Q : Recently the World Bank criticised the speed of the privatisation. Do you agree that the process is a little bit too slow, if not give your reasons.
A : There was a delay in the privatisation process in the range of years. The process started in 1992 with the passing of the privatisation law in the Parliament. By the beginning of 1997 less than 20% of the enterprises in the Bulgarian economy were privatised, the larger part of which was privatised through mass-privatisation- 12%, 6 or
7% were for the cash- privatisation. This is a not significant result for a period of 5 years. The main reason was the political instability in Bulgaria and the lack of a firm decisiveness in the direction of privatisation. The Government did not know for them selves what are they going to privatise, what exactly , in what terms. That is why the privatisation in Bulgaria had a random character . On the other hand the first wave of mass-privatisation did not give any good results since it lead to the centralisation of the management of enterprises. A lot of privatisation funds and a lot of individuals took ownership on companies and this lead to a negative climate in the companies them selves. From the time of the temporary Government that came into power February last year, and ever since coming into power of the new Government , things changed rapidly. There is a very clear decisiveness for the privatisation. Unfortunately a large part of the Bulgarian economy was not the same as in the beginning of the process. The enterprises suffer a much worse condition than the beginning of 1992. The Government adopted several very important regulations concerning the privatisation ; on the first place the program f the Government, which was adopted in May, 1997 ; then the strategy towards accelerated privatisation – September, 1997 ; and the privatisation program for 1998 that just passed in the Parliament and on which we are working now. The more significant moments are : firstly the Government acted upon its decision to privatise the mere privatisation process its self, which means that they turned into private intermediaries, private companies to facilitate the privatisation. Upon the execution of that intention in
1997, contracts with privatisation intermediaries were made, which are mainly reputable financial foreign institutions, audit and consultancy houses. With them we made contracts for the privatisation of 31 enterprises in 1997 that represent a little over 15% of the economy of the country. This process continued in the present year and we are still signing similar contracts for another 61 Bulgarian enterprises which represent more than
5% of the economy of the country. I am talking about cash-privatisation through intermediaries. A little more than 20% of the Bulgarian economy will be privatised in this way ; these are the largest and most difficult sellable enterprises in Bulgaria. We are using mostly the international prestige, the contact, the skilled services of those intermediaries for locating reputable foreign buyers for the enterprises. And some of the projects are in a very advanced stage of their development . Next Wednesday the first such deal is supposed to be introduced with the help of Supervise Inform . From the Fall of the present year until the middle of 1997 We expect the most intensive period in terms of privatisation and by the end of this period to have completed the process of privatisation of these 20% of the Bulgarian economy. The Agency its self continues to complete transactions. This manor will be used to privatise 3 or 4% of the economy. We have 8% left over all from the resources of the Agency. It is interesting to know that already 28% of the Bulgarian economy have been privatised. 2% have been taken out from the state owned assets by liquidation. About 30% of the state assets are difficult to sell ; they will be privatised but on a long term bases. I am talking about the larger assets of the National Electric Company, the Nuclear Power Plant, the large District Heating Power Stations, which are due to be privatised in the course of next year. The privatisation of NEC started this year with the privatisation of Hydro Power Stations. Among hard to sell assets and the non-sellable ones are the Bulgarian State Railways, the Ports and the Airports. These difficult points represent 30% of the economy.
Q : Could you mention one of the biggest privatisation deals that took place in Bulgaria so far?
