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First privatisation competitions announced by Goskomimushestvo
After a relative silence about privatisation matters in 2010, on 21 March current year, the Council of Ministers of Belarus eventually signed the long-awaited resolution by which the 2011–2013 state-owned property privatisation plan (“Privatisation Plan”) was approved. The reorganisation programme which was carried out in 2008–2010 was aimed at making enterprises ready for sale, i.e. reorganising unitary enterprises into open joint-stock companies, so the three years to come can reasonably be called the years of privatisation. The new plan provides for the sale of 244 enterprises, with as much as 180 to be sold this year. Despite the scepticism that allegedly the state intends to sell only those enterprises that fail to attract investment, there are also good examples of improvements to the legal framework testifying to the removal of red tape in the privatisation process. So, effective from 1 January 2011, the Law on Privatisation of State-Owned Property and Reorganisation of State Unitary Enterprises into Open Joint-Stock Companies came into force in Belarus. The law was drafted following recommendations from the International Monetary Fund and the World Bank and lays down new principles of privatisation which should ensure that the privatisation process will be carried out according to plan, systematically, openly and transparently. The new law provides for five specific methods of privatisation: sale of shares at an auction and by competition, sale of enterprises as property complexes at an auction and by competition, and a completely new method – sale of shares of open joint-stock companies based on the results of a trust of shares. Such methods of privatisation as sale of shares to the employees of an enterprise at a discount and in exchange for vouchers and the buy-out of the leased property by the lessee have been revoked. However, the law contains a negative provision that privatisation may be carried out without holding an auction or competition, but merely at the sole discretion of the President. This indicates that while Belarusian authorities seek to bring the legal framework of privatisation in line with Western standards and creditors’ requirements, nevertheless they want to keep instruments through which they can exercise influence and control – the provision referred to above will enable to conclude the most attractive privatisation deals only with the presidential approval. Nevertheless, on 11 March 2011, the President signed Decree No 11 by which the Belarusian State-Owned Property Committee (“Goskomimushestvo”) was vested with the right of decision-making on sale and reduction of the initial price of shares. Now ministries determine the conditions of sale (auction or competition) of shares of open joint-stock companies included in the Privatisation Plan, and, unlike before, a decision on sale and price reduction is taken by Goskomimushestvo , no longer by the President. This will significantly shorten the term of decision-making because the President’s resolution will no longer be required for each sale. Goskomimushestvo recommended that the ministries should determine the methods of privatisation according to the following criteria: a shareholding of 50 per cent or less should be sold through an auction (the winner is the participant having offered the highest price), and a shareholding of 50 per cent and above should be sold by competition (the winner is the participant having offered the best conditions: creation of new jobs, renewal of equipment, etc.). The shares of open joint-stock companies (other than based in Minsk and region centres) will be offered for sale from the general list, and their price will be determined based on the balance sheet value. For other enterprises the market price will have to be determined, and a decision on their sale will have to be made according to a separate procedure – based on the offers from future investors As recently announced by Goskomimushestvo, first competitions will take place on 29 June in Minsk. Applications for participation will be accepted until 4 p.m. on 14 June 2011. The shares of six open joint stock companies will be offered for sale:
All competitions are subject to the conditions stated below. Agropromstoymash sells 100% of shares under the condition that the share capital will be increased by $2.5 million within one year after the execution of the share sale agreement. The proceeds will be used towards development of the company. Bumajnaya fabriką Krasnaya Zvezda requires that an investor should make a contribution to the share capital in the amount of BYR 10 billion ($2.5 million) within two years after the execution of the share sale agreement. There is an additional requirement to keep the same number of job positions and retain the company’s activity profile throughout a period of two and five years respectively. The shares of the four remaining companies are sold under the condition that one per cent interest loans will be provided to them in the following amounts: $400 000 to Borisovgrusavtotrans, $142 000 to Novogrudskiy gorodskoy avtomobilniy park, $830 000 to Krasnoselskavtotrans, and $605 000 to Pinagruzservis (Pinsk). More information on: - competition here;
- privatisation plan here;
- upcoming competitions/auctions here.
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