A recent article by the Public-Private Infrastructure Advisory Facility (PPIAF) examines what triggers such cancellations and finds that macroeconomic shocks, such as a sudden exchange rate depreciation, and political sensitivities are among the most important factors. When the private sector ‘exits’ a partnership with the state, the impact on confidence is felt by both the private and public sectors.

To make the most of private sector participation in infrastructure development, key principles of good partnerships should be followed. Several multilateral initiatives exist, aimed at addressing the growing need of governments to engage effectively with the private sector. In March 2007, the Organisation for Economic Co-operation and Development (OECD) Council approved the OECD Principles for Private Sector Participation in Infrastructure – a set of regulations aimed at helping governments work with private sector partners to finance and implement infrastructure projects.

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In 2007, PPIAF and the Asian Development Bank published a toolkit on crossborder infrastructure development. Specifically addressing the ownership issue, the toolkit provides useful country and project case studies. The European Commission issued a set of guidelines on this topic in March 2003, titled Guidelines for Successful Public-Private Partnerships. Specific tools also exist for individual sectors. For example, this year the OECD published a practical guide for governments wishing to engage the private sector in water infrastructure, titled Private Sector Participation in Water Infrastructure: OECD Checklist for Public Action. Also this year, PPIAF published the second edition of a toolkit on PPPs in roads and highways.

Asia

  • Vietnam has announced its intention to privatise the Bank for Investment and Development of Vietnam this year.

 

Europe

  • In the first four months of 2009, Azerbaijan has privatised about 250 small enterprises and has established four joint stock companies. The country is expecting to complete the round of privatisations of small-sized enterprises by the end of this year.
  • Kosovo has launched a new round of company privatisations.
  • Ukraine’s ArcelorMittal Kryviy Rih has postponed some of its investment commitments under an agreement with the State Property Fund that amends the terms of its privatisation tender.
  • Serbia has postponed the sale of RTB Bor copper mine after rejecting the offer of an Austrian bidder as incomplete.

 

Middle East and Africa

  • Ethiopia has privatised 19 state-owned enterprises in the past nine months.
  • In April, Iran issued a decree that makes compulsory the acquisition of identification numbers for domestic and foreign companies and foreign individuals.
  • Zimbabwe will not be going ahead with full privatisation plans, but will develop plans to ensure that key state-owned enterprises are operating efficiently. With the bid submission deadline for the sale of a 51% stake in NITEL (Nigeria) having passed, the sale of the company is expected by September. Burundi plans to privatise the state-owned Onatel by the end of this year.

 

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 direct investment in 175 countries.