Azeri privatisation to continue later this year

Feb 04, 1999 01:00 AM

Azerbaijan's privatisation process, virtually halted by last year's crisis in Russia, will get back into gear later this year under plans submitted to President Haydar Aliyev.
The final version of the draft programme, approved by the cabinet of ministers last December, has been submitted to Aliyev. It then goes to parliament for ratification and then back to the president.

"The programme is ambitious if it's signed in the shape it's in. By August 15, 2000, we want to have privatised as much as possible -- at least 50 % of the medium- to large-scale enterprises," Barat Nuriyev, deputy head of the State Property Committee, told.
The first companies to be sold will be the nation's energy company, telecommunications and Azerigas.
The Property Committee, the oil-producing country's privatisation ministry, hopes to sell some 75 % of state assets, including oil company SOCAR, the Caspian Shipping Company, the national airline, ports and railroads.
"In the new programme, the president will sign exactly which companies will be privatised, the stake the state will retain, when the process will start and how much will go for voucher auctions," Nuriyev said.
Voucher booklets were distributed to the country's 7.5 mm people in 1996. More than half the vouchers, currently trading on the open market at 78,000 manats ($ 20) for a book of four, have been bought up by foreign investment firms.
Foreign entities can take part in both cash and voucher auctions, although in the case of the latter they must buy voucher options from the state for 70,000 manats, entitling them to use one voucher.
"We've sold some 19 mm options and only 0.5 mm have been used. We expect the remaining options will be used to buy shares in the blue chip companies," Nuriyev said.
So far foreign participation, including the purchase of cotton gins and beer and wine factories, is around 5 % of the total amount sold, Nuriyev estimated.

Russia's crisis dealt a big blow to Azerbaijan's privatisation programme, scaring off international investors.
The World Bank delayed a second $ 35 mm tranche of a structural adjustment loan because of the slow progress in selling off the International Bank of Azerbaijan, the country's largest bank.
Nuriyev said debts to the state and mutual debts to other companies were the main hindrance to privatisation last year.
"Debts are the biggest issue and unfortunately the amounts are huge. If we ask an investor to pay these debts then we'll be unable to privatise these companies," he said.
He said debts to the budget or other state firms could be written off while debts to private creditors would be met by the issue of shares with a nominal value.
The central bank recently agreed to pay off the International Bank's $ 35.9 mm debts after the finance ministry guaranteed repayment with an issue of securities.

Azerbaijan has sold some 90 % of small businesses but only a quarter of larger firms have been privatised.

Source: not available
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