Recent examples in emerging markets include the sale of Kuwait Airways Corporation, Serbia’s Telekom Srbija, Russia’s Svyazinvest, Thailand’s Krung Thai Bank and Siam City, and the Korea Development Bank and Woori Finance Holdings in Korea. Industrialised countries are not immune either, with Germany announcing the postponement of the ongoing partial privatisation of Deutsche Bahn until February 2009.

There are several reasons for this. First, the credit crunch has reduced funds available to investors for participating in privatisations. Second, low stock market valuations are discouraging initial public offerings. Third, in many cases foreign investor interest in companies slated for divesture is weak, forcing governments to cancel tenders rather than selling them at unacceptably low prices. Fourth, in the banking sector, some governments are postponing the sale of state-owned financial institutions as they provide a vehicle for channelling funds to businesses and consumers during the financial crisis.

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At the same time, some countries are accelerating existing privatisation plans or re-invigorating dormant ones to shore up dwindling government revenues. Serbia has strived to maintain the momentum of its privatisation drive, with the objective of winding down the process in the near future. In recent months, however, a few tender offers have failed to attract investor interest, most notably the tender for the sale of the state’s controlling share in JAT Airways, JAT Tehnika and the chemical company Zupa.

Americas

Mexico’s Congress has voted on an oil reform bill that allows the privatisation of PEMEX, the country’s state-owned petroleum company. The bill allows private contractors to participate in PEMEX oil business, but is considered by some not to offer enough incentives for private companies to undertake new oil exploration.

Asia

Pakistan’s Cabinet Committee on Privatisation has given the go-ahead for the sale of 37% of the shares of the Oil & Gas Development Company Limited’s (OGDCL) Qadirpur Gas field with transfer of operational control. The government has explicitly asked that all concerns of stakeholders should be taken into account prior to initiating the privatisation process. Privatisation will continue to be the cornerstone of the country’s economic agenda.

Europe

Kosovo has launched the 32nd wave of privatisation, with six companies/land properties listed and a bid submission deadline of early-December 2008. Serbia is seeking a strategic partner for RTB BOR Group, the country’s largest copper mine and smelter company, through a tender with a deadline of January 30, 2009.

Middle East and Africa

Egypt is planning to transfer shares in state-owned enterprises to its citizens in steps to finalise its privatisation plan. The government is drafting a presidential decree that will create a privatisation institution to manage the process. The government will continue to hold controlling equity stakes in state-owned companies in key sectors.

Kenya has announced plans to privatise all state-owned sugar mills to boost production and improve management. The country’s Privatisation Commission is planning a new round of sales of state-owned enterprises, expecting to raise $105m.

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.