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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.
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I. Social Impacts |
1. Company Impacts
Management and employee concerns about job security or loss
can be addressed as part of the negotiations and included in
the buy and sell agreement. There are numerous arrangements
that can be agreed to that will cushion any changes that will
take place. In Hungary and Georgia, the Governments and investors
worked out agreements that included, among other things, employment
buy-outs and training programs. It is useful to note that not
all transitions are adverse. Immediate payment by the new owners
of all back wages and wage increases in the first year have
occurred (Georgia, Moldova).
2. Customer Impacts
Strategic investors will introduce commercial practices that
will include strengthened collections through modern metering,
billing, collection technology and management. Privatization
may also mean some increase in tariffs. As a consequence, some
customers may be adversely impacted. It is important to identify
these impacts and address them from the beginning. In Georgia,
low-income households in the territory of the private company
were provided subsidies through donor support. A similar program
is being implemented in Moldova.
A widespread practice prior to privatization has been tolerance
of government under budgeting and, non-payment by state budget
organizations for electricity (such as water and heat companies,
municipal buildings, state industries, etc.). As a consequence,
the power sector is forced to absorb the deficits rather than
the central and municipal budgets, with the debt building up
in the power sector. Privatized companies cannot do this, and
governments will have to begin to budget fully and pay for electricity
consumed.
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Source: |
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Table
of contents |
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I. Power Sector Privatization |
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II. Privatization Process |
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Conclusion |
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