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The Government of the Republic of Serbia

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Privatisation Agency plans at least 500 sell-offs in 2005

Belgrade, 7 March 2005

Privatisation Agency Director Miodrag Djordjevic has said that nearly one half of the socially-owned enterprises have been privatised so far, with the sale of 1,406 companies bringing in a total of €1.5 billion. This year’s plan includes the sale of at least 500 enterprises, he said and added that 300 of them will be auctioned, 18 will be offered at tenders, and between 200 and 220 through the sale of shares from the state Share Fund.

Miodrag Djordjevic

Djordjevic told today’s Vecernje Novosti daily that 31 enterprises have been sold in the first two months of the year. One was sold through a tender (Veterinarski Zavod for €9.1 million), 16 were auctioned off for a total of €5.5 million, and the Share Fund sold its minority stakes in 14 companies, raising a total of €9 million. He added that €4.1 million of this total comes from the Pension Fund’s stake in mineral water firm Knjaz Milos.

He pointed out a desire of the Privatisation Agency to carry out the process at a much faster rate, but that various ‘real-life’ circumstances beyond the control of the agency are preventing this from happening. According to Djordjevic, the privatisation process started with the sale of the best performing enterprises as their already established market positions attracted buyers’ interest. Now the attention of the agency is turning to the sale of companies that are carrying debt, Djordjevic noted.

The Privatisation Agency has so far initiated cancellations of the purchase agreements of 141 companies, which, combined with those whose sell-offs are at the brink of cancellation, make up some 20 percent of the entire privatisation process, according to Djordjevic.

He added that out of the total number of companies privatised so far, only five percent have been sold to foreign investors, but because these companies were the most expensive, they subsequently represented 60 percent of total privatisation revenues.

Djordjevic pointed out that the option to pay for privatised companies in instalments has resulted in the sale of most of the companies to domestic buyers.

Speaking about the problem of “bad” buyers, Djordjevic recalled that the laws on privatisation and the Share Fund will be amended to allow for a prompt termination of a contract, without taking the case to court. Also, under new regulations, the Share Fund will administer the company until a new sale, which will enable the Privatisation Agency to work faster.