Jordan Times
Thursday, October 7, 2004
Government intends to become
as competitive as the private sector in
running essential services
By Rami Abdelrahman
Dead Sea — The Executive Privatisation Commission (EPC) will not privatise key
state-controlled sectors like health and education, as the government intends to
become as competitive as the private sector in running these sectors.
According to EPC Executive Director Adel Qudah, the government intends to
upgrade the quality of services in general, but will not turn its back on key
and fundamental services.
In his capacity as EPC chairman, Prime Minister Faisal Fayez underlined the
importance of the privatisation process describing it as the machine that
switches the economy from a state-run economy to a market economy.
In a recorded video, Fayez said His Majesty King Abdullah is keen that
privatisation should enhance the living conditions of citizens across the
Kingdom.
“The whole objective of privatisation in Jordan is to reinvigorate declining
sectors by bringing specialists to run them, while attracting more investments
to the Kingdom and increasing its competitiveness,” explained Qudah, noting
privatisation brought JD1.73 billion in investments to the Kingdom.
“We do not only privatise profitable government-run firms, but mostly ailing
firms which incur losses that citizens compensate for,” Qudah said. Last year,
total losses of such firms reached JD1.3 billion, he added.
“Now after such companies are fully privatised, the treasury will not have to
compensate for these losses, or be in debt to anyone,” he remarked.
According to Qudah, losses by unprofitable state-owned firms have forced the
government to borrow JD875 million to aid these companies.
For example, he mentioned that the demand on electricity rose recently by 17 per
cent requiring an increase in production and, therefore, higher costs. Qudah
said once the private sector steps in, the increase in demand would be a
business opportunity.
The EPC chief said that when a losing company becomes profitable and is
registered at the Amman Stock Market as a public shareholding company, this
helps expand the capital market in the Kingdom.
The Social Security Corporation usually owns all government shares in privatised
companies.
However, Qudah promised that if the private sector fails to deliver the services
and could not enhance the privatised company, the government would step in to
put things back on track.
Legally, the government can interfere using its “Golden Share,” which is a share
that it owns in all privatised companies. The Golden shares give the government
the “Veto” right, according to Qudah. He said it has never been used before, but
would only be used for the national interest.
Since the EPC was established in 1996, the government has adopted a multitrack
privatisation approach in order to avoid the risks incurred when only one method
is applied.
The main approaches are the total or partial sale, concessions, lease contracts,
management contract, private infrastructure development and operation,
build-operate-transfer,
build-transfer-operate, build-own-operate and the build-operate-own-transfer
approach.