INFORMATION ON THE REALIZATION OF THE PRIVATIZATION PLAN FOR THE PERIOD I – VIII 2004 AND THE PROJECTION OF REALIZATION TO THE END OF 2004
The Management Board of the Agency for Privatization in Federation of BiH on the session held on 22.06.2004 has concluded that professional services of the Agency have to prepare the Information on realization of the FPA plan in the period January – August 2004.
The Information has been prepared as follows :
1. The Enterprises in responsibility of FPA
1.1. Infrastructural enterprises
The most significant planned activities in which the Agency should take part were relating to the adoption of privatization strategy in the infrastructural sectors. In that period the Agency initiated at responsible Ministries the need to organize institutionaly infrastructural sectors as it was a condition for bringing the private capital and to make action plans of restructuring and privatization in each sector.
The Management Board of the Agency, on the 37th.Session held on 18.05.2004 has adopted the Information on realizattion of the Working Plan of FPA for the period January to April 2004 and has confirmed that the Agency has performed the activities provided activities in this Sector, but the responsible ministries have done very little in definition of particular regulations on inflowing of private capital and on the way how tomanage this sector. Also, it refers to determination of responsibility in development and managing of infrastructure.Some problems relating to preparing of privatization would have been already solved if the obstacles which slowed down the process, on which the Agency drew the attention, had been removed. It is obvious that we are far away of any privatization arrangement in this Sector. ( the eventual exception may be telecom companies ). The future engagement of the Agency may be established only if the responsible ministries and the Government FbiH activities are included in order to create indispensable conditions to inflow a private capital in this sector.
The Management Board realized that the planned activities of the Agency were very ambitious due to the expectations that the new approach of privatization will be in another way performed.
Taking into consideration the Report for the period 2004. it may be concluded that has happened nothing significant in this sectors, but nevertheless some actions are undertaken:
Electro energy Sector
The Government of Federation, has adopted, in June 2004, the Action restructuring plan and modernization of coal mines in Federation of BiH, by which these activities should be carried out by the end of 2005. Taking into consideration the fact that these activities in realization of Action plans in restructuring of electr energy sector are not performing in accordance with determined terms, because regulatory institutions in sectors ( for example FERK ) are not in function in full capacity, and transfer company on the level of BiH has not yet been established , so it is unreal to expect any privatization activities before 2006.
Telecommunication Sector
Decision was made to assign the third GSM licence to HT Mostar and the price of licence for all three operators in BiH is determined (each 140 million KM ).
According to verbal information of Federal Ministry of traffic and communication the consultant has been selected who will work on development strategy of telecommunication sector in Federation of BiH. After finalization of this strategy FPA could be included in defining of privatization strategy for companies and in creating Action Plan of privatization.
Water Sector
It may be noted that preparing of water sector is going slow, because provided funds from World Bank credit for institutional organization of this sector are not used for this purpose.
Namely, the contract for this sector, with consultants who will work on institutional organization ,is not yet signed. The contract with consultant is prepared but approval of the Government F BiH is expecting from 22. January 2004.
Forest Sector
In this sector the problems, which are still lasting, were arised due to the fact that privatization of forest industrial enterprises has been partly carried out ( POS ) when the rules of the Law on forests provided separation of forest`s cabins from those enterpises.
This comlicates privatization to be continued in industrial enetrprises which activity is
conversion wood, but also there exists a problem of providing raw materials by using the right for forests exploatation ( concessions ).
The problem is expressed in ZE-DO Canton, where they made it impossible to continue on privatization of enetrprises of the „List 56 „ ( Stupèanica Olovo ).
Gas Sector
No activities have been undertaken which could make basis for privatization in the gas sector. The exception is the intention of the World Bank to participate in organizingof this sector on the level of BiH. Terms of preparation, privatization and participation of private capital in this sector are still uncertain.
