Recently, the Albanian government made public its intention of privatising the remaining state ownership of subjects operating in the strategic and non-strategic sectors. However, apart from certain signals coming from the Ministry of the Economy, Trade and Energy (METE), the use of privatisation vouchers in this new and probably final phase of privatisation has not been made clear and concrete through concise strategy and legal backup.
The term subject covers juridical persons, either under the full or partial ownership of the state, regardless of their juridical form as state enterprises or joint stock companies.
Privatisation vouchers were introduced for the first time in Albania in the mid-nineties as tools of a mass privatisation model that was widely implemented in several other post-communist countries during that period. In 1998, they were categorised as privatisation titles, together with other privatisation instruments such as the privatisation lek and privatisation bonds. The destination of the privatisation titles is strictly linked to their use in the privatisation of state property.
The legal framework that served as the basis for creating, issuing, printing, distributing and using privatisation vouchers has undergone several modifications and reformations in time so as to adapt to the privatisation needs and outcomes of particular periods.
At the core of the Massive Privatisation Programme (MPP) of 1995 stands the use of privatisation vouchers in a process based on three waves of privatisation. However, the government failed to strictly implement the methodology set out in the MPP of 1995. The normative acts that followed the programme narrowed the privatisation process to two waves of privatisation, and the participation of the vouchers in the actual privatisation was significantly limited. The programme was formally abolished in 2000.
In 1998, the Albanian legislator enacted two laws that formed the new legal basis for the privatisation strategy: (i) law 8306, dated March 14 1998, on the strategy for the privatisation of the strategic sector, later amended; and (ii) law 8334, dated April 23 1998, on the strategy for the privatisation of a subject operating in the non-strategic sector, later amended. Both laws recognise the use of privatisation vouchers in the privatisation of the subjects operating in the strategic and non-strategic sectors. However, none of these laws set out in a clear and definitive way the actual use of privatisation vouchers by shifting it onto the specific normative acts setting the privatisation formula. This legal gap has resulted in a fractional use of the vouchers in succeeding privatisations.
In the majority of cases, the state privatised its ownership of subjects operating in the strategic or non-strategic sectors through a formula that did not enable the participation of privatisation vouchers in public bidding. Following this formula, participation was limited only to those holders of privatisation vouchers that fell into the category of employees or former employees of the subject under privatisation. We find the same formula adopted in the laws on the basis of which state ownership was privatised in the past and also in companies that are in the process of being privatised. For instance, we can point to the legal formulae for the privatisation of the National Trading Bank JSC (BKT), the Savings Bank JSC (Banka e Kursimeve), Albkrom JSC, Albanian Mobile Communication JSC (AMC), SERVCOM JSC, Albtelecom JSC, ARMO JSC, INSIG JSC and the Distribution System Operator JSC (OSSH).
Albania: Privatisation vouchers Part 2
Wolf Theiss, Tirana
February 01, 2009
It is difficult to build a complete picture of the actual status of privatisation vouchers as evaluated against the remaining privatisation potential, considering the lack of necessary indicators from official sources. The sporadic indicators made available to us from other public sources show a disappointing and worrying picture. For instance, the figures solely concerning privatisation vouchers indicate that the government has issued a total of L74 million ($769,000) of privatisation vouchers. Out of that number, only 68.3% have been distributed to Albanian citizens. A small quantity, 17.6% of the total issued, have been used in the privatisation process. The remaining 85.4% remain in the hands of their holders or as a promise for distribution (the issued but not-distributed portion that amounts to 31.7%). On the other hand, the number of companies in which the state continues to own a full or partial stake is relatively small. For instance, we can name ARMO (15% state ownership), Albpetrol (100% state ownership), OSSH (24% state ownership), AMC (12.5% state ownership), Albtelekom, (24% state ownership), INSIG (61% state ownership) and a few other companies operating in the water and energy industries and the non-strategic sector.
These indicators, as well as the drafting of the existing legal framework, create a feeling of scepticism about the credibility of the government concerning the fulfilment of its promise to give value to privatisation vouchers. As an inevitable downside of this scepticism, the market has reacted with a negative evaluation of the vouchers. Consequently, the privatisation vouchers’ market value has fluctuated in different periods depending on the signals coming from the government, devaluing the vouchers to a market value of 2% of their face value. This, of course, causes real and considerable damage to the holder of the title. On the other hand, even the government itself is at risk of facing state liability, regardless of this being considered a state debt default, extra-contractual liability or both.
This situation has given rise to a lobbying initiative in Albania from holders of privatisation vouchers, businesses and practitioners. At the origin of this initiative lies the proposal for a legal reform that would provide in a clear, specific and structured way the use of privatisation vouchers in the remaining stage of privatisation. Though such reform does not require substantial legal change, it certainly requires a strong political will.
Needless to say, in spite of how efficiently the government will address this problem, it is still going to be a delayed reaction that will not turn this long story into a successful one. The previous holders of privatisation vouchers have already lost because of the governmental role in this process. What remains to be done is to seek and save what can be saved and not end up with a failure.
Defining features
It is hard to find an accurate definition of privatisation vouchers, given their unique scope and destination. Of greatest concern is the fact that nowhere in the Albanian legal framework is the liability of the state in the event of failing to efficiently enable the use of these titles clearly identified. To indicate some of thier key features, privatisation vouchers:
- can be used in the privatisation of the subjects or assets of the subjects that operate in the strategic or non-strategic sectors and that are entirely or partially state owned;
- continue to be valid until the deadline of December 2010;
- are titles convertible into equity;
- are tradable among physical and juridical persons, regardless of nationality;
- are issued in physical form;
- are issued in bearer form; and
- have a face value.
Resarte Vukatana & Sokol Nako
Rezarte Vukatana & Sokol Nako
