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French Version


Privatization officials warn gridlock threatens to derail telecoms sell-off

'We need the Parliament's cooperation'

Doubts hanging over the fate of Lebanon's push to privatize its mobile sector by the end of the year were fortified on Sunday as officials said the continuing failure of Parliament to meet could prevent passage of a privatization law.

Minister of Telecommunication Marwan Hamadeh said earlier that the government would fetch not less than $5-$6 billion for the mobile licenses, if everything goes according to plan.

Officials and economists fear that privatization may be delayed this year without major positive developments in the political sphere.

Any law to privatize the cellular networks would require the approval of the Parliament, Ziad Hayek, the president of the Higher Privatization Council, told The Daily Star.

"We want the Parliament and all concerned parties to have a say in the privatization program, and that's why we want to submit a law that will authorize the government to sell the entire mobile networks," Hayek said.

If Parliament fails to convene, privatization cannot go forward, Hayek said.

Parliament Speaker Nabih Berri, a key opposition figure, has so far refused to call for a parliamentary session, arguing that the government of Prime Minister Fouad Siniora was rendered illegitimate by the resignation in November of five Shiite ministers and one Greek Orthodox minister.

According to an economic reform proposal drafted in advance of the January 25 Paris III donor's conference, the government plans to sell all the assets of the cellular networks in the third quarter of 2007 at the latest.

The members of a regulatory authority to oversee privatization have already been named.

But President Emile Lahoud has rejected the creation of the new body, citing irregularities in the process to select the six members of the authority.

Hayek said that the delay in privatization this year may have an impact on the size of the public debt, which is estimated at $41 billion.

"I am not sure how much impact the delay in privatization will have on the public debt but I think it will have some sort of effect," Hayek said.

The government said that all proceeds from privatization will be used to reduce public debt.

"We need the parliament's cooperation or else the privatization will not go through," said Kamal Shehadeh, the head of the regulatory authority.

He and his team are facilitating the privatization procedure so that the sale of the networks will happen in transparent manner, he said.

"Our job is to prepare everything before the tender on the licenses takes place. We have to start defining what our policy will be before launching privatization in 2007," Shehadeh said.

Telecom privatization would enhance investments, reduce the cost of mobile calls, streamline the sector and above all bring money to the Treasury, he said.

Mobile operators MTC Touch and Alfa currently run Lebanon's mobile networks.

Revenue from the cellular networks goes to the Treasury. The operators get a monthly fee of $4 million each.

Shehadeh said the cellular networks take in $900 million, with the government netting nearly $600 million after expenses are paid.

Telecom experts argue that the cost of mobile phone calls is artificial because a large share of costs per minute of use is taken by government taxes.

In Lebanon mobile users pay $0.13 for each minute for a fixed cellular line and $0.50 for a pre-paid card.

Hayek said the privatization council plans to launch Liban Telecom, which will merge all three telecom entities in June of this year.

"One of the conditions set by the government is to list part of the mobile shares in Beirut Stock Exchange after the transactions are completed," Hayek said.

Nassib Gobriel, the head of the research department at Byblos Bank, said that without privatization, the public debt will continue to rise. "It is a golden opportunity to reduce the growth of the public debt this year and debt stock itself. There is a lot of liquidity in the market and many investors will take part in the privatization program once it starts," Gobriel said.

Beirut 26-02-2007
Rédaction
The Daily Star



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