Privatization tips september 1998
ARGENTINA – BRAZIL – COLOMBIA – GUATEMALA – MEXICO – PERU
ARGENTINA
- The government of Carlos Menem announced at the end of September that it will receive some 3.5 billion dollars from the privatization of utility and production companies. Before the end of the year, the government plans to transfer the Banco Hipotecario, three nuclear power facilities, the PCS cellular telephone communications system and the Yacyretá hydroelectric station it owns jointly with Paraguay. In addition, it will give in concession the Mint, the ATC television channel and part of the Military Manufacturing company.
BRAZIL
- Brazil plans to open concessions to compete with the Telebras conglomerate, recently privatized at the end of November. The announcement was made by the Minister of Communications, Luis Carlos Mendoca de Barrios, who added that the rules for the sale will be published in October. Unlike the sale of Telebras, which was sold to the highest bidder, the parties interested in the telecommunications concessions must submit an integral development plan for the installation of new lines. Brazil expects to collect around US$5 billion from these concessions.
- Brazil is negotiating with Telefónica de España, (a Spanish company) to have the latter make an advance payment of 3 billion dollars for last May’s purchase of the fixed telephone companies of the State of Sao Paulo (Telesp) and the mobile telephone service of the State of Rio de Janeiro, as was confirmed by the Brazilian Minister of Communications Luiz Carlos Mendoza de Barros. Telefónica has already paid 40% of the total amount and the remaining 60% must be paid in two parts: 30% in July 1999 and the remaining 30% in July 2000.
COLOMBIA
- The new Colombian government expects to receive at least US$ 1.6 billion from privatizations next year, according to an official document published by the Ministry of Finance called "Fiscal Adjustment Plan of the Pastrana Administration: 1998-2003." The document contains details of the privatization plan that will focus on the power sector. The Minister of Finance, Juan Camilo Restrepo said that the companies that will be privatized include Interconexión Eléctrica S.A., the main power distributor in the country, and ISAGEN the third largest power generating plant in Colombia.
- A document sent by the Colombian Ministry of Finance to the Board of Directors of the Banco de la República (the Central Bank), indicates that for 1999 the government foresees the sale of ISAGEN, the power generating company (833 million dollars); different power distributors (50 million) and the Urrá hydroelectric plant (250 million). The personalized telecommunications service will also be adjudicated generating income of some 100 million dollars and the Bogotá Telecommunications Company (ETB), the largest telephone company in the country will also be sold. The price ETB is estimated at 2 billion dollars of which the government will receive approximately 545 million.
- The Colombian government has deemed it prudent to delay the sale of its share in El Cerrejón, the largest open pit coal mine in the world with annual production of 20 million tons. The Minister of Energy and Mines, Luis Carlos Valenzuela, stated that privatization plans for certain State-owned companies has been halted and investments reduced as a result of the international economic crisis reflected in the drop in oil and coal prices. The crisis that has affected international financial markets due to the Asian and Russian crises has had repercussions in Latin America with a tightening of conditions for access to financial resources and increasing difficulties in maintaining capital flows to the region.
GUATEMALA
- On 12 September, the consortium comprising Iberdrola Energía Sociedad Anónima from Spain, Electricidad de Portugal, S.A. from Portugal and TTS Ultramar from the United States, took control of the Empresa Eléctrica de Guatemala (EEG) for which it paid 520 million dollars for 80 percent of the shares. The remaining 20% of the shares is divided as follows: 4% among private shareholders and 16% will be sold on the local market. The EEG supplies 70% of the electricity of the country and the Instituto Nacional de Electrificación (INDE) covers the other 30%.
MEXICO
- The Mexican construction group Tribasa reported in a press release that it had made a downpayment of approximately US$100 million for a 50-year concession of the railway system in the southeastern part of the country. The payment corresponds to 30% of the total amount offered for Tribasa (US$322 million) with the remaining 70% due in December 1998).
- The Secretary of Energy has called for bid tenders for 49% of the shares of the Morelos petrochemical complex, in his interest to continue the Pemex-Petroquímica divestment process. Three companies have already expressed an interest in participating: Alfa, Celanese and the IDESA Group.
PERU
- The Peruvian government will sell its shares in Telefónica del Perú for approximately US$140 million. Thus, the State will totally divest itself of its shares in the telephone service that is controlled by Telefónica de España which, in 1994, paid US$ 2 billion for its majority share in the company. Under the terms of the privatization agreement, the Company had a monopoly of conventional telephone services, but in September the market will be opened to other competitors in the hope of stimulating growth in the sector.
- The regulating entity for Peruvian civil aviation, CORPAC, announced through its Director, Dante Mantellini, that in 1999 the country will begin privatizing the 5 principal airports in the country. The official explained that the process will be individual and not by group with the granting a 35-year concession for each airport. The airports involved are those in Lima, Cuzco, Arequipa, Iquitos and Trujillo.
- Some 20 companies have stated their interest in participating in the process to develop and operate the Peruvian State-owned copper company Toromocho. The Government-owned mining and metal companies located in the State of Centromin will auction off the concessions in November for a minimum of 20 billion dollars, with an option to buy in two years. The privatization of another State owned mine, Cerro de Pasco, is scheduled for December 14. The mining complex includes an underground mine, two open pit mines and two concentrators. Cerro de Pasco produced approximately 382 tons of zinc and 118 tons of lead in 1997. It is estimated that the mine will continue to produce for another 20 years. The value of the property could reach 120 billion dollars; however, the base price will not be published until November.
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