Other Infrastructural sectors
The identical appraisal could be extended on continuation of privatization in railway sector ( taking into consideration for partly privatization carried out by POS ) as well as in sectors of public utilities and electronic media, considering facts that activities on projected privatization of eneterprises on the local level and activities of local communities ( on the Federation level are not existing responsible ministries that are, in the name of the statemay perform activities as the capital owners.)
In media sector all efforts are directed to organization of public operators (on the state and entity level ) for which privatization has not been provided.
1.2 Enterprises with the property in more cantons – multicantonal enterprises
The Agency continued on operational planning and realization of the tasks relating to this enetrprises on the basis of Activity Plan for 2004.
For a certain number of enterprises some activities are undertaken to remove obstacles in privatization ( for TDS enterprise responsible Ministry has approved continuation of privatization ), but some enterprises are still blocked ( E- Energopetrol, Šipad Export Import, Hidrogradnja ).
The other problem is to pass a Law on change and ammendment of the Law on privatization of enetrprises ( „Official Gazette FBiH „ No. 28/04 dated 26.05.2004 )by which the issue ( competent for privatization ) are defining contrary to the Law on Agency for privatization ( „ Official Gazette FBiH „ no.18/96 )
By the Law on change and ammendmantsof the Law on privatization of enetrprises it was determined that privatization has to be conducted by federal and cantonal agencies for privatization, depending on it which Government has the right to manage the enetrprise, what is not in accordance with the earlier adopted Law on Agency for privatization, by which it was defined that privatization, of multicantonal infrastructural enterprises (assigned by the Governmet of BiH ) and enterprises which in their balance sheets state the same assets ( so called disputable ) are in responsibility of FPA, and all other are in responsibility of Cantonal agencies.
2. Privatization of enterprises in 2004
Taking into consideration the fact that in this year preparation of most complexed companies in Federation of BiH was expected, the Agency has performed activities to adjust organizational structure with forthcoming needs. Special significance was stressed on Sector for restructuring of enterprises and its future activities based on project approach in privatization of most important companies. It was expected that project teams will be organized in order to perform privatization in some companies as (Krivaja, KTK, Energoinvest ), but due some uncleared issues abot responsibilities in privatization,dealmakers are not engaged,undefined responibilities of the agencies in the split procedure ( restructuring ) etc.
Privatization Plan of the Agency has been mostly relied on „New Approach „which was not realized , and consequently some activities on good preparing companies for privatization have been missed.
According to the existing regulations the obligation of Steering boards and managements of companies to prepare privatization is still on force.
The problem of accrued debts and surplus of employees are still in focus of all who try to make influence in order to improve privatization process. IMF initiative focusing on
strategic companies debts,in its conception was not clear and real one, it is still only initiative, and the Government attempt to bring regulation,by which state enterprises will be „ released„of debt to the state funds (social ) was never brought and it is not certain it will ever be.
Solution for such situation with local companiesforeign investors solve in a way not to buy the existing legal subjects, but making business through joint ventures. If the problem of debts and surplus employees could not be soon resolved it may be expected that foreign capital will continue to prefer such form of entering to our country.
2.1. Enterprises without obstacles for privatization transactions
(Attachment no. 1 )
Energoinvest – Sarajevo
The eneterprise is on the list of eneterprises privatization of which is supported by PTAC. In this period of time the Commission for selecting dealmakers selected six candidates who are on a short list. As this procedure is complicated and takes a long time (TOR description, providing technical and financial dealmaker`s bid, evaluation of technical bids,negotiation and concluding the contract with the best bidder) so, it is not real to expect the work on preparation of tender to start before December 2004.
According to all above mentioned, by the end of this year preparation could start and publishing of tender, bid evaluation, selection of the best bidder, negotiations and eventual concluding of the agreement, may be realized in 2005.
Feroelektro - Sarajevo
Technical assistance in privatization was extended by EU.
In January 2004 the sharepurchase agreement was signed with secondly ranged bidder.
Competent Ministry made a Decision on revoking procedure in sale/purchase of state owned capital in this eneterprise. The purchaser brought adminstrative dispute on the Supreme court.
