After earlier optimism over privatization, Egypt today finds itself at a crossroads in the process. It now faces the challenge of selling off generally less attractive companies, as well as those in sectors that are considered highly strategic.
When the new prime minister and cabinet took office in late 1999, there was new energy for privatization but no the government - which has listed some 90-plus companies for sale in 2000 - is now forced to look at new sales methods.
A few of the remaining government-owned companies (Telecom-Egypt and the electricity companies) can be sold on the stock market or to large anchor investors. But the majority is unlikely to be sold as IPOs or through international tender offers managed by investment bankers.
Most will have to be sold via an electronic bidding process, or in other regional or local sealed bid offers.
The government has an opportunity to privatize well over 700 wholly or partially-owned government entities - not counting assets like health care and training centers that may eventually be considered for sale.
Privatization moving forward on a number of fronts in Egypt," says Robert Wagner, managing director of the US-based Carana Corporation's Privatization Coordination Support Unit that is advising the government on this matter.
The government completed three privatizations during the first quarter of this year. Approximately 40 other potential sales are at the stages of bid evaluation for sale or lease contracts. The official plan is to offer 94 companies for sale in 2000. Another 80 companies are to be restructured before being privatized but this is an approach that some feel is getting too much attention across too many industries."
Generally privatization activity appears to have slowed, particularly after the recent sale of cement companies. The Public Enterprise office is building a dynamic database of company information that will be available in the third quarter of 2000 on a MPE Web site (also under construction.)
The government expects to sign contracts later this year with two international investment banks who will prepare valuations of four state-owned insurance companies. This will be the first step to privatizing them.
The Ministry of Economy and Foreign Trade recently formed an internal joint-venture privatization unit to collect, verify and update data on the portfolio of over 300 joint-venture companies.
The unit will also be responsible for coordinating joint-venture privatization, which is likely to focus on sales of shares to existing private sector owners and local buyers.
The Ministry of Energy and Electricity continues its efforts to restructure and partially privatize the seven power generation and distribution companies. The newly organized Ministry of Telecommunications is in the process of strengthening the capability of Telecom Egypt to operate in a commercially oriented manner. —(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
