Privatization back on front burner

  • 2009-09-10
  • Staff and wire reports
TALLINN - Estonia should sell its state-owned companies, or at least some of its shareholdings, and get rid of incompetent supervisory board members, many of which are politicians, in an effort to make the companies more transparent, say analysts, reports news daily Aripaev. The state would also earn billions of kroons for the budget from those transactions.
Ec
onomy advisor to Prime Minister Andrus Ansip, Kalev Kukk, said that now is not the best time to sell, however. "The state can't and shouldn't be an entrepreneur, but a judge who guarantees fair play on the market. Being a player and a judge at the same time isn't the most honest activity. Exceptions are companies which are clearly monopolies, such as transmission networks. But I wouldn't list Tallinn Airport among those companies, nor Estonian Railways, which is in the so-called factory railway status," he explained.

Kukk said that the most important thing is that "The companies work and create jobs, not social jobs," adding that "Searching for the link between market value and the sales decision isn't perhaps the most appropriate thing to do, and therefore it's an artificial subject. Besides, a suitable market value may come only after a long wait."

He added that the state companies can't be treated equally. "There's a saying, 'Let's not kill the milk cow just to have one meal' that could be suitable for our situation," Kukk said. He didn't consider an imminent privatization of Eesti Energia to be advantageous, though, as it's too sensitive of a subject, and is a well-managed company.

Olari Taal, former member of the parliament and ex-banker, said that the state companies could be listed on the exchange. "The state is most certainly a bad owner. Not all, but most of the politicians sitting on supervisory boards are incompetent for that job," Taal said, reports news agency bbn.ee.
Listing state companies would be the only way to make the company transparent, in Taal's opinion. It brings with it publicity and control by both private investors and financial institutions.

"Unfortunately politicians don't want to do that. Why? We may only guess that companies with state holdings are also financing [political] parties. No matter which supervisory board you look at, it's a brake and politicians are brakes most of the time. I know what I'm talking about since I've been on the supervisory board of several companies," Taal said.
He said that most of the state-owned companies face difficulties when facing open, market competition. "Eesti Post, for instance. The company's current situation is due to important decisions that were not taken 10-12 years ago," Taal said.

Chairman of the Estonian Development Fund's supervisory board Raivo Vare said that the state should list the companies, or bring in investors in some other way. "If the only goal is money then it's a road to hell. The state should think in a long-term perspective. My first suggestion would be listing minority holdings," Vare said. That allows the state to control activities in the state companies and opens new possibilities to finding investors.

"Pension funds could invest to infrastructure companies, for instance, instead of investing in suspicious Kolle bonds. There is nothing securer than an infrastructure company," he said.
Another possibility would be roping in a strategic investor. "The state could sell Tallinn Airport's operating rights, along with [some of the] assets, to an investment consortium. Tallinn Airport would still be owned by the state," said Vare. "At least one investor must have already proved themselves in the business, then another one should be a financial investor. The important thing is keeping control over property and [enforcing] laws," Vare said.

He criticized incompetent politicians and officials as well: "I haven't seen a single politician, maybe just a few, who know the area," stated Vare.