Interšped - Sarajevo
Sharepurcase agreement was signed 14.05.2004.
Technical assistance in privatization was extended by USAID. By verbal information for time being there is no any problem in realization of this agreement. Inspection in realization of this agreement follows.
KTK – Visoko
Preparation and conducting of privatizetion transaction is supported by World Bank credit. From the short list of dealmakers the best bidder was selected. The negotiation and signing of the contract with the selected bidder will be soon, but the problem may arise due to the Government refusal to accept the contract because of stipulation„success fee“ required by World Bank.
In the case that contract with dealmaker is signed by the end of October 2004, preparation of the tender and its publishing is planned to be by the end of this year. The evaluation of the bid and selection of the best bidder,negotiations and concluding the contract could be realized in next year.
Natron – Maglaj
Tender published in 2002 was unsuccessful, after that the Agency has sold an unsignificant part of assets in the procedure of small scale privatization. Potential investors, (Turkish company Kastamone Integra visited the Agency and the company AHW from Austria, the Agency had not any official contacts with this company ), expressed the interest in joint venture. In May 2004 the Cantonal Government of ZE – DO signed pre agreement with AHW in which is expreesed interest of AHW for joint venture with Natron Maglaj.
The Government of ZE – DO Canton is responsible for negotiations and all other activities with Austrian partner.It may be noted that this procedure is not transparent.
If all activities are going to be successful, the signing of joint venture agreement may be expected by the end of this year.
Sarajevo osiguranje – Sarajevo
Preparation for publishing of Direct negotiations is finalized and Public Invitation was announces on 07.05.2004. It was submitted 6 bids and three circles of negotiations with potential bidders have been performed. The negotiations are stopped by the end of July 2004, because one of the bidders lodged a complaint and required elimination of foreign bidders who are also themselves the subject of privatization. It was based on the Article 12 on the Law of change of the Law on privatization of eneterprises.In order to clarify this issue the Agency asked for authentical explanation of Article 12 of a/m Law from Parliament in Fedration.
Authentic interpretation will take few months so that signing of agreement may be expected only by the end of this or beginning 2005 year.
UNIS – Sarajevo
In the first half of this year menagement of this company has prepared development strategy which has to be adopted by Steering Board of the Company. Due to this fact the Agency did not undertake any significant activities in preparation to announce Tender Public invitation. No potential investors expressed their interest.
In September this year it was agreed to form Commission to prepare tender for large privatization, and tender should be announced by the beggining 2005.
2.2. Enterprises with disputable rights, things and capital
Entering into force of Decree on fell in abeyance Decress on the way of managing disputable assets when two or more enetrprises state in their balance sheets the same rights,the same things and the same liabilities and capital, and on the way and procedure od revision in this enetrprises.
Decisions on amendments of Decision on the way of disposal on the means realized by sale of enetrprises and banks on the BiH Federation territory.(„Official Gazette F BiH“
no. 8/04 ) and Regulations on principles, mode of operations and regulations of sale in performing privatization of eneterprises with disputable rights,things,liabilities and capital („Official Gazette FBiH „ no. 22/04 dated 24.04.2004 ) created pre conditions for privatization preparation of so called „disputable enetrprises „ As the above mentioned regulative was established by the end of the first quater this year, FPA ,at the middle of May has undertaken first paces in a procedure to coordinate internal relationship between parties interested in. That`s the reason for our survey of Sector for passive sub balance activities relating to the planned activities.
Borac Uskoplje – Gornji Vakuf
Enterprise Borac Uskoplje – Gornji Vakuf was established on the assets of bussines units of already privatized enterprise „Borac Konfekcija „ Travnik in the opening balance sheet of which the assets are recorded out in passive sub balance. The agreement of internal mutual relationship settlement between interested parties was signed. As this enetrprise is with 100 % state owned capital the FPA is of the opinion that there is no need for ownership structure revision. Privatization programme and Opening Balance Sheet was adopted,the Public invitation for sale has been published ,tender procedure was conducted and the tender was announced as unsuccessful
Reanounnced public invitation is in progress. The realization of privatization transaction is expected by the end of 2004.
