Govt Supervised Private Enterprises Fall Well Short of Targets

Govt Supervised Private Enterprises Fall Well Short of Targets Govt Supervised Private Enterprises Fall Well Short of Targets

The privatisation process has slowed down substantially, with no bids coming in during the last tender Privatised enterprises still under government supervision fell short of the planned 18 million dollar revenue in the first quarter of the 2013/14 fiscal year by more than half.

The Privatisation & Public Enterprises Supervising Agency (PPESA) has targeted 104 million dollars in revenue for the entire budget year, from 20 of the 69 enterprises that are still under its monitoring. The 20 are those believed to be involved in export during the year.

"Among these enterprises, 20 had planned to export products, but only 15 did so," said Asebe Kebede, deputy communication head at the PPESA.

The disappointing export performance is due to low budget allocation by the enterprises, machinery failures and low quality products, according to the official.

"The Agency proposed that the companies be supported by foreign experts, but they did not show any interest in this," he said.

In addition to transferred companies that it monitors, the PPESA also has 42 others still under its control. It plans to get export revenues of 59 million dollars from the nine enterprises that are currently engaged in exports.

The performance of those enterprises during the past quarter was more satisfactory, with the Agency securing over eight million dollars through these companies, out of the planned 10 million dollars.

The largest revenue recorded in the quarterly report, however, is the 1.34 billion Br earned by the Enterprise from the sale of three companies - Awash Winery, Limu Coffee Plantation and Negede Printing Enterprise.

"This amounts to 86.4pc of our plan," said Asebe. "Most of the revenue came from companies whose auctions happened in the last fiscal year, but whose payments were made this current budget year."

Though Awash's full ownership transfer was completed at the beginning of September, the transfer of the two others is still pending.

"The buyers have to check that everything is in place before they receive the full ownership of the companies and this reason is the main factor for the delay of full ownership transfer," stated Asebe.

While privatisation had proceeded at a brisk pace initially, it has slowed down in recent years. For instance, the PPESA's tender in August 2013 to sell five fully government-owned enterprises was kept open for close to two months, however, not even a single bid document was sold, let alone a sale of an enterprise.

Weyera Transport S.C, Transport Construction Design S.C, Addis Abeba Ghion Hotel, Agricultural Mechanisation Service Enterprise and Artistic Printing Enterprise were the companies that were floated in the said tender. Except Weyera Transport S.C, the remaining companies have been floated for tender previously also.

Several possible reasons have been mentioned over the years. According to the World Bank (WB) document, for instance, while only seven percent of state-owned enterprises consider land as a constraint, private enterprises put it as the main obstacle to their operation. This can lead to a decreased interest.

A research by the Agency itself states that buyers think that the minimum prices set for the tenders are very high, even though the Agency argues that it is setting prices based on market prices.

The Agency has currently floated Caustic Soda S.C. and Ethiopian Mineral Development S.C. The result will be known within less than two weeks, according to Asebe.

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