Реферат: Privatization process in Lithuania

HISTORIC OVERVIEW OF PRIVATISATION PROCESS IN LITHUANIA

Privatization process was launched in Lithuania in September 1991 and since

then it has constituted an integral part of Lithuania's economic reforms. The

entire privatization process may be divided into three major stages:

· The first stage covers the privatization that took place from

September 1991 until July 1995. This phase may be called a mass privatization

for vouchers with some elements of cash sales. The voucher method was chosen

as the most effective way of transferring the ownership of the state-owned

enterprises. The privatization of state assets in Lithuania during that phase

has been based on the Law on Initial Privatization of State Property passed

in late 1991 and amended in 1993. As a result of that phase, Lithuania has

become a country with a majority of the GNP generated in the private sector.

· The second phase of privatization started in July 1995 with the

introduction of a new Law on Privatization of State and Municipal Property.

A State Privatization Agency and a State Privatization Commission were

established in late 1995 to administer the process. According to the Law, the

second phase will call for cash privatization of remaining state and

municipal property at market prices. Local and foreign investors will have

equal rights in purchasing the companies offered for the privatization in

Lithuania. During the second phase of privatization the government will have

to decrease its control in the sectors of economy generally recognized as the

state monopoly through the cash sales. According to the Law on Privatization

all bidders have equal rights in the privatization process. Previously

existing concessions for the employees and management have been eliminated

from the new Law. During the second phase of privatization the amount of

investment into Lithuania was comparatively small. Investors had to lodge

documents with many different institutions, and therefore the privatization

procedure took some time. Individual ministries were not interested in

preparation of objects for privatization. Besides, legally the former

privatization institutions had no right to transfer obligations of

enterprises to the purchasers because they were not real managers of

enterprises.

· New laws of privatization and State Property Fund (SPF) were passed

in November 1997. According to the aforementioned Law restructuring

Lithuanian Privatization Agency established the SPF and other related to

privatization and property management institutions. SPF holds in trust, uses,

disposes and privatizes securities and other state-owned property transferred

to it by the Government of the Republic of Lithuania.

There are several possible methods of privatization:

· public subscription for shares;

· public auction;

· public tender;

· direct negotiations;

· lease with an option to purchase;

· transfer of the state or municipal control of an enterprise

controlled by the

state or municipality.

THIRD PHASE OF PRIVATISATION, 1998 TO DATE

A new, amended privatisation law has been approved in the Seimas recently,

November 1997. The law amends the current privatisation law. The proposed

changes into the law are following:

i) to establish the State Property Fund (SPF) as the

successor to the enterprise founder found in the current law;

ii) to bring certain procedures of the current law into

line with operation of proposed SPF and;

iii) to do technical changes (but not substantial) to the

current law.

The key policy change, proposed by the new law, is the replacement of the

role of enterprise founder and many of responsibilities of the Privatisation

Agency by the SPF. SPF holds in trust, uses, disposes and privatises state-

owned property. As time showed, the branch ministries had too many

conflicting policy objectives and wished to keep enterprises that the

Government has decided to sell, so, in brief, privatisation process by new

law is made less bureaucratic. The SPF co-ordinates the privatisation process

in Lithuania and directly organizes privatisation of largest state-controlled

entities in industry and infrastructure. Privatisation of these enterprises

is carried out through transparent competitive procedure of international

tenders prepared and executed by internationally renowned advisors and

arrangers. First of all, public tender is announced to prepare the

privatisation program for the company by retaining a leading adviser. During

the tender, consultants having an extensive experience of privatisation in

the relevant sector are selected to prepare an attractive privatisation

program and provide financial, technical and legal advice for the Government

of Lithuania concerning the enterprise to be privatised. When the program is

to be approved by the Privatisation Commission and the Cabinet of Ministers a

tender is to be announced for the privatisation of the company where the

object shall be sold.

Recently Public Limited Companies Lithuanian Telecom ("Lietuvos Telekomas")

and Hotel Lietuva (Viešbutis "Lietuva") have been privatised.

Privatisation of these enterprises is carried out through transparent

competitive procedure of international tenders prepared and executed by

internationally renowned advisors and arrangers. For the enterprises which

have a strategic importance to the Lithuanian economy, the Government has

devised a special procedure of two stages for their privatisation and some of

them are already privatised. Public Limited Companies Lithuanian Telecom

(Lietuvos Telekomas) has been purchased by the strategic investor -

Consortium "Amber Teleholding" of Sweden "Telia" and Finnish "Sonera". The

Government accepted sale option of 60 per cent shares. In the energy sector,

the oil refinery AB "Mažeikiu Nafta" is also being prepared to

privatisation. Using the International tender, a consortium of financial and

other advisors, led by Banque Paribas, has been selected as the winner of

tender. At the moment it is under the negotiations with potential investors.

The Government of Lithuania is also privatising two airlines: "Lietuvos

avialinijos" and "Aviakompanija Lietuva". Recently, the companies have been

consolidated so that "Aviakompanija Lietuva" became a subsidiary of a major

airline. The privatisation of the company is foreseen in 1999.

Privatisation of these entities is expected to achieve the following goals:

1) to increase the efficiency of management and operation by introducing

new technologies, investing additional funds and exploiting the experience of

investors in the relevant area;

2) to promote the development of enterprises and markets;

3) to liberalize monopolistic markets.

Institutions taking part in the privatisation of strategic objects are as

follows:

1) the Property Fund, the role of coordinator; prepares companies for

privatisation and carries out the technical work,

2) the Privatisation Commission is responsible for the approval of final

decisions and control of the privatisation process.

3) International tenders for privatisation of strategic objects are

carried out by specially appointed Public Tender Commissions for the

sectors of energy, transport and telecommunications.

Public Tender Commissions determine the criteria for the preparation of

privatisation programs based on the Government policy as well as practice and

experience of other countries. The main priorities of privatisation include

not just maximising the revenue from the privatised objects, but also

attracting potential investors and their contribution to Lithuania.

Privatisation of the largest objects in Lithuania is carried out in an open,

transparent, efficient and rapid manner.

Sources:

I. Lithuanian Development Agency. Website: http:\\www.lda.lt

II. ''Lietuvos Rytas" Nr. 8 (360)/ 1999 m. sausio 30 d; "

Valstybės turto fondo veiklos apžvalga". p.16;

III. Republic Of Lithuania Law On The State Property Fund.

Website:http:\\www.lrs.lt