Borac Katarina – Jajce
Enterprise is former business unit of already privatized enetrprise „Borac Konfekcija „ , Travnik in the opening balance sheet of which the assets are recorded out of actice sub balance. The agreement of internal mutual relationship settlement between interested parties was signed. As iz was neccessary to perform revision of ownership capital structure, FPA has announced public invitation for audit selection ( in March 2004 ), and the contract was signed with Auditing House „Auditor „ from Tuzla. According to the auditing opinion and determined capital structure „Borac Katarina „, Jajce is obliged, to submit Privatization programme and Opening balance sheet to the FPA by date 20.09.2004, after it process and adoption of privatization programme and Opening balance sheet and publising of Public invitation follows.
Public invitation of tender is expected by the end of October 2004.
PAN – paper industry – Èitluk
On the property of the enterprise „Natron „ Maglaj in 1994 the PAN paper industry Èitluk was formed.According to the Regulations on principles, the mode of operations and rules on sale in procedure of privatization process, the enterprises with disputable rights, things liabilities and capital ( „Official Gazette FBiH no. 22/04 dated 24.04.2004 ) FPA initiated and fixed the term of 60 days for mutual relationship settlement between „Natron „ d.d. Maglaj, and PAN – Paper Industry TAÈ d.d. Èitluk.
As the settlement was not effected between these two parties in a due time, FPA has brought the act in the form of the conclusion, by which revision of ownership capital structure has to be performed in legal, financial and accounting aspects for the period of time 1992 – 2003. The Auditor will be selected by FPA and that will bear the auditing The auditing findings will be basis for privatization programme and opening balance sheet.
Carton Print – Stolac
Carton Print Stolac has been estalishe on the property of TKA Cazin in1994.
According to the Regulations on principles, the mode of operations and rules on sale in performing privatization process of enterprises with disputable rights,things liabilities and capital ( „Official Gazette FBiH „ no. 22/04 dated 24.04.2004 ) FPA initiated and fixed the term of 60 days for mutual relationship settlement between TKA d.o.o. Cazin and Carton Print d.o.o. Stolac.
As the settlement between parties was not effected in due time, FPA has brought the act in the form of conclusion, by which revision of ownership capital structure has to be performed in legal, financial and accounting aspects for the period of time 1992 – 2003. The Auditor will be selected by FPA that will bear the auditing expenses.
The auditing findings will be basis for privatization programme and opening balance sheet.
TKA – Cazin
TKA Cazin is non active firm. FPA and the enterprise agreed to make Feasibility study on economical un /usefulness to continue on with production. ( Elaborate was made up by Institute LOK Sarajevo ) and in it was confirmed that there are no good economic reasons to continue on with production. Some parts of property in enetrprise are sold out in procedure of small privatization, and the interest to purchase some equipment is expressed. After reached setllement with enetrprise Carton – Print, Stolac and adoption of privatization programme and opening balance sheet with method of fragmentary sale, it was planned to announce the public invitation for sale of fragmentary units in November 2004.
2.3 Enterprises for which it is neccessary to settle disputes before privatization
Croatian Telecom – Mostar
Activities on the solving the problem of unlegal sale of the stakes in Eronet until now have not reached final solution. As for the solving of this problem court judgement is necessary, the Agency was not in a position to participate actively in the making solution.
The Government of Federation tried to agree with HT Zagreb on stake transmission of HT Zagreb in Eronet to HT Mostar, but realization was not performed.
As the determination of competent Ministry in strategy of development in telecommunication sector in Federation of BiH is known it seems that privatization transaction will wait for awhile.
Agrokomerc – Velika Kladuša
Agrokomerc has its position in the group of these enterprises, because in the period of making plan for 2004 in this enetrprise ownership structure was determined.
