Property Bureau chief in favour of privatization through IPOs
Director of State Property Bureau L. Ganbat announced that the list of companies to be privatized this year – and yet to be approved
Director of State Property Bureau L. Ganbat announced that the list of companies to be privatized this year – and yet to be approved by the Government - includes Baganuur LC, Thermal Station-3 by concession law, Erdenet’s thermal power station, Autoimpex and Erdenezam. Meanwhile, the suggestion of handing over the Mongolian Stock Exchange to a contracted team of experienced professionals has been forwarded to the Government.
Mongolian Telecom is also in the list, says Ganbat, but as Korei Telecom owns 40% the company, it has the right of first offer or refusal. Only if Korei does not wish to buy the 54.76% owned by the State will Mongolian Telecom be sold by international tender.
UB Railway is another issue and talks have to be held with the Russian side on changing and updating several provisions. The company runs under an agreement made in 1949 with Russia and the railway is exempted from paying land tax and such. It is time to change all these special privileges in the present circumstances, declared L. Ganbat..
More than 5,000 items of State property have so far been privatized through both open and closed tenders. Only a few big companies and organizations are left in State hands. Ganbat says his office has a list of 76 companies that are partially or fully owned by the State. Most of the fully owned companies are energy companies. There are about 20 road companies as well as Erdenes MGL and MonAtom in the mining sector.
On the methods of privatization, the director believes using the IPO method is better than auctioning or tendering. With IPOs, additional capital can be raised by selling new shares which can then be used on renovation and extension of the companies. “Privatization yields no benefit if the buyer does not make fresh investments in the company,” said Ganbat.