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Friday, 28 October 2016


Georgia infected with privatization virus

2010-10-12 16:14

8678.jpegSakartvelo government comes up with an overwhelming initiative to liquidate enterprises co-owned by the state. Giya Khuroshvili, secretary to parliament, stated that the country has a task to cut its stake leaving only strategic facilities under the government's control. The novelty suggested by Mikheil Saakashvili's administration has a vivid reference to Russia with PM Vladimir Putin's recent statement on the second wave of privatization.


Georgia has a simple solution - to amend the law "On Entrepreneurs" in order to simplify the liquidation procedure. In compliance with the draft, the enterprises with more than 50% of the state's capital will be able to allocate funds raised as a result of the sale of property during liquidation to their private account and use them to cover costs required in the process. Apparently, this intricate wording means compensation to the state for selling its share in an enterprise.

"It is necessary to transfer enterprises to private owners", - Khuroshvili stated remarking that as a result of the initiative liquidated enterprises can consolidate or be privatized. According to Khuroshvili, subordination to the state is a wrong practice. Of course it is! Looks like a bald-headed man talking about a hair comb. Letting companies go the Georgian authorities apparently try to attract investments for their development. Everybody knows now that Georgia simply does not have money to run most facilities. But will local investors - let alone foreign ones - be tempted with what Sakartvelo's government is going to sell?

Georgy Khukhashvili, an economic expert, does not expect particular interest in the purchase of the state's stake. According to him, Georgia has no practice of running joint-stock companies, so everyone is trying to snatch 100% of shares and sell them later earning 100% profit to put it in the pocket.

"There is not the slightest doubt that the company system management works badly. The fact that the system needs to be changed and that the worthless assets must be thrown aside by reorganization is evident. So the statement sounds logical. But it is hard to judge about the result and the way it will be applied. Another evident fact is that somebody will use privatization for his private purposes. I have strong doubts that minor or major stock holdings owned by the state together with other co-owners will be interesting to domestic or foreign investors. Despite all these statements I personally don't see any agitation on this market. So the topic is quite peculiar and not so important for discussion. What is, for instance, a 20% share in a company? This is entirely unattractive", - he told in a conversation with GeorgiaTimes correspondent.

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