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The Warsaw Voice » Business » February 6, 2008
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Privatization Must Be Transparent
February 6, 2008   
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Treasury Minister Aleksander Grad talks to Andrzej Ratajczyk and Urszula Surmacz-Imienińska.

Privatization proceeded at snail's pace in the two years the Law and Justice (PiS) party was in power. Gross revenue from privatization in 2006 was a mere zl.622 million and zl.1.95 billion in 2007-much less than revenue from privatization in the previous years. It was also less than foreseen in the budget. Is the new government of the Civic Platform (PO) and the Polish People's Party (PSL) planning to change this state of affairs and speed up the privatization process?
The privatization process did slow down, almost stopped in fact, during the past two years. Restarting the process is a top priority for us, especially because privatization is no longer something that only managing and supervisory boards demand. Employees and trade unions want it too.

Privatization has attracted bad publicity in the past few years, with extensive media coverage of deeply rooted problems in sales of state-owned property. How is the new Treasury minister going to restore the public's trust in privatization?
This is a very serious task which I believe is best carried out by setting a good example, that is, handling privatization honestly and openly. You cannot judge privatization as a whole by individual, failed projects. So far, privatization has brought good results. Under the PiS government, the Treasury Ministry compiled an analysis to report on the privatization processes conducted in the past decade or so. The analysis indicates that the value of real investment by investors who took part in the privatization process was many times more than the investors were obliged to invest. The same holds true about the number of new jobs created in the process. The public needs to be shown that putting privatization on hold results in everyone paying higher taxes due to the increased costs of servicing public debt.

How is the Treasury Ministry going to solve the problems seen in some earlier privatization transactions?
Our overriding goal is to privatize companies transparently and honestly, so as to benefit the economy, companies and their employees. We want to achieve this by making privatization fully transparent. For example, we are planning to guarantee greater transparency by amending the law on transforming state-owned enterprises into commercial companies controlled by the state and privatization. This includes the declassification of some contracts. The air of mystery that surrounds privatization does it no good, instantly causing suspicions that if a contract is classified, there must be something improper about it.

Special files will be set up for every privatization process. They will be accessible to the public, providing information on when the process began, who was involved and when decisions were made. If privatization is to keep going at a steady pace, it has to be carried out in compliance with regulations that do not cause any doubts, otherwise the voices of the opponents of privatization will get louder, claiming that state property is being criminally sold off.

Human resources policy will undergo thorough changes in order to free the managing and supervisory boards of Treasury sole shareholder companies from politics.

Recruitment to supervisory boards has already been made transparent and based on qualifications and the managing boards of the companies are selected through competitions.

The 2008 budget foresees zl.2.3 billion in revenue from privatization, but Treasury Ministry officials have indicated in public that the actual revenues may be higher than that.
That's true. I can tell you that the anticipated zl.2.3 billion from privatization is the minimum we shall have this year, but I am convinced the revenue will be much higher than the target the finance minister has set. This is not to say we are carrying out privatization only to benefit the budget. From the point of view of privatization processes, it is better if we can plan privatization by focusing primarily on the interests of companies and the situation on the market and on the stock exchange. Personally I am against planning privatization revenue on an annual basis and so instead we want to come up with a four-year privatization program to stop thinking about privatization in one-year terms, as a budget target. This program will be soon presented to the government.

The published list of companies to be privatized in 2008-2009 contains over 300 enterprises, most of which were privatized a long time ago, but the Treasury still holds a minority stake in them, a stake that is to be sold. On the other hand, the list does not contain such strategic companies in the fuel and energy sector as PKN Orlen, Lotos, KGHM and PGNiG, in which the state is still a major stockholder. What kind of privatization will take place this year?
The priority for 2008 is to privatize companies in which the state holds shares, but which it does not need any more. These include businesses in agriculture and the furniture, tourist, leather, publishing and printing sectors, most of which are small companies that cannot generate high profits. In this area, privatization processes ought to be very quick. The longer we postpone this, the more we will have to pay and as a result sales will bring either low profits or no profits at all. Meanwhile, plans for large strategic companies will be unveiled in the long-term privatization program which is being prepared.

In which sectors of the economy do you think the state should retain control?
A detailed list of companies to remain under state control will be contained in the privatization plan I mentioned. I would like this list to be as short as possible. Quite naturally, it will include infrastructure-related companies of key importance to Poland's energy security that guarantee supplies to oil refineries. The list will also include Lasy Państwowe (State Forests) as well as companies and institutions which fulfill important public roles, such as public television and radio.
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