A : I can not talk bout these deals because I have not been the executive director of the Agency at that time but definitely the largest one are the privatisation of the Soda Factories in Devnia where the buyer is Solvei, the privatisation of the Copper’s Melter in Pirdop, the buyer is also a Belgium investor – Minion Minya. The privatisation of the Cement Plant in Devnia is also done by Belgium investors who apparently have the biggest presence here in that process . These are the deals on a larger scale, and there are hundreds of others which is difficult for me to remember now. May be it will be interesting to you what we are selling right now. What about NEC, let me be absolutely clear : it will be privatised in several stages ; the initial stage will be the privatisation of the small hydro power stations. Right now we have included 22 Hydro stations in one of the pools to be privatised by intermediaries ; the bid is on the way right now and soon we will select the winning offer. Several heating power plants will be sold next year. All the Heat Power Station will be privatised in a period of 3 years because they are fundamental for the providing of Bulgaria with electricity. Only the Nuclear Power plant is not a subject to a privatisation . One of the others projects is the privatisation of BTC which is in quite an advanced stage right now. The preparatory phase will be over soon with the introduction in the Parliament of a information memorandum. The Ministry Council needs to approve on the primary directions of the privatisation so that the Agency and the Intermediary know what a course to be taken until the deal is completed ( this will be at the end of this year or the beginning of the next). We are looking for a strategic buyer which should be a telecommunication operator ; with serious reputation in the field and complying with several conditions. Right now we are in the process of the bid for selecting the winning offer for a intermediary of the best Bulgarian company BULGARTABAC.
What I mean is that almost all the large Bulgarian companies excluding the mentioned above are for sail and each of them is in a different stage of the privatisation process. And in the worst case all the large Bulgarian companies will be sold by the end of next year.
Q : Could you give us more details about the privatisation of BULGARTABAC or may be it is secret.
A : The process of the privatisation of this company according to my opinion is more complicated even from this one of BTC; it is the most complicated deal at all. It is clear that we want to find a strategic investor for BTC while for BULGATRABAC is very important that we preserve the Bulgarian character of this company. And it is a priority that it is not overtaken by the competition. This is a great challenge both in the face of the Bulgarian Government and the Privatisation Agency. It is a challenge also for the intermediary, it is not that a secret that we are in the process of choosing one not later than the beginning of next week. For the first time such renowned financial institutions and consultant companies participate in the bid for intermediaries, such as Meryl Lynch, Bankers' Trust, Kreit Ashtold.
Q : Talking a little bit about privatisation techniques, do you intend to use the Bulgarian stock exchange in the process of the privatisation?
A : In the 1998 program it is said that 4% of the
Bulgarian economy will be privatised through the
means of the stock exchange. On execution of this
task the Agency selected 17 share packages for being
listed on the stock exchange. We have drawn the
rules for the selection of investment intermediaries
( this is the exact terminology according to the
law for securities in the stock exchanges: licensed
companies which the only entitled to list shares
on the stock exchange). After the supervisory council
approves these rules we will execute the selection
process and assign the 17 packages to those intermediaries
eventually. If things take on a positive development
we will be ready to offer new share packages. It
is very interesting to know that a second wave of
mass privatisation is forth coming. We are ready
to offer enterprises to the Centre of Mass Privatisation.
I think that the other institutions are ready as
we are. The Agency for Mass Privatisation deals
with large enterprises with very considerable assets
but difficult to sell. While ministries are in charge
of a lot greater number of enterprises which as
a percentage of the Bulgarian economy as a whole
they rate low. |
Q: Since the beginning of the Privatisation in 1992 authorities have been strongly criticised by the lack of transparency of the process. Can you say that now the current process is transparent?
A :To be honest, I do not agree very much with these statements. Because as far as I am informed the Bulgarian privatisation procedures do not differ much from any generally accepted world-wide privatisation procedures. A greater part of the enterprises are sold through auction because the intention is to find a strategic investor. Comparatively a small number of enterprises are being sold through direct negotiations with the potential buyer. These are the larger companies where the deals are considered to be problematic. The problems are like debts, restitution, environmental problems that could only be solved by the Government. It is a common practice of the Privatisation Agency to execute these deals through auctions, especially for the minority packages left over from the first wave of the mass privatisation. May be the process does not seem too transparent looked at from the out side. But any one who is interested enough in privatisation knows that this is not the case. Besides I think that I can say firmly that the process is being carried out on a legitimate bases. Although anybody interested could always present his claims in court. We have a very insignificant number of such cases, even less in number are those in which certain actions of the Agency are being overruled by the court. I think that this is a good indicator. As to transparency you should have something else in mind, the greater part of the buyers very mach insist on maintaining confidentiality agreements and the Agency is obliged to comply with their requirements
Q : You are one of the leaders in the privatisation process in Bulgaria, so you must have a lot of contacts with the foreign business community; but what about the contacts with the US business community?
