 THE STATE MODERNIZATION PROCESS |
Beginning in 1996 the Government of Guatemala embarked on an extensive state modernization process that included the divestiture, concession, sale, and privatization of inefficient State Owned Enterprises (SOE's) that for decades had hindered the development of several key sectors of the economy. The enactment of new Electricity and Telecommunications Laws in 1996 opened these sectors to private sector participation effectively ending the state monopoly. In addition to selling selected assets of the state-owned electricity producer, the National Institute of Electrification (INDE), and 80 per cent of the assets of the Guatemalan Electricity Company, the principal electricity distribution company in the country, the Government put up for sale 95 per cent of the shares of the Guatemalan Telecommunications Company (TELGUA).
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Additional concessions were granted to Canada's International Postal Services (IPS) to operate Guatemala's postal and telegraph system and to the Mexican firm MARHNOS, S. A. de C. V. to operate the toll highway between the Pacific Coast region cities of Escuintla and Palín. Furthermore, operation of Guatemala's railroad system was awarded to Pittsburgh-based Railroad Development Corporation (RDC) in a 50-year right of way concession. Plans to concession key services at Guatemala's major seaports continue to be evaluated by the Government, as well as the construction of a new international airport in the Pacific Coast region.
Proceeds from the privatization process are being used in part to support monetary policy and the rest to fund electricity, education, and potable water investments in rural areas as well as land acquisitions in the context of the Peace Accord implementation. |
