Privatization breakthrough ended without starting

April 22, 2016 18:26

The draft amendments to the Law “On state property privatization” put an end to attempts of most investors to purchase state-owned enterprises in Belarus.

To implement the FDI plan, the Economy Ministry has compiled a list of 800 companies for a possible sale to investors. However, privatization in Belarus can be severely restricted due to the potential interventions by the state in the privatized enterprises’ operations, even after their sale to the new owner. Therefore, the range of investors will be limited to businessmen with strong connections in the government and mainly representatives of Russian large businesses, who have the opportunity to lobby their interests.

On February 13th, the Economy Ministry has compiled a list of 800 companies for a possible sale to investors. The State Property Committee has compiled a list of 103 companies, the sale of minority stakes in which can provide for USD 5 billion. The government intends to keep the controlling stake in these companies. Belaruskali, Naftan and others are on this list.

On February 21st, the draft Law “On state property privatization” was submitted to the Parliament. If adopted as is, as of April 1st, 2013 state representatives will be able to participate in open meetings of shareholders and to vote for the minority shareholders that have not registered for participation in the meeting. In addition, they will be able to intervene in all decisions concerning enterprises’ reorganization, payment of dividends, issuance of additional shares; to suspend implementation of decisions, made at open shareholders’ meetings, - even if the state does not own the controlling stake. Operations of any enterprise, which has been privatized, can be blocked.

It makes no sense for investors to buy such enterprises. Buying a minority stake is not economically feasible due to the peculiarities of the Belarusian economy. High-performance businesses annually enter certain amounts in the national development fund’s accounts. In December 2012 Naftan remitted BYR 600 billion to the fund. Before Russia bought 100% shares of Beltransgaz, it could do nothing about enterprise’s loss-making (50% of the shares were bought for USD 2.5 billion).

Thus, attitudes to privatization have not changed in Belarus. The range of investors is limited to businessmen with strong connections in the government and mainly representatives of Russian large businesses, who have the opportunity to lobby their interests and oppose the interventions in the operations. For other potential investors buying enterprises in Belarus could become a high-risk undertaking.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.