Trading in the Dark

How much money can be acquired by selling the large systems? There are no official nor semi-official assessments on that. According to information, which has originated from foreign diplomatic-financial circles, Serbia was ready to sell 33 percent of its telecommunications, 20 percent of its oil industry and 10 percent of its electric-power industry. From it, around 6 billion dollars in profit was expected. Naturally, not all the business deals would be carried out simultaneously, so that funds would arrive by annulments, just enough to cover the regime's financial dubious dealings.

However, economists doubt such astronomical amounts. Therefore, Srboljub Antic from the economic department of the Belgrade Institute of Social Sciences in his conversation with VREME, says: "In the next three years this country, under the condition that all is functioning as it should, shall not attain more than one billion dollars from privatizing the large systems". Actually, Antic believes that the only money that will be obtained shall be from the privatization of the Post, Telephone and Telegraph company (PTT). This is where, he says, things have reached their furthest point in the privatization idea which has been worked out in detail. It is a known fact that the PTT shall be divided into a post office and a telecommunications department and an assessment is currently being made of the value of the entire system (CES Mecon and Price Waterhouse). For the other two systems, not even assessment operations have been commenced. The former minister of the electric-power industry in the government of Serbia, and now "only" the president of the board of directors of the electric-power industry of Serbia (EPS), Dragan Kostic, recently stated that "no steps have been taken with regards to plans of the privatization of EPS at all" and that previously all should "wait for systems regulations on privatization in general." Still, certain value assessments of the Serbian electric-power industry exist. According to the words of Srboljub Antic, the electric-power industry's capital has been assessed at 8 billion dollars. However, according to another version, that value stands at 17 billion dollars. In the latter case, an assessment has been made on the basis of calculations as to how much the entire assets of the electric-power industry would cost if they were purchased according to today's prices. Even 36 billion dollars are mentioned, measured by EPS's profit potential. However, Antic does not believe in these and similar assessments. He primarily stresses the general inclination of the assessor and company to mutually overestimate the firm's value. However, value assessment presents the lesser part of the task which needs to be carried out prior to its sale. "No one from the West shall buy such systems as they now stand", claims Antic. That means that their internal organization, technical-technological organization and economic parameters must be adapted to the European standards - i.e. reconstructed. Only the PTT, with its already mentioned division of the post-office and telecommunications services which has been adopted on principle, is close.

A huge amount of work awaits the electric-power industry concerning a "horizontal and vertical disintegration". "Vertical" means that production, transfer and distribution of power is to be separated. As Antic believes, all this is also required because foreigners shall solely be interested in certain parts of the electric-power industry - be it production or distribution.

Practically the same can be applied to the oil industry of Serbia (NIS), which is also made up of numerous and diverse companies - from production, to transport and sales of petroleum products and natural gas, to the chemical industry.

The assets of EPS and NIS have nothing to do with their primary activities. For example, hotels which were practically paid for by the citizens' electricity bills, i.e. petrol. It isn't all that probable that the person who would want to buy Naftagas would also wish to purchase its hotel in Becici on the Montenegrin coast. That is, maybe he would rather opt for the hotel, but what use would he have of the refinery then?

Still, there are more serious aspects to it, such as prices. Will foreigners want to - a purely hypothetical question - charge TV subscription rates along with the electricity bills?

Finally, although that still doesn't cover all aspects, in order to have someone invest his capital and become an owner of these three systems, they need to be organized as stock companies. It should also be precisely stated who is the owner of those stocks. They cannot be "state-owned" since then the state makes deals, gives authorization and takes on obligations.

Antic believes that at least 2-3 years are needed to accomplish it all.

Here, the economic infrastructure is the first thing that is up for sale, even though transition rule number one states that it is last on the list. What is even more important, i.e. more dangerous, is that all that is going on with regards to it and what follows is shrouded in a mysterious veil, while information is arriving via foreign media, on the basis of the statements our top officials are issuing to foreign businessmen.

Rumors on the sales of infrastructural systems have united their unions. Recently the EPS, NIS and PTT unions have issued a joint announcement on the "full accord on a united, joint stand" on all key issues which are of interest to the employees of these three systems. Among other things, the unions are demanding direct participation "in the processes of reorganization and privatization". The union demand undoubtedly presents yet another warning that the privatization of the large systems must be transparent, i.e. accomplished in accordance with the previously set and publicly known rules and conditions, which primarily means that privatization must be accomplished by public tender. Through this, least two things are achieved. Secret deals and abuse are prevented by it and, as the Eastern European countries experience has shown, better prices are attained.

Montenegrins Have Completed The Procedure

The estimation of the infrastuructural companies' value in Montenegro has been completed towards the end of last year. The value of Montenegro's electric-power industry has been estimated at around 250-300 million USD, and the railway at 40 million USD. Finally, the Bar harbor has been estimated at also 40 million USD. That is a lot less than was previously expected, since the value of the coastal part of the harbor has been excluded from the value of this public company which has, according to a decision of the Montenegrin state authorities, fallen under the ownership of the public company Morsko Dobro.