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French Version

Siniora calls for privatization drive

Lebanon's premier says planned regulatory body will set stage for auction of state-owned electricity and telecom assets.

Prime Minister Fouad Siniora said that his government is serious about the privatization program which is seen as a crucial step to reduce Lebanon's $36 billion public debt. Siniora, who headed a meeting for the Higher Privatization committee on the weekend, told reporters that selling some state assets will help alleviate Lebanon's economic problems.

Former Prime Minister Rafik Hariri, who was assassinated on February 14, had tried to push the idea of privatization during his last four years in office.

However, political bickering and Syrian intervention in Lebanon's daily affairs dealt a severe blow to Hariri's efforts to privatize the telecom and electricity sectors.

But with the landslide victory of Hariri's son Saad in the spring parliamentary elections, the chances for the long-stalled privatization drive seem to have improved.

Siniora said that a regulatory body for both the telecom and electricity sectors will be formed "soon" to prepare for the liberalization of these sectors and then sell them to the highest bidder.

"There should be an understanding on the sectors that will be privatized," Siniora said, adding that the government will hire professional companies to study the state of the companies earmarked for privatization.

Finance Minister Jihad Azour said that privatization is one of the key elements in the government's economic reform program.

Justice Minister Charles Rizk, who is a member of the privatization committee, said privatization is not a new concept in Lebanon, noting that former Prime Minister Salim Hoss approved privatization measures in his Cabinet from 1988 until 2000.

"If we want to have a strong and active state then privatization is one of the means to achieve these goals," Rizk said.

He added that the government cannot continue to function without reforming key sectors such as telecommunications and electricity.

The former government of Hariri pledged to generate more than $5 billion from privatization of telecom and electricity. Some analysts, however, believed that this figure was too ambitious.

But it is very unlikely that the government will be able to push privatization of the telecom sector very soon because Lebanon's only two cellular networks have been managed by the Kuwait-based Mobile Telecom Company and Germany's Detecon for four years.

According to the contract with the two companies, the government has the right to revoke the contracts if they give the firms six months notice.

Economists also fear that the current state of the electricity supply in Lebanon will not encourage many companies to buy the generators and distribution centers, noting that Electricite du Liban loses more than $450 million a year.

Beirut 15-08-2005
Osama Habib
The Daily Star

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