According to one estimate, only in approximately one third of the world’s developing countries in 2004 was the private sector responsible for the delivery of electricity, water and transport (railways). State-owned enterprises have important forward and backward links to private sector companies in a variety of industries and tend to be among the largest employers. Increasingly, state-owned companies are seeking to internationalise their operations through FDI, recently focusing on energy and commodities.

For existing state-run companies, there is a growing pressure to offer service quality at prices that match those offered by private companies. The challenge for governments is how to run these companies effectively. As a result, the Organisation for Economic Co-operation and Development (OECD) issued Guidelines on Corporate Governance of State-Owned Enterprises in 2005. These guidelines aim to help countries by providing standards and best practices, as well as guidance in their implementation. The OECD has also established the Global Network on Privatisation and Corporate Governance of State-Owned Assets – to facilitate the exchange of views by member and non-member countries.

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A recent World Bank working paper also offers some policy suggestions regarding corporate governance of state-owned companies in infrastructure. First, corporate governance guidelines need to be adapted to infrastructure, especially in the case of natural monopolies. Second, states should try to address both internal and external governance issues for the sustainability of performance of state-owned enterprises. Finally the paper cautions that some of the structures implied by internationally adopted principles of corporate governance for state-owned enterprises, favouring a centralised ownership function, may not be suitable for all developing countries.

Asia

  • The Philippines is finalising a proposal for the privatisation of the Philippine National Railways.

 

  • India is planning to expedite the sale of its shares in eight parastatal enterprises.

 

Europe

  • Kosovo has launched a new round of company privatisations (the 37th wave).

 

  • Turkey has received 13 bids for the pre-qualification for the tender for Coruh Elektrik Dagitim, 22 bids for Osmangazi Elektrik Dagitim and 17 bids for the Yesilirmak electricity distribution grid.

 

Middle East and Africa

  • As of 2008, Egypt had privatised 20% of its public sector companies.

 

  • Nigeria’s Bureau of Public Enterprises has shortlisted six companies for the sale of Skypower Aviation and Handling Company.

 

  • A 51% stake in Mali’s national phone company, Sotelma, has been acquired by Maroc Telecom (Morocco), which is controlled by Vivendi.

 

  • Canada’s SaskTel International has submitted a notice of its intention to pull out of a contract to manage the operations of Tanzania Telecommunications Company.

 

  • Kenya is exploring alternative ways of privatising the country’s sugar factories.

 

This privatisation news is provided by the FDI.net Privatisation Alert (www.fdi.net/privatizationalert). FDI.net is a web portal from the Multilateral Investment Guarantee agency, a member of the World Bank Group, that offers free, on-demand country analysis and information on issues related to foreign investment in 175 countries.