The results of revision of ownership structure of the enterprise have been annonced,what has created conditions to organize eneterprise in accordance with revision. The Agency held several meetings with the enetrprise Management, Prime Minister and Ministries in USK and competent ministries of Federal Ministry of Industry, Energy and Mines.It was ordered to make new opening balance sheet and privatization programme. ( The consultants for that are selected ).The sale of the property abroad is approved by FPA Management Board. The enterprise in this year needs financial consolidation through the sale of property in procedure of small privatization. The applications for sale through small privatization are submitted, but due to the shortage of good evidence on ownership the sale is not sure.
Definition of privatization strategy is the task of the team of consultants and by the end of the year the Privatization programma and opening balance sheet are to be finalized. The selection of dealmakers and privatization transaction are planned in 2005 from the World Bank credit.
Hidrogradnja – Sarajevo
Charges brought by small shareholders against Federation Government and FPA are in court procedure. As the Courts are in reorganization, the finalization of disputes is not determined.( date of next appearance in court is not determined ) and continuation of privatization could not be determined. As a possible option still is to try privatization without solving disputes but it will minimize possibility to find out interested in investors.
Business system „ Vitezit „ – Vitez
The amount of additional capitalization, in 12 joint firms established on the property of eneterprises and by investing of private investors, is determined. Process of coordination of registration with revision results is in progress. It is concluded that there is no interest of potential investors ( what they could be interested in is already in joint venture ) and management inertness in making opening balance sheet and privatization programme.
Public invitation for sale of state owned capital is not expected to be published in this year.
AFIP – Sarajevo and Mostar
There were several urges for providing proofs on ownership of real estates,as the real value of the enterprises could be determined. Managements did not succeed to do it. It seems that the property of former ZPP is very interesting for many of them so in the process for getting that property arised a great interest ,what made difficulties in realization of this task.
The Agency will, together with the AFIP management, make an apprisal of its privatization in 2005.
2.4. Enterprises for which it is necessary to make decision of the Government of FBiH
Energopetrol – Sarajevo
The Government decion to exclude liquid fuel terminals in Ploèe from the balance sheet of this company to new established enterprise „Terminali „ has not been realized and there is a proposal to extend this term to 31.12.2004. To perform separation there are some tecnical details to be clarified as the opening balance sheet has been adopted and partly performed privatization, but even the Agency several times urged the reply of FMERI, it was not still received. Some investors are interested in for this enetrprise, but as the FBiH Government decision has not still made, the preparation and announcement of privatization transaction is impossible to be performed.
As the partner has expressed the interest,the Government brought the conclusion by which the possibility, to acquire 51% of ownership in the enetrprise through joint venture, is opened.
Energoinvest - Transmission power lines – Sarajevo
Nothing has happened in agreement of TDS and Energoinvest d.d. relating to future statuse of TDS in Energoinvest company. TDS enetrprise prefers to be the part of Energoinvest d.d.,and Energoinvest aspires to be the owner of TDS shares, without any formal unifying with this enetrprise.
The Agency initiated and FMERI agreed with new approach in privatization of this enetrprise. Tender commision has been formed and supported by USAID is extended. It is expected that tender will be published in November 2004.
ŠIPAD Export Import – Sarajevo
The problem of Luka Šibenik is not still solved. The FPA Management Board, considering the chages of opening balance sheet as per which Luka Ploèe could be transfered to passive sub balance, required stand of the Government as there was no answer the beggining of privatization is not certain.
Željezara – Zenica
In reporting period there were some actions ( mostly unsuccessful ) for sale the part of property in small privatization. The Agency participated in activities to attract the third partner in BH Steel Company joint venture.The agreement with LNM was signed in August 2004.Željezara Zenica made Decision on transmitting the stake in BH Steel to Federation BiH and that transaction was registered in the Court. Significant devaluation of the company follows in the way of changing the opening balance sheet.
Taking all above into consideration it is estimated that future privatization activities in Željezara may be performed for the rest of the company only in a way of property sale, sale of company parts ( fragmentation or joint venture ).
