Privatisations -- September 1998

First stage of privatisation	The first stage of privatisation (1991-93) aimed to transfer into private hands a significant portion of small retail establishments. The country has achieved remarkable progress in implementing small-scale privatisation: 97.2% of small companies in retail and food production/primary processing, 86.7% of companies in catering, and 100% of service companies were privatised during these two years.
Mass privatisation	After the successful completion of small privatisation, it was time to privatise medium size and large enterprises in core sectors, such as industry, transport, and construction. During the implementation of this mass privatisation programme (1994-95), 6,269 companies changed their form of ownership. A record-breaking 69% of the total industrial assets were privatised (according to the State Property Fund).
Privatisation techniques	The Government employed various privatisation techniques, such as the direct sale of assets for cash, employee buy-outs, selling a portion of the stake through the voucher auctions, etc. During this second stage of privatisation, shares in privatising companies were distributed in the following fashion: 5% were given to the employees for free, 25% were allocated on the coupon auctions in exchange for special privatisation coupons, and the remaining 70% were reserved/allocated for cash auctions, sales to foreign investors and investment tenders.
Coupon privatisation	The coupon stage of mass privatisation started in 1994 when over 3.5 million Kyrgyz citizens received privatisation coupons. In order to facilitate the coupon privatisation, the Government decided to sell 25% of the state shareholdings in companies eligible for mass privatisation through the coupon auctions. When this stage came to an end in June 1997, the shares in 1,056 joint stock companies had been sold through coupon auctions for a total sum of Som 902.7 million.
Third stage of privatisation	The third stage of privatisation, currently underway, has as its major objective the transformation of the large monopolies. Moreover, the government has initiated bankruptcy procedures against insolvent state-owned companies, and this is followed by their privatisation.
Privatisation Programme	The Concept and Programme of Privatisation and Denationalisation were approved by the Parliament in April 1998. This programme underscores the key objective of Kyrgyzstan’s privatisation by the year 2000: to privatise monopoly companies in the major sectors of the national economy. It outlined a case-by-case approach to the privatisation of key companies in mining, power generation, and telecommunications.
Sectors for privatisation	Kyrgyz law prohibits the privatisation of airspace, water resources, forests, subsoil, unique cultural and historical objects, railways and motorways, scientific institutes, and selected objects in the health care system which affect public health. There is also a group of sectors where privatisation is restricted and is subject to special Governmental approval. These sectors include companies that are engaged in refining and processing precious and non-ferrous metals (including gold refining companies), TV and broadcasting services, some public utilities (water, heat, and gas supplies, power engineering networks, city lighting; etc).

© Kazkommerts Securities 1998. Please cite source when quoting.

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