Privatizing State-Owned Enterprises

Abstract

This chapter describes the formulas for privatization that were used to privatize almost all state-owned assets in Georgia between 2004 and 2011, including its ports, airports, water utilities, and power grid. To improve service levels and ensure long-term economic feasibility for investors, the government followed a best-practice process, comprising five steps – from replacing top managers and laying down the regulatory framework for the future private companies to screening and selecting bidders. The chapter also explains why Georgia’s railway and its oil and gas corporation were exempt from full privatization. It concludes with a discussion of alternatives to outright privatization, such as issuing Eurobonds and establishing public-private partnership funds, which combine the benefits of competitive pressure on public enterprises with governmental control.