BH Telecom – Sarajevo
In telecommunication sector and privatization of HT Mostar the facts are not changed.
Selected consultant has a taski to propose development strategy in this sector on the basis of which the action plan of privatization would be determined. On the basis of these documents, it could be expected theGovernment to make decision on the package of shares for sale, requirements for Investors, time of share offering and other There is an opinion that it should be determined by the Law.
TheAgency is on opinion that any activities will not be performed relating to the privatization transactions in this company.
3. The „List 56 „ companies
From this List in 2004, until now, it was signed 8 ( eight ) sharepurcase agreements
( Bira-Bihaæ, Metalno-Zenica, Holiday Inn and Feroelektro- Sarajevo, Velmos-Mostar, Interšped- Sarajevo, Granit Jablanica, Enker Tešanj ) what is great success comparing to only three agreements signed last year.
Currently the final negotiations are in progress for signing sharepurchase agreement for : Unico filter Tešanj. Milcos – Sarajevo ( in the meantime the sahrepurchase agreement was signed ) and BNT Tvornica mašina – Travnik ( sharepurcase agreement is also signed )
The Management Board of the Agency has made decision to take off the List company Alloy Wheels. Now this List consists 36 companies not still privatized. ( including KHK – Lukavac, where J.V. is performed ).
By the agreement on authority transfer from Cantonal agencies to the Federal Agency , seven companies were transfered to the Federal Agency.
From Cantonal Agency Sarajevo : Fabrika Duhana Sarajevo
( Tobacco Factory – Sarajevo )
From Cantonal Agency Tuzla : Aida – Tuzla, TTU- Tuzla, KHK- Lukavac,
Fabrika sode – Lukavac
From Cantonal Agency Travnik : BNT Tvornica mašina – Travnik
From Cantonal Agency Zenica : Krivaja – Zavidoviæi
The above agreement was also signed by representatives of Unsko – Sanski Canton, but only company which was on the List ( Bira Bihaæ ) was privatized in the meantime. Representatives of Hercegovaèko Neretvanski Canton did not signed the agreement and this problem should be solved by OHR.
All problems relating to the above companies are analysed in the Agency and it was opinion that priority has to be given to the privatization of Krivaja Zavidoviæi and BNT Tvornica mašina Travnik, as for them is expressed the interest of potential investors.
Privatization ofprocess for Krivaja did not start because the contract with dealmaker has not been signed ( procedure performed ) and direct negotiations for BNT Tvornica mašina- Travnik are carried out and the best bidder was selected.
In the meantime the joint company agreement between KHK – Lukavac and Global Ispat Group company from India, was signed. The Cantonal Government Tuzla is trying to solve the problem of Factory Soda – Lukavac in the same way.
Preparation for tender announcement of Fabrika Duhana Sarajevo are in final phase, but the stand of the Government relating to sale method (and sale itself ) is questionable.
According to the Agreement an income of the overtaken companies sale belongs to the cantonal agencies, FPA Management Board has determined the percentage of reimbursement to be paid to the Agency as compensation for expenses and performed sale services.
4. Process of coordination activities
In the period of 8 months USAID and GTZ as the government institutions have supported privatization process by technical assistance, and by engagement of experts who are together with local experts took part in preparation and privatization of some companies. USAID has significantly supported privatization of Holiday Inn and Interšped- Sarajevo. USAID also supported privatization activities in Unico filter – Tešanj, Milcos Sarajevo and other companies. The approach and results of GTZ limited their support only for four companies : Unis – Sarajevo, Hepok Mostar, Aida Tuzla, and hotel Europa Sarajevo.After finalization of the technical assistance of USAID and GTZ the Agency will meet the task how to solve the problem of assistance which was extended by USAID and GTZ.