A : To be honest, this is one of disadvantages in the process of privatisation in Bulgaria - the lack of enough contacts. So we tried to make up through holding forums of the type: Invest in Bulgaria. We are trying to organise such forums in our country as well as different other countries. Unfortunately we have not organised such a forum in the USA for opportunities for investments in Bulgaria but only in Europe. On the other hand various investors and financial institutions interested in consultancy establish contacts with our Agency. We register a certain interest towards Bulgaria but when it come to particular deals and transactions we encounter difficulties which is dependent on the condition of the enterprise in question.
Q : You have been the president of the Privatisation Agency only for a few months. What have you changed during this period?
A : The first important change that I managed to implement is the creation of a new management structure, co-ordination and control of the privatisation process. One of the main tasks of this department is to facilitate and maintain contacts with foreign institutions. The effect of this change was felt immediately; deals and transactions are advancing quicker; this department is in direct contacts with stock exchange and the Centre for Mass Privatisation and with the ministries executing transactions them selves. Another important change is the stressing on the priorities of the privatisation process. On a special meeting we selected several types of deals. The first type is the so called: advanced transactions, they are just about to be concluded. One of my assistants is in charge of keeping track on those transactions and taking care of the avoidance of the obstacles. We also keep an eye on the list of enterprises for strategic privatisation, those are the enterprises whose funds from their sail go directly in the budget. Another thing that I plan to do is to organise a special report list with companies of isolation, since I am convinced that only a fast privatisation could save them. Something which we need to take care very soon is adopt new rules for conducting the negotiations, with the main purpose of putting a hold on the practice of conducting negotiations for months and years.
When I took my job in the Privatisation Agency there were already several such transactions with endless ongoing negotiations. The long delay brought no positive effect what so ever. It has to be clear where is the beginning and the end of the process. Something that I am in a process of deliberating bit haven't decided how to approach the problem yet is how to create a greater motivation of those people who are in charge of privatisation, the employees here in the Agency. Because in their hands are the interests of a lot of people. Now the working conditions are not very good. According to me this is very important for the process its self
Q : As a more personal issue , what would be your most satisfying personal achievement?
A : What I have set as a goal for my self and I think that this would complete my mission in the Agency is to finalise the Great Privatisation till the end of next year. I do not think that the privatisation as a whole will stop in the end of 1999, of course. There will be left a lot of assets to be sold. The most important thing is to sell the large Bulgarian enterprises whose condition is the most serious problem for Bulgaria right now. So the very fast transfer of ownership could better the situation of those enterprises and render their production competitiveness. This is the only way for them to survive. Hundreds of thousands of Bulgarian employees are involved in these companies. This is a multi-layer problem. All the intersections are located here in this Agency.
Q : Keeping in mind that you are reaching 2.5 million readers, what would be you final message to them?
A : Because you mean a different category readers' audience here, I will be happy if among those 2.5 million readers there are 250 investors who would come to Bulgaria and try to do business here. Of course, the perfect situation if they are greater in number but I am moderately optimistic. It would be good if American businessmen take more frequent business trips to Bulgaria and if you want even a tourist trip since Bulgaria is a tourist country. Something that I omitted to say is that the tourism sector is getting privatised very fast and the whole of it is going to be completely privatised by the end of this and the beginning if next year. There are a lot of beautiful locations here in Bulgaria that are worth seeing. I will be very happy if after the report comes out in Forbes magazine the interest of the American audience towards Bulgaria increases especially the business interest
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BULGARIA, 
