Latvian Shipping Company privatization postponed

  • 1999-08-12
  • By Diana Kudayarova
RIGA - Although the first revenues from the privatization of the Latvian Shipping Company could be derived by Dec. 15, it may be beneficial to postpone its privatization till 2000, Economics Minister Vladimirs Ma-ka-rovs said. He claimed that greater revenues could then be raised.

Privatization postponement will be welcome news to LASCO's administration and the For Fatherland and Freedom Parliament faction.

"All the necessary legislation and regulations for privatizing LASCO and Latvenergo are already in place," Ma-karovs said at a press conference on August 4. The economics minister complained that the process has so far been very slow, and blamed it on the privatization agency and lack of activity in the privatization advisory board.

Although the Cabinet of Ministers has passed the concept of shipping industry development, no schedule has been worked out for bringing it to life, Elmars Vitolins, the director of LASCO's legal department, pointed out.

There are two possible ways the privatization may take place. One option is selling 51 percent of LASCO shares at an auction to a strategic investor. Fifteen percent of the shares can then be offered on sale to the general public for privatization vouchers and the remaining shares will stay in government hands.

Another way is to sell shares to the public first, and then offer the controlling packet at the price determined by the market.

Latvian Privatization Agency director Janis Naglis is to hand in a report evaluating both options, as well as PricewaterhouseCoopers' assessment of LASCO shares.

Vouchers worth 780 million lats ($1.32 billion) could be used to privatize LASCO, Makarovs said. One voucher will buy one share. According to the Economics Ministry, residents currently hold around 50 million vouchers.

In some shipping company experts' opinion, the market price of one LASCO share could be around 0.3 lats.

The projected revenue from selling the controlling share packet is 35 million to 45 million lats. Around 80 percent of this money will go to the state budget, currently in a lamentable state. The rest will be kept in reserve and used to pay the corporations' debts to their workers.

The economics minister said LASCO's privatization must be completed promptly, which would require closer cooperation between the government and privatization advisory board instead of attempts "to divide responsibility."

Vladimirs Makarovs also reminded that "privatization is a tool, not a priority. It will not alone make Latvia a prosperous country. It's one of the small things we have to get over and done with before we can concentrate on more important long-term policies."