Cooperation with Government Foundation ODRAZ and PTAC Project was very intensive. The Agency participated in commissions which have chosen dealmakers for Krivaja – Zavidoviæi and KTK Visoko, and short list of Energoinvest- Sarajevo, and participated in defining the TOR and contract of engaging of the consultant for institutional organization of water sector and conducting of the campaign in public introduction on privatization projects. The most cooperation was realized in tenders for :
Bira-Bihaæ, Metalno-Zenica, Granit Jablanica and Enker- Tešanj. For mentioned companies consultant was IMC – London and their engagement for technical assistance was funded by World Bank credit.
Cooperation with OHR aimed to remove obstacles in order to continue efficient continuation of privatization process ( Agreement on transfer of autorization and solving the problem of overdebt ), to speed up announcement of new tenders, providing equal participation of all BiH citizens in process of privatization and other issues.
Coordination business has been very important in organizational way and as very signnificant coordination is,according to decision which was adopted by Management Board of the Agency, organized in new sector.
To realize these activities, to the end of the year, it will be necessary to engage new dealmakers for Agrokomerc- Velika Kladuša, intensify cooperation with dealmakers for Krivaja , KTK and Energoinvest, to redisigned the World Bank credit, and make a new list of enetrprises for which is necessary to provide World Bank credit.
It will also be necessary to organize new teams for complex enterprises,specially after finalization of USAID support ( expected to be by the end of October ) and GTZ support.
In the situation like this one the support of local experts is expected.
Coordination with local institutions was performed in a way of cooperation with cantonal agencies. In that way information and data, for reports to the responsible ministries, have been gathered in order to solve the problems in enetrprises` management and other local institutions all in order to solve the problems which are obstacles in privatization process.
This sector for coordination with new cadres should be improved in its activity.
Passive sub balance sheet
In May 2004 new sector for passive sub balance in the FPA was formed.
As this very complex issue required resolving the FPA has engaged Dr. Trifkoviæ to extend technical and proffesional consultant services relevant in solvong the problems relating to the things and rights of passive sub balance and other issues important for privatization process.
On the meetings held in July 2004 it was concluded that bringing the Law on state property should be initiated in order to protect state property which was stated in passive sub balance of the enterprises which are the subject of privatization and which are located on the territories of the states in Ex Yugoslavia.
With aim to realize planned activities and in order to establish Central Register of sub balance subjects on the level of Federation in BiH, all competent agencies for privatization have received the letter by which it was ordered to record things and rights,to collect dokumentation and submit required data to the FPA. This is in progress.
By the Working group which is engaged for change and amandments of privatization regulations, it was initiated the change of the Law on opening balance sheetof enetrprises and banks, what wwould provide transfer and aquiring of ownership in Federation BiH / Cantons on things and rights stated in passive sub balance.
In near future the cooperation, with Direction for privatization RS, Coucil of Ministres, Ministry for finance and treasury- Sector for succession, Federal legal office and competent ministries of new formed states on the territory of ex Yugoslavia, has been planned.
In order to find out modality of return, entry book keeping, sale of things and achiving the rights on the territories of ex Yugoslavia states, the contacts with experts for above issues will continue on.
All planned activities are performing according to the plan.
Small scale privatization
The activities on preparation and subject sale are performing in continuation, depending on enetrpises` register.
In the reporting period the sale of four subjects is realized successfuly, the Seller was TKA – Cazin. Total agreed price was cca 916.000 KM.
Public Invitation for sale in small privatization of KTK ownership property was announced with initial price of 2,2 ml.KM.
6. New problems in realization of privatization process
In the process of privatization some problems are already mentined, but new problems which slow down privatization have arised and that also make negative influence on the planned effects. Those problems are :
1. Enactment of the Law on changes and amendments of the Law on privatization
of enetrprises.
The above Law by its five Articles arised confusion in privatization process.
First problem was about competence of the Agency for privatization. The Law on the Agency for privatization and the Law on privatization of enterprises definied that multicantonal enterprises, infrastructural enterprises assigned by the Government FBiH ) and enetrprises which in its opening balance sheets are recording the same assets ( so called disputable ) are in competence of FPA, and all other in competence of cantonal agencies.
