ECONOMY

Bulgarian courts stripped of power to derail privatizations

SOFIA – Bulgaria yesterday approved changes to its privatization law that will prevent the courts from suspending strategic sell-offs, a key part of Sofia’s reform drive. The move is aimed at stopping legal problems from getting in the way of landmark sales, as they recently did in the privatizations of dominant telephone operator BTC and tobacco monopoly Bulgartabak. This has been a major setback for the pro-Western government’s plans for fast-track privatization. Bulgaria is one of the poorest countries queuing up to join the European Union. The government plans to add a new chapter to the law to regulate the privatizations of 12 companies that are key to its national security, Interior Minister Georgi Petkanov told reporters after a government session. Under the planned changes, the privatization agency and the government will decide on the sale of these companies, allowing no room for appeals or protests in the Supreme Court, Petkanov said. The list of 12 companies includes BTC and Bulgartabak, whose sell-offs were initially planned to be completed last year. Also on the list are seven electricity distribution companies, whose sale will start in March, the Vazov group of arms plants and two companies trading in arms and ammunitions. Petkanov said the Privatization Agency and the government would handle the sales of these strategic companies, though Parliament would still need to give final approval. Speeding up the delayed sell-offs has been a key economic priority for Simeon Saxe-Coburg’s government of young Western-educated technocrats which took over in mid-2001. But analysts say privatization makes a poor reading for the government’s performance so far, though its reform policies have generally received praise. The proposed amendments are likely to be approved by Parliament, in which the ruling coalition led by the former king has a clear majority. But there could be a legal battle if opposition parties appeal them in the Constitutional Court. The planned changes will enable the government to complete the sale of Bulgartabak, which has been stuck in court since last September following appeals by three failed bidders against the sale procedure. Last month, the Supreme Court annulled the sell-off agency’s decision to name a Deutsche Bank-backed consortium as an exclusive buyer and recommended seeking a higher bid than the 110 million euros ($118.25 million) offered by the group. The agency, which is expected to call for improved bids in February, has yet to decide which candidates to invite, and analysts say the planned legal changes might clear the way for the Deutsche Bank consortium to go ahead with its bid. A legal deadlock over the sale of BTC, the country’s dominant telephone operator, was resolved earlier this month after both the Supreme Court and the chief prosecutor confirmed a company owned by London-based private equity firm Advent as a preferred buyer of a 65 percent stake for 200 million euros. The sale was brought to an abrupt halt in December after the prosecutor, acting on an opposition party appeal, suspended the deal while it reviewed the legality of the sale.