Government Privatization Guidelines for 2005-2008
The Government of Mongolia has approved “Guidelines for Privatization 2005-2008” on September 2005, which outlines two sets, the first of which is to be completed by the year’s end. This guideline follows the first set for 2001-2004.
The first set affects nine organizations including banks, a spa-resort, and mining, wool processing, construction companies to be privatized in 2005. The second set affects 11 other organizations to be privatized by 2008.
The first set of the privatization program included “Shargaljuut” spa-resort, “Mongol Erdene” mining company, “Mongol Camel Wool” wool processing company, “Khash-Ord” Construction Company, Savings bank, Capital bank, Central Asian Uranium, the State Circus, and the Number Three Clinical Hospital.
The 11 entities that will soon be privatized include large companies like the Mongolia Telecom company /55 percent state-owned/, Darkhan Makh Expo /21 percent state-owned/, “Mongolrostsvetmet” /51 percent state-owned/, state-owned “MIAT Company” and state-owned “Mongol Kino Unit”. These organizations will be reorganized and ready to privatize by the end of the year.
In one case of from the second privatization set, the Civil Aviation Authority will remain intact with the status of the authority unchanged, but the petroleum stations, airports, and the service department of MIAT will no longer fall under the jurisdiction of Civil Aviation Authority. These petroleum stations, airports, and the service department will be privatized.
The first set of the privatization began with the sale of Mongol Camel Wool for USD 970 million through auction. Next the state owned Shargaljuut spa resort – valued by government at 100.000.000 tugriks- will privatize through a competitive tender process. A progress report from the consulting commission handling the competitive tender process will be released on September 16 notifying applicants of their status.
Three organizations of the initial nine organizations – Shargaljuut spa resort, State Circus, and the Number Three Clinical Hospital – will privatize under contract conditions guaranteeing that certain organizational elements of the companies remain the same while decreasing their reliance on the state budget. The other six organizations, which included in privatization in this year, would privatize without any contract condition.
Savings bank will sell by the international open tender, but the State Property Committee hasn’t established the date of the tender yet.
The state will auction off their 100 percent owned Mongol Erdene mining company. The state will sell its 34.6 percent stake hold of shares in the Khash Ord Company on the Mongolian Stock exchange.
The Government will first offer its holdings in the Capital bank to other shareholders, and if the shareholders are not interested, the state will sell shares through an open auction.
Mongolia Telecom Company is one of largest companies. And is part of the second set, with major investment by Japan and South Korea. The Government of Mongolia is considering offering the state-owned portion fro sale to the Korea Telecom Company under a contract between shareholders.