Poland - Privatization Process
The government appointed as a result of the parliamentary elections held on October 21, 2007 announced a significant acceleration of the privatization process to increase companies' effectiveness and encourage investment. During the first half of 2008 the Government announced a four-year privatization program, or the Privatization Plan, and a decision about which companies will be under local government management and will not be privatized. A decision was also made on strategic companies which will not be privatized.
This privatization program is different from the previous government's "Privatization Strategies for 2007". The primary announced goal of privatization in 2007 was to increase the effectiveness of the management of the State-owned assets. The Ministry of Treasury also disposed of its shares in those enterprises where the State Treasury held only a residual stake (below 10.0 percent) and intended to consolidate state-owned enterprises within different sectors. In addition, the Ministry of Treasury closely monitored the fulfillment of investors' obligations under the privatization agreements. Other goals of privatization in 2007 were to improve the efficiency and competitiveness of privatized entities and to restore public confidence in privatization.
The process of privatization in Poland has significantly reduced the number of state enterprises from the original figure of 8,453 in 1990. Revenue from privatization between 1990 and 2008 amounted to PLN 96.0 billion, of which approximately 97.8 percent was from capital privatization. Poland has utilized several methods to facilitate the transfer of assets from State control to private ownership, including privatization, liquidation, bankruptcy and transfers to municipalities.
The process of privatization accelerated in the mid-1990s with the passing of a new law on commercialization and privatization of state enterprises in 1996. While privatization proceeds accounted for only PLN 800.0 million in 1993, revenues were PLN 13.3 billion in 1999 and reached PLN 27.0 billion in 2000 when the incumbent telecommunications operator, TP S.A., was privatized, raising approximately PLN 18.0 billion.
Since then, with the exception of 2004 when revenues from privatization reached PLN 10.2 billion, revenues from privatization have been relatively low, raising approximately PLN 26.0 billion through the end of 2008. Although the core privatization programs have been completed, there are still substantial state-owned assets available for privatization and the Government has budgeted to receive PLN 12.0 billion in revenues from privatization in 2009, PLN 10.0 billion in 2010 and PLN 6.0 billion in 2011.
The primary methods for the transfer of state-owned enterprises and assets to private ownership are direct privatization and capital (indirect) privatization.
Direct privatization involves the sale of the assets of a state enterprise or entering into a joint venture or leasing arrangement with a potential investor. As of April 2009, out of 2,297 entities approved by the Minister of the Treasury for direct privatization, transactions in respect of 2,212 (96.3 percent) had been completed and such entities were removed from the register of state enterprises. In May 2009, the Szczecin and Gdynia shipyards were privatized through a public auction of their assets, as mandated by the European Commission. United International Trust was the highest bidder for the majority of these assets, although there has been no official confirmation of the price to be paid for these assets. The transactions are expected to close in the second quarter of 2009.
Capital (or indirect) privatization involves the commercialization of a state enterprise prior to sale. The state enterprise is first converted into a joint stock or limited liability company owned by the Ministry of the Treasury (a process known as "commercialization") and, thereafter, shares in the relevant company are sold either as part of a public offering or directly to a strategic investor. As of April 2009, of the 1,724 entities which had been converted into state-owned joint stock companies, shares or stakes in 1,064 of such companies had been sold.
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