Business pushes for privatization
Deputy Treasury Minister Paweł Szałamacha confirmed the Law and Justice (PiS) government's will to continue the privatization process during a press breakfast organized by the Warsaw Business Journal and the Polish Confederation of Private Employers (PKPP) Lewiatan. "We are convinced that a reasonable, just privatization [policy], which is beneficial to the economy should be continued," he said.
He added that the government sees the state as a market regulator rather than an investor or active participant in the market game. However, he emphasized the government's will to keep PiS' pre-election promises of maintaining state control over strategic sectors.
"Ownership will be kept in key areas such as energy and gas networks, rail infrastructure, port infrastructure and also in leading energy and fuel companies," Szałamacha stressed. He underlined that this policy will be maintained until strong, domestic capital, which could invest in those sectors and prevent their acquisition by foreign capital, is formed. For this reason consolidation in key sectors is to be undertaken.
Szałamacha also disclosed that the government is considering introducing privatization via auctions, aimed at getting the highest possible price. "However, it will only be with regard to the so-called remainders or the state's minority stakes in privatized companies," he explained.
Nothing doing
The Deputy Minister had to fight off accusations that the government hasn't done much with regards to privatization in its first hundred days in office. Szałamacha said that in the case of the privatization of the Dolna Odra power complex, negotiations on social packages have already begun. He also promised that: "The chemical industry, lumber industry and combined heat and power plants will be privatized within the next several months."
He also said that the final decisions with regards to the board of the press distribution chain Ruch will be made soon and the company's IPO will go ahead. Regarding the bourse debut of Polish Oil and Gas (PGNiG), which was heavily criticized by PiS, the Deputy Minister said that the process of separating the transmission infrastructure from the assets is currently under way. Szałamacha also disappointed many experts by stating that the government would not take up consideration of the privatization of the Warsaw Stock Exchange (WSE) - which some had expected to happen this year - until 2007.
Voice of experience
Former Treasury Minister and current vice-president of PricewaterhouseCoopers Polska, Jacek Socha, himself an advocate of privatization, claims that the fact that the state still owns 98 percent of the WSE prevents the bourse from playing a larger role in the region and becoming a financial hub for the CEE countries.
"The WSE has reached the optimum level of activity on a closed capital market. The privatization process should be continued," Socha said. The former Treasury Minister claims that privatization should be carried out through the stock exchange. "This would help develop the Polish capital market," he said, stressing that a strong, domestic capital market in Poland must be a priority for the state. Therefore, he thinks that the government should introduce incentives for companies to debut on the stock exchange, such as lowering the corporate tax for those enterprises that are going public.
Although Socha gave credit to the government for having a systematic approach to privatization, he criticized it for the high number of important, strategic companies that it doesn't want to privatize. "There should be a dozen or so of them, not 80," he underlined.
People power
Industry heavyweights claim that the government should speed up its privatization plans. The president of Stoen SA, Harry Schur, underlines that a privately-owned utilities sector could cure Poland's gravest problem, unemployment, especially with regards to young people with higher education. "This is one of the biggest advantages of the private sector - it's interest in these people," he underlined. He points out that in Hungary, where the energy sector was privatized in 1995, the unemployment level is around seven percent, compared to Poland's 17 percent. Schur claims that private companies are generally more efficient than their public competitors and are more customer friendly.
But the Prime Minister's economic adviser, Marek Zuber, notes that the general public's opinion about privatization is negative. While he admits that there were controversial, shady privatizations in the past, these incidents are blown out of proportion.
"There are many more companies that have benefited from privatization than those which didn't," Zuber said, adding that it's a challenge for the government to create a better image of the process. This process is one which even the government admits is necessary, as, citing Szałamacha's words, "private capital is better at participating in the free-market game and more experienced. It can acquire the best people and governments are just not good at it".
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