Georgia to Accelerate Privatization of State Property

After it was noted that the National Agency of State Property of Georgia has sold twice less state property compared to 2018, Georgia’s Minister of Economy and Sustainable Development, Natia Turnava said the privatization process must be accelerated in order to use the property owned by the state in economic processes.

The LEPL National Agency of State Property was established on September 17, 2012. To date, the Agency falls under the governance of the Ministry of Economy and Sustainable Development of Georgia and exercises rights related to privatization of state property, transfer of the right of use of state property and managing companies established with government shareholdings.

Turnava says reorganization of the National Agency of State Property is necessary to improve the privatization process and accelerate it.

“The Property Agency and the Service Agency of the Ministry of Finance will be united, which will give us the opportunity to get property sold via the open window principle through only one agency,” she explained.

The Minister noted that another step in this direction is the introduction of an electronic system of privatization which is expected to accelerate the privatization process of state property.

“This is not a simple process but we have a specific plan. At this stage, specialists have been invited and will start writing the software, i.e. creating the electronic platform. It will take about six months and in the first half of 2020, we will have the platform up in test mode, after which we will start using it,” she explained.

While speaking about the plans for privatization of state property, Turnava noted some complex privatization objects remain in state ownership and require special preparation before sale.

“We intend to transfer the property rights of the Gori Wind Power Plant in a month or so. There is a loan agreement with the EBRD and we have to prepare this object [for transfer] following their obligations. Georgian Post is another example. We have other objects too, which require the proper preparation [prior to transfer],” the Minister said.

Turnava stressed that, in parallel, an electronic database is being created on which all state property will be listed.

“This will help us to offer investors the property they want,” she noted.

Turnava set a plan according to which state property worth GEL 70 million will be sold this year, which can be increased to GEL 100 million where possible.

The Minister noted it is hard to say exactly how much money the state budget will get after privatization of some property, adding the cost of the property on the privatization list depends on many factors.

The price of state property sold by the National Agency of State Property in five months 2019 is GEL 35,457,138, which is approximately twice less compared to the same period of last year - GEL 60,984,612. Also in 2018, the total amount of state property sold saw GEL 116,892,431 transferred to the state budget. This resulted in 151% fulfillment of the privatization plan by the National Agency of State Property last year.

Currently, the LEPL National Agency of State Property manages 97 state-owned enterprises. However, their number was much more in past years. In 2012, when it was established, the agency managed 490 enterprises, in 2013 it had 463 enterprises, 442 in 2014, 282 in 2015, 180 in 2016 and 127 enterprises in 2017.

By Thea Morrison

Image source: attorneycordero.com