After a slow start, Albania appears to be following the Georgian model of privatisation by putting virtually everything on the block. "Except public hospitals, public schools and hydropower stations on the Drin river, any other asset is in the process of privatization," Minister of Economy Dritan Prifti tells bne.
Like his Georgian counterpart Kakha Bendukidze when he launched that country’s massive privatisation effort in 2004, Prifti is only in his 40s, and he holds an MBA from the University of New Mexico and a Master in Public Administration (MPA) from Harvard – an education that has helped lead him to a simple philosophy: "Our experience of recent years proves that the smaller the state, the better the economy."
He cites the recent examples of where international companies have come in and their management have transformed the way formerly state-owned assets are run. For example, the Turkish company Kurum International took over the iron-steel making industry; Greece’s OTE bought the country’s first mobile operator AMC; Turkey’s Calik Group bought the fixed-line operator Albania Telecom; and Canada’s Bankers Petroleum joined the oil exploration sector.
Even so, he is a bit more cautious than his boss on how quickly the process can proceed. Prime Minister Sali Berisha has said he hopes the privatisation process will be finished by end of 2010; Prifti says the target is to sell off all state property within two years by the end of 2011, "although it requires a very voluminous" amount of work. "The state should take from this operation €100m," he adds.
Time to buy
Prifti says his ministry has so far drawn up a list of 300 assets to be sold, which will have to be first reviewed by the government. Of that, he reckons the asset that will attract most interest from foreign investors is the 100% stake to be sold in state-owned oil firm Albpetrol, as well as the sale of a 15% stake in the partially-privatized oil refinery ARMO. There is also the only state-owned insurance company INSIG (which controls about 16% of the insurance market), a nickel and cobalt plant currently mothballed, power plants that have closed, and some former military facilities.
Prifti says that while "everyone can value by himself the best time to buy something," he argues that nowhere but in Albania can a foreign investor get the size of oil refineries, mining companies and nickel-cobalt processing factories for such a cheap price.
Even so, if history is any guide, the privatisation process won’t be without its hiccups along the way. An attempt to privatise INSIG failed last year after the US company that was picked as the winner of the tender withdrew during the negotiation phase. And the privatization of Albpetrol has already hit the buffers; following the first tender for the selection of the privatisation consultant on February 11, KPMG Bulgaria has denounced the process, noting some irregularities. After reviewing the documentation, the Procurement Ombudsman launched an investigation on April 15, which prevents the government declaring a winner in the advisory tender, thus also stopping the privatisation process in its tracks.