Uzbekistan plans to make money on the privatization of state facilities in 2022, announced the director of the State Assets Management Agency (SAMA) Akmalkhon Ortikov during the II International Economic Forum in Samarkand on November 3.
“Someone might think that privatization processes have slowed down a bit. No, privatization processes are expanding in terms of scope and coverage. As for achieving the result, it is a big responsibility to make the best and most correct decision. Behind this are thousands of jobs, the stable operation of large enterprises, their further modernization so that they continue to work as an enterprise that meets modern requirements,” he said.
The chief of SAMA noted that until 2021, the income from privatization was not considered as a source of the state budget.
“For the first time since 2021, privatization is considered as a source of budget revenues. If last year the amount of the sale was about $700 million, then $400 million of this amount went to the privatization fund. Over the past period [this year], privatization took place for 5 trillion soums ($447 million - ed.), Of this amount, 4 trillion soums went to our fund. By the end of the year, we have big plans - to bring the amount of privatization to $1 billion,” said Akmalkhon Ortikov.
According to him, the Agency for State Assets Management has a mandate for privatization, but it needs to be done effectively in terms of "transferring the enterprise to the owner for payment" and "finding a real investor."
“For example, we have a mandate to privatize the Dekhkanabad potash plant. But why don't we announce privatization? Because, after talking with our consultants, we came to the conclusion that selling the plant is not a problem, but the main issue is to make the plant attractive to the investor in terms of providing it with raw materials and its subsequent activities,” he explained.
Akmalkhon Ortikov said the government had allowed the agency to assess the mineral base of the Dekhkanabad potash plant in accordance with JORC (Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves) standards.
"For what? We want to sell the plant, placing nearby mineral reserves according to the internationally recognized JORC standard. Then the investor will come here with confidence and guarantee and will be able to invest,” he said.
Akmalkhon Ortikov also spoke about plans to privatize Ferganaazot. The International Finance Corporation (IFC), the agency's strategic partner in the privatization of this facility, wondered how the investor's investments would be guaranteed, given that the enterprise runs on natural gas.
“We must provide the investor with a guaranteed supply of gas for at least 10 years… About 5,500 people work at Ferganaazot today. Tomorrow after the sale of the plant, if there are interruptions in gas supply and other unforeseen circumstances, the entrepreneur will be forced to reconsider jobs,” he said.
The head of the SAMA believes that due to the uninterrupted supply of raw materials, it will be possible to save jobs, and the investor will confidently invest in the development of the enterprise.
He cited the example of the privatization of Coca-Cola Uzbekistan, where the state sold its 57.1% stake for $252.3 million to Turkish Coca-Cola İçecek.
According to him, after the arrival of a "real investor", Coca-Cola Uzbekistan began building a new plant in Samarkand.
“The land has already been chosen. This plant is a new construction for 78-80 million dollars. Another direction: in Urgench, Coca-Cola has another plant where the equipment is outdated. [The investor] says he will spend another $40 million on this. Thirdly, there is a factory in the center of Namangan. Now the investor proposes to move production outside the city and build a new plant. At least $40 million will also be spent on this... That is, the state was paid $252 million, and this is followed by another investment of $160 million. The company continues to work in Uzbekistan, pays taxes, employees work,” he said.
Akmalkhon Ortikov noted that the responsible authorities are faced with the task of preparing enterprises for sale to investors, including the introduction of modern management methods in privatized facilities, improving financial performance and more.
Presidential Decree of October 10 instructed to complete the privatization of "Ferganaazot" before the end of the year. By October 2023, it is planned to privatize another 9 enterprises as part of the Uzkimyosanoat concern.
