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Economy / Featured News / Mongolia News / Politics / September 19, 2014

Mongolian Government to privatize state companies

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Preparation have started to launch the Privatization of MIAT

The issue of privatization of MIAT might become more challenging topic rather than government’s restructure. Some independent parliament members are already started the preparation of the privatization. There is some sources have informed that some members of the majority group in the Parliament candidates to compete among independent members for the privatization as well through their trusted person whom will be appointed inside of MIAT.

However, MIAT is the biggest within all airline companies, its economical efficiency has been poor for the past years. Also the company management is too much dependent from political influences. There is a unwritten law that MIAT should be managed by trusted person from leading political party in the Parliament. There are rumors, that two years ago, the leading power let MIAT issues to the hand of independent members of the parliament. Since that MP Davaasuren’s became a strong player in this field. It remains uncertain, if past two years played an important influence to independents members, whether they are figured out the possibility to run this field more profitable.

Although, Parliament hasn’t ratified the decision about MIAT privatization yet and financial report of MIAT still remains uncompleted at the State Property Committee, the marathon within PMs in the parliament to prepare for privatization procedures has already started in a full speed and this fact is attracting the curiosity.

Government carrying out the policy to privatize until 49% of MIAT’s share. Therefore, in the draft of the Parliament decree about main directions of privatization and reforms of State owned assets, the MIAT was included in the list of companies to be privatized in 2014-2016.

Public has 2 different opinion about the privatization of the sate properties. While one side of the public supports the Government resolution, considering that State should be freed from some part of its’ duties, the other side of it criticizes that it will such action will make state assets valueless, especially just in the moment when procurement of the brand new craft had been performed form Government bond.

MIAT bought new airplane from USA about a year ago. The total cost was 114 million dollar and was completely covered from financed by Government bond. MIAT carrying out the duty to reimburse this cost within the period of 10 years. It is too early, to accept that this investment has been “let in the wind” (wasted).

Now, let us to present the full list of companies to be privatized in accordance with the draft of the Parliament decree about main directions of privatization and reforms of State owned assets to be carried out from 2014 to 2016. It consist of two types of privatization: “Complete privatization of State asset” and “Decrease of State share”

List of companies for complete privatization:

1. “Erdenet-Bulgan energy network” and “Baganuur, South-Eastern region energy network”. The purpose of privatization is to expand company, renew technology and equipment, cut the costs, maintain reliability of service. Open tender will be used to privatize this state asset and national nominees will be allowed for bidding;

2. “Tsagaan Shonkhor” (White Falcon), state owned factory, will be privatized by open tender;

3. “Orgil Rashaan Suvilal” (Orgil Sanatorium Resort), a state owned share-holding company, will be privatized by open tender under the condition that it will not be allowed to change current business operations.

4. “University of Movie Art” LLC will be privatized by open tender in case if private shareholders refuses to buy the Government shares of this company;

5. “Auto Impex” company’s shares will be sold at Stock Exchange in case if private shareholders refuses to buy the Government shares of this company;

6. “Khutul Cement and Lime Factory”, a state owned share-holding company’s will be sold at Stock Exchange;

7. “Monsam” LLC, share owned by state will be privatized by open tender;

8. “Road Equipment Rental”, share owned by state will be privatized by open tender;

9. Union of Corporation of traditional medical science, technology, manufacturing, Erchim corporation, Armono corporation and Agriculture technique, science, technology, manufacturing will be privatized by closed tender based on intellectual property valuation and under the condition that it will not be allowed to change current operations. Only scientist and researchers in the field will be allowed to attend in this tender.

Companies, where the government shares will be decreased:

1. “Mongolian Stock Exchange”, a state owned share-holding company, will be restructured as minimum of 34% of total shares are under government and up to 66% of total shares will be offered to strategical and financial investors by several phases. The shares will be sold open at Mongolian Stock Exchange and other international stock exchanges with good reputation;

2. “Agriculture foundation”, a state owned factory, will be gone as company structure. The minimum of 34% of the company will be under government and up to 66% of company will be privatized by several phases;

3. “Agriculture Exchange” LLC will be changed as share-holding company. The minimum of 34% of the company will be under government and up to 66% of company will be privatized by several phases at Mongolian Stock Exchange;

4. “Mongol Post”, a state owned share-holding company, will issue additional shares equivalent to its 34% of current total shares and will sell them at Mongolia Stock Exchange;

5. “MIAT” (Mongolia Airlines), a state owned share-holding company. The minimum of 51% of the company will be under government and up to 49% of company will be privatized by open tender;

6. “Telecom Mongolia” a state owned share-holding company, will issue additional shares under the condition that government shares have to be 34% as minimum.

7. “Mongolia Netcom” a state owned limited liability company’s minimum of 34% will remain under government and up to 66% will be privatized by several phases to other companies which have similar business operations;

8. “Shivee-Ovoo” share-holding company’s up to 20% of government shares will be sold at national and international stock exchanges with good reputation;

9. “Baganuur” share-holding company will issue additional shares under the condition that protect government’s share as minimum of 51% and the shares will be sold at Mongolian Stock Exchange;

SOURCE: News.mn




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