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Serbian minister announces sale of oil, tobacco, mobile phone companies in 2003 |
Belgrade, Jan. 04, 2003 - This year's income from privatization is around 350 million euros and next year will be at least three times higher. We plan to sell three "prize stags" this year - firms worth hundreds of millions of euros. First Beopetrol, whose investment tender will be ready by 20 January at the latest. We are waiting for a revision of the decree on the trade of oil and petroleum products. I am looking forward to a very successful transaction because six buyers will bid for certain. The other "prize stag" is the tobacco industry, DIN [Tobacco Industry Nis] and DIV [Tobacco Industry Vranje], in which major world companies are interested. The tender will be issued as soon as the law on tobacco is passed. Absence of the law increases the risk of investment which would reduce the firm's price and investment.
In this company is Mobtel [mobile phone operator]; the tender has been made contingent on settling the ownership structure in which the state must have a significant majority based on uncollected profits from the previous period. Our recommendation is that Mobtel be sold for 100 per cent ownership, but if the private investor refuses, the state will sell its part, Serbian Privatization Minister Aleksandar Vlahovic said in an interview for Blic.
[Vukovic] What is your comment on suggestions by some experts, even in the government, not to offer all firms to foreigners, so as to preserve the national interest?
[Vlahovic] I have a different opinion. If something is of national interest, then it should undergo nationalization and not privatization. Somehow I have little faith in the efficiency of a firm that is owned by the state...
[Vukovic] Are you satisfied with the progress of the process of privatization?
[Vlahovic] Privatization is not carried out in a straight line. When we were setting out, the most important thing for the ministry was to build strong institutions so that the process would evolve in keeping with the law and in public view, and then to proceed with moderate privatization that would gain momentum the following year. Unlike other ministries, our achievements are measurable and we can state precisely what we have accomplished, and say that we are satisfied with what we have done. The plan was [to place] 250 firms for an auction sale, and there will be 300, of which 240 have been successfully sold. The number of firms sold through tenders was 70, yet it has been carried out with 74 firms, and of 40 successful firms planned for sale, 33 have been sold. The percentage is a little lower than for the auction sale.
[Vukovic] Why is that?
[Vlahovic] Tender privatization is a good base for collecting political points. We had hoped for strong political stability; macroeconomic stability would have made our firms more attractive, but the delay with the constitution charter and political instability throughout the year are factors that we cannot influence. But we have learned something from it, which is why we are amending the law on privatization to remove obstacles in the system to ensure successful sales.
[Vukovic] How far have you advanced in the process of restructuring large systems?
[Vlahovic] The process began in 40 firms and the first among them will initiate proceedings for a sale in January. The Sabac-based Zorka and six other firms, among them MIN, FAP and EI, will be entering a new stage by the end of March. Next year we will finance 25 social programmes from this group of firms, and the special-purpose [military] industry will be added to these, so that around 40,000 workers who are technological redundancies will be taken care of...
[Vukovic] What is your response to some people saying that privatization is too slow, while others are saying it is too fast, that firms are going for a song?
[Vlahovic] Neither have understood the essence of this process... I have a surprise for those who say the process is too slow, as only 18 firms were privatized in the last 10 years, whereas the figure for this year alone is 300. At the end of 2003, 60 per cent of the Serbian economy will have been privatized.
As for those who say that firms are selling at knockdown prices, I have not seen them at the auctions. Their academic talk is a pretence and if anyone gave them a company to sell they would not know how to do it. Sometimes at auctions the initial price rises 140 times...
[Vukovic] When is the decision made to state bankruptcy, and end the search for buyers?
[Vlahovic] An auction is repeated two times and we were in a dilemma whether to introduce a third round, as recommended by the World Bank. We did not accept their recommendation, knowing that unrelenting critics would converge in the third round and declare that firms are being sold at knockdown prices, because the sum of 10,000 euros has been set for every firm in the third round...
[Vukovic] Why have you said that unrealistic social programmes bring down the prices of firms?
[Vlahovic] It happened that one firm increased wages and the severance pay three times during the privatization process. That is nothing but an obstacle to a successful sale. Giving in to workers and incorporating expensive social programmes makes buyers behave rationally and make one of two reasonable decisions. They either decide not to invest if their hands are tied and are not allowed to restructure the firm after privatization, or pay a lower price for 70 per cent of ownership because of the big appetites incorporated in the social programme. Then workers with excessive demands complain of firms selling at knockdown prices.
In future, collective agreements will not be able to change once the process of privatization starts. Of course, social programmes will continue to guarantee rights to workers. We will make concessions to successful firms but generally, social programmes will not be a list of wishes which the new buyer must
fulfill to satisfy the management and workers and local administration...
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