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What are the bottlenecks for privatisation - Minister of Finance Date: 17 January 2018



Bakhyt Sultanov, Minister of Finance of the Republic of Kazakhstan, named reasons preventing timely privatisation of state facilities.
For two years, 476 of the Complex Plan objects were put up for sale, of which 367 were sold for a total of KZT 164 billion. 255 facilities are in the process of liquidation and reorganization. In general, taking into account the reorganized and liquidated objects, the implementation of the Comprehensive Privatization Plan is 71%,” Bakhyt Sultanov told at the Government meeting.

Minister also noted that interest in the ongoing privatization has significantly increased. The number of active visitors to the trading floor increased by 12%. In addition, bidding competitiveness increased - the average number of participants in one bidding is about 4-5, whereas previously there were no more than 3 of them. The realistion rate by 15% exceeded the same indicator for the previous period. The price of the realized objects is 8% higher than their book value.

At the same time, he outlined a number of problem issues that require appropriate measures.
Firstly, some sellers violate the legal interval between bidding. For example, Mangistauagroservise LLP biddings were conducted in October-November 2017, and the third bidding did not take place until the end of the year, while holding three biddings with an interval of 20 days would give absolutely different results.

Secondly, individual governor offices split the state shares in the LLP when they are put up for sale, which negatively affects the results of the sale. Meanwhile, the split of shares and the participation of legal entities is permitted only in relation to Samruk-Kazyna assets for attracting strategic investors. And there are such facts in Kostanay, Zhambyl, Mangistau regons and Almaty," Mr Sultanov emphasized.
Thirdly, some sellers delay the pre-sale evaluation of objects, thereby violating the time limits for their sale, and the auctions are postponed to a later date. Thus, the evaluation work was conducted for four months at Kalkymaly Otkel LLP.

In the same way, the pre-sale preparation for seven municipal property objects and five socio-entrepreneurial corporations was delayed.
Fourthly, despite the Prime Minister's instruction to end the practice of appeals submission to the Government regarding the withdrawal of objects from privatisation, the number of such appeals only increased.

According to the Head of the Finance Ministry another reason for the hindering privatisation was untimely decision-making on the liquidation of unsold items based on the results of three auctions.
"In the past year, decisions on the liquidation were not taken on seven enterprises although the last bidding on these objects was conducted during the period from March to September of last year," Bakhyt Sultanov summed up.



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