargo in 2009, which is likely to be finalised within the coming months. The successful bidder expected to be Romanian rail freight operator GFR. Montenegro railways (zeljeznicki prevoz Crne Gore) has also been put up for sale in 2010, but progress has remained stalled.
Romania Privatisations in 2011 may include the following: In February this year, the government launched an international tender for selecting a consultant for the sale of a 9.8% share in the oil and gas company OMV Petrom, which is evaluated at €500 million. Furthermore, the state has offered a 15% stake in the electricity transporter Transelectrica and a 15% stake in gas transporter Transgaz. Offers for a 55% share in the petrochemical plant Oltchim will be collected until the end of 2011, and the government plans to privatise the company in 2012. Finally, in November 2010 the authorities announced to offer its 46% stake in the land-line operator Romtelecom to the majority shareholder, Greek’s OTE, which is expected to make an offer by the end of March. The government is hoping to raise around €1 billion from the privatisation deal. The authorities are further committing themselves to a number of privatisations within the framework of the new IMF SBA (which has been agreed at IMF staff level and is expected to be approved in the coming weeks), which include the sale of the freight transporter CFR Marfa and the national flag carrier Tarom, provided market conditions are favourable. However, considerable uncertainty remains over the government’s plans for the energy sector, particularly its intention to create two vertically integrated “national champions”.
Serbia Two large-scale publicly-owned enterprises are expected to be privatised this year. First, Telekom Srbija, where the government has announced plans to sell a 51% stake. The state currently holds a share of 80%, with the remaining 20% owing to Greek’s OTE. In October 2010, it set the floor price at €1.4 billion, but the deadline for interested investors to submit an offer has been delayed several times - currently to the end of March. In early February 2011, OTE announced that it would consider selling its 20% stake, which could mean that the state will only offer 31% of its share. Seven international companies are said to have expressed interest but so far no bids have been submitted. Second, the national airline JAT. After a failed bid in 2008, efforts on restructuring JAT have resumed last year when the government decided to establish a new company to take over JAT’s operations and some assets, for which a strategic partner was needed. In November, Deloitte was selected as consultant in the privatisation process and negotiations on a strategic partnership have started with Turkish Airlines. The authorities are hoping to finalise the privatisation at the end of 2011.
Source; European Bank of Reconstruction and Development
