|
|
|
II. Privatization Process: Making Privatization Work - Key Issues & Approaches |
With all the factors discussed above in mind, certain specific steps have emerged as most likely to achieve success. This section discusses what these steps are, why they are taken, and how they are advanced.
|
|
B. Sale of a Controlling Interest |
Generally speaking, the privatizing country in a transitional economy should sell a majority stake sufficient to provide full management control in the company being sold. Because one primary reason for privatizing is to bring in modern management and operations expertise, it is important to give the purchaser operational control. The government is exiting the role of management, and leaving the operation of energy sector assets to private entities with knowledge and experience in competitive markets.
Beyond management control, however, the privatizing country should sell a majority and controlling ownership interest in the assets being sold. This is because, first, selling a majority stake increases the attractiveness of the sale and hence the price investors will offer. Second, as noted, one purpose of privatization is to transfer decision making to the investor. Finally, experience teaches that the use of a "Golden Share" by a government to retain some theoretical control over the entity is rarely if ever in fact exercise e and may discourage investors.
The government and public interests can be protected through the creation of sound policies to which sector participants should adhere, with the energy regulator and anti-monopoly body the primary organizations overseeing the sector. With the proper legal and regulatory framework in place, the government should no longer have need to retain ownership or management control over the privatized assets.
Some governments have provided small shareholdings to management and employees to give them incentives to improve the companies and share value.
|
|
Source: |
|
|
|
Table
of contents |
|
|
|
I. Power Sector Privatization |
|
|
|
II. Privatization Process |
|
|
|
Conclusion |
|
|
