The offices of
The old system had changed little from Soviet days, where the state owned almost everything of value. Run by “red directors” and managed using state orders, quotas systems and decrees, little real business was done. But all that has changed now. The job of the
During an economic forum organised by the Ministry of Finance in September, more than
As bne IntelliNews reported, the entire cotton sector – the backbone of the economy since Soviet times – has already been completely sold off, and the same privatisation of wheat production, also a strategically important sector, is anticipated to be complete by the end of 2022.
“The sale of
The Uzbek Coca-Cola plant was purchased by the Turkish Coca-Cola İçecek (CCI) Group, one of the biggest structures in
“CCI was one of seven bidders, but the first to apply when the auction process was launched in January 2021,” Mukhamatkulov and Okhunov said, “but all the bidders were all very keen. There were also bidders from the US,
Governments are usually cautious about selling off their biggest and best SOEs, concerned to get the best price possible for their industrial family jewels, but during a course of the interview by bne IntelliNews representatives of the state said over and over again: the state companies needs to be sold off and given to the private sector. “There is no other way,” has been a mantra repeated by one state official and head of a large industrial concern after another in a series of interviews conducted by bne IntelliNews in
In the first nine months of this year the government has already raised
“We are keen to create sustainable businesses and want to the process to be transparent,” say Mukhamatkulov and Okhunov. “It’s important to build trust during the sales process. Coca-Cola was sold to an international buyer but most of the smaller companies [are] being sold to local buyers, but the same rules apply to them.”
Mukhamatkulov and Okhunov say the government is agnostic to sales to local or international investors; there is no preference. “The best bid wins. That is all there is to it,” says Mukhamatkulov and Okhunov.
The entire cotton sector has already been sold off, mostly to domestic investors, and the wheat production sector is currently in the middle of being privatised, which should be finished by the end of 2022. Next up is the banking sector.
The government has already privatised
“That is another important part of the privatisation process: its not just about valuations; the investor should also bring some sort of added value to the deal. The bank sector reform must develop much faster, and deals like this help,” say Mukhamatkulov and Okhunov.
However, the privatisation programme is not a fire sale and each auction is tailored to the needs of each company. Another major asset up for sale is the
Real estate was an early entry into the sell-off. As bne IntelliNews reported, the first to go was the iconic
“The government is also going to sell its resorts, its government-owned tourist assets. It’s going to sell other real estate assets,” says Mukhamatkulov and Okhunov. “Mirziyoyev is betting on privatisation. He wants to reduce the government share in the economy by 75% by 2025. That’s the goal.”
To make all this work smoothly, and to avoid the danger of creating an oligarch class or of the process being overtaken by insiders, SAMA has tried to set high standards of transparency and fairness in the sell-off. Mukhamatkulov and Okhunov emphasised throughout the conversation that transparency and trust are the key elements of the auctions. International consultants provide a measure of objectivity to valuations and as part of the restructuring the accounts of the target companies are transformed into the IFRS standards. The international financial institutions (IFIs) have also been invited to take stakes in the first round as an added safeguard to transparency and a hands-off approach to the sales. For example, the EBRD and IFC have bought a 20% in the TBC Uzbekistan, after Georgia’s TBC bank bought a local bank in one of the first sales of an Uzbek bank to a foreign player.
The legislation supporting privatisation has been on the books for several years already but work to fine-tune it is ongoing. New laws are on the way in the New Year that the government hope will improve the situation further by introducing a new mechanism to bring the valuations closer into line with the bids being offered by potential buyers, for example.
All this is leading up to the sale of the largest 15 state-owned companies, including the biggest, Navoi Mining and Metallurgical Kombinat, one of the biggest gold miners in the world.
“The big 15 will probably sold via an IPO; maybe on the
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