By change of the Law“ procedure of privatization.....performs the Cantonal agency for privatization that is Federation of BiH, depending on which government is authorized to manage this eneterprise. That means that privatization for example of Natron Maglaj, KTK Visoko, Krivaja Zavidoviæi should be competence of the ZE-DO Canton Agency for privatization, Hidrogradnja Sarajevo, competent cantonal agency Sarajevo, HEPOK bcompetent Cantonal agency Mostar, and Federal Agency for privatization should be competent for privatization of all brown coal mines, airports and Aluminij Mostar.
As two Laws define the same issue in different way, the explanation was required by the Parliament of F BiH.
The second problem relates to participation rights,there is a question who is not permitted to participate in privatization process. By the Law on privatization of enterprises in the process of privatization can not participate local enterprises which are themselves the subject of privatization according to this Law. On the other side by the Law on change and amandments of the Law on privatization of enterprises can not participate „enetrprises which are themselves the subject of privatization“ and so foreign state enetrprises can not participate in privatization.Also, in this case,the explanation of the Parliament in Federation of BiH was required.
The third problem is that in quoted changes of the Law, is that the Government in Federation BiH and Cantonal governments are obliged to agree with method of privatization of enetrprises, what really may slow down privatization process.
The representatives of the Agency took part in the Commission of changing of rules relating to the rules of privatization and they will propose the change of some provisions of the Law which are not clarified and may arise confussion.
3. Blockade of signing the contract on engagement of dealmakers from the World
Bank Credit due to „success fee „ ( for realized sale )
In procedure of engaging of dealmakers from the World Bank Credit the Government of Federation agreed to sign the Contrac . In the case of selecting dealmaker for Krivaja – Zavidoviæi conditions for engagement provided this provision , but the Government required elimination of this provision, and only under that condition the agreement could be signed. The World Bank has very strong regulations according which the rules of engagement of the consultants could not be changed. In that way privatization process of this enterprise was blocked,and the same problem is expected to be with KTK – Visoko.
This could not be explained because these fees are unsignificant amount comparing to the contract value.
In order to overcomethis problem, consultations between Prime Minister of the Government F BiH and the World Bank representatives are carried out.
The Management Board of the Agency for Privatization on the 41st. session held on 30.09.2004 has adopted the Information on realization of the Privatization Plan for the period from January to August 2004. and appraisal of realization to the end of 2004 and brought the.
CONCLUSIONS
1. Management Board of FPA has been worried about the fact that besides continuous warning on the „list of problems „ which have an influence on quality and dynamics in privatization process, the problems complexion, significance and need to overcome the problems which are still existing. Besides the new problems are arising.
2. Management Board supports the FPA stands that it is necessary to have more coordination and definition of the FPA competence to some other institutions in solving the issue of :
- definition of policy and organization of infrastructure
- disputes on ownership structure of the capital and othercourt disputes,
- accumulated debts, and surplus of employees in enterprises to be bid in privatization , what potential investors are not ready toovertake
- more engagement of international institutions and better coordination with World Bank, USAID, GTZ, OHR and other international institutions to provide technical support in process of privatization in FBiH.
3. Taking into consideration the issue of sub balance, the Management Board of the FPA has a positive opinion in forming the Sector of passive sub balance, and in order to solve this issue considers that the coordination of institutions of BiH, Fedration of BiH and Cantons is indispensable. Relating to this Management Board insists on:
- submission and collection of data of all competent agencies and on urge making elaborat of central registre of things and rights of passive sub balance on the level of FBiH.
- After presentation of collected data of Central registre, the Management Board of the Agency will define the proposal for this issue and it will be submitted to the Government of FBiH.
4. Consequences of above and other factors, is only partial realization of privatization Plan for the period January to August 2004.
As the significance and complexion of the problems, the Agency is meeting with in carrying out the process of privatization, the Management Board urges on the meeting of the Government FBiH and Management Board of the Agency on which all problems would be presented and the Agency be instructed for further actions.