Radar | Jun 05,2021
May 25 , 2019
By FASIKA TADESSE ( FORTUNE STAFF WRITER )
The government is amending the privatisation proclamation to specify which government body will oversee the asset valuation of public enterprises, bring them to public auctions, managing transactions and transfer the enterprises to buyers.
All these processes have been solely performed by the current Public Enterprises Holding & Administration Agency, formerly known as the Privatisation & Public Enterprises Supervising Agency.
The proclamation, which is under review by the Ministry of Finance and the Public Enterprises Holding & Administration Agency, with the technical support of the World Bank Group and the Tony Blair Foundation, aims at bringing transparency to the ongoing privatisation process of public enterprises, according to Brook Taye (PhD), senior adviser to the Minister of Finance.
"Since most of the state-owned enterprises have high values, the valuation and the transfer process needs to be transparent," Brook told Fortune.
Ethio telecom, Ethiopian Airlines, Ethiopian Shipping & Logistics Services Enterprise and Ethiopian Electric Power (EEP) are among the companies that the Executive Committee of the EPRDF decided to partially privatise last June. The Executive Committee has also ruled for the full privatisation of railways, sugar factories, industrial parks, hotels, energy and manufacturing plants.
The amendment process also attempts to balance a conflict of interest that may arise among government offices involved in the privatisation process.
While drafting the bill, the team involved in the process reviewed the experiences of counties that started privatisation decades ago, including some neighbouring nations, according to Brook.
Different countries applied diverse mechanisms while proceeding with the privatisation process. Some had formed commissions, agencies or departments under finance ministries, which oversaw the privatisation process.
A legal framework review co-authored by Mekdes Mezgebu and Mesfin Tafesse of the law office Mesfin Tafesse & Associates, encourages the initiative of the government to classify mandates.
"Clarity in relation to the articulation of the privatisation mandate as it applies to Ethiopian Airlines, Ethio-Telecom and EEP will ground the process on a strong legal basis," reads the review.
Before reaching the legislation stage, the bill will pass through different layers of reviews and approvals by technical committees, a steering committee and the macro committee chaired by Prime Minister Abiy Ahmed (PhD) to give it policy direction before it reaches the Council of Ministers and parliament.
The Prime Minister has also set up a 21-member advisory council to advise the government on the process of privatising state-owned enterprises.
Along with the privatisation proclamation, the team is amending another proclamation, the establishment proclamation of public enterprises, which is expected to smooth the way for any ongoing privatisation process.
The amendment of this proclamation has two major targets, according to Beyene G. Mesqel, director general of the Public Enterprises Holding & Administration Agency.
"Taking the private sector on board toward ownership of the existing state-owned entities and enabling them to be involved in the formation of new enterprises are the main targets," Beyene told Fortune.
In addressing the formation of new state-owned enterprises, the 35-page bill mandates the incorporation of a clear business case along with the social objective. The new amendment to the proclamation also calls for trigger mechanisms in the creation of new entities that can be used as a tool for supervising authority over the enterprise and reviewing its financial reports and examining its debt levels.
"This amendment will address the issues of state-owned enterprises that carry high debt loads and operate in an atmosphere of financial mismanagement," said Brook. "With the trigger mechanism, the management and the board will know the level of debt and timeliness of any needed debt restructuring before it reaches critical levels."
Selection of corporate governance board members, the composition of the board of directors and their qualifications are areas included in this bill.
The draft bill has been finalised, and it is on its way to being submitted to the macroeconomic committee, according to Eyob Tekalign (PhD), state minister for Finance.
“We expect to submit the bill to the Council of Ministers soon,” Eyob said last month in a meeting held at the Office of the Prime Minister while briefing members of the advisory council about the status of the privatisation process.
Among the enterprises slated for privatisation, Ethio telecom's process has progressed well. The bill for the formation of a telecom regulatory agency has reached parliament and is waiting for legislation. The process to hire a consultancy firm for Ethio telecom’s asset valuation, a process that is expected to take half a year, has also progressed well, according to the state minister.
To achieve the desired results of the privatisation, Mesfin and Mekdes recommend strong external support including financial, management and legal expertise for the entity in charge of the privatisation process.
PUBLISHED ON May 25,2019 [ VOL 20 , NO 995]
Radar | Jun 05,2021
Radar | Jun 14,2020
Fortune News | Aug 01,2020
Fortune News | Jan 12,2019
Radar | Oct 17,2020
Fortune News | Feb 08,2020
Fortune News | Jul 30,2022
Radar | Nov 14,2020
Fortune News | Aug 22,2020
Fortune News | Oct 12,2019
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country's most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or two...
Feb 4 , 2023
Rene Lefort is a French journalist with a keen interest in Ethiopia, spanning over ha...
Jan 28 , 2023
It is not common to see an appointment for a senior federal government office stir de...
Jan 21 , 2023
Eyob Tekalign, state minister for Finance, took to social media platforms last week t...
Jan 14 , 2023
The longing for normalcy and a semblance of individual and collective security in Eth...
Folks awed by the devastating national exam results have ignored the massive crisis that engulf the academic sector for nearly half a centur...
Inspired by the stories of business people who started small, I have been on the quest to decode the custom-made recipe of wealth for th...
Or see contact page