World Bank

Prelude

Jordan’s privatization program commenced in 1996 with the aim of rebalancing the role of the public sector in the economy by reducing the Jordanian government’s stake in sectors dominated by state-controlled enterprises. The ambitious goals to be achieved for the wide-scale privatization program encompassed increasing the efficiency and hence production levels of privatized firms, creating a competitive market where demand and supply can freely interplay, attracting foreign direct investments, allowing the private sector to participate in infrastructure investments, deepening and developing the Jordanian financial market, and most importantly, limiting the role of the government to that of the regulator rather than that of the producer of goods and services.

Jordan adopted a multi-track approach to privatization:

• Facilitating capital sales (e.g., IPO, divestiture, etc.)

• Sales to strategic investors

• Concession agreements

• Management contracts

• Franchising & other methods including BOT and BOO

To date, the most commonly applied method has been the divestiture of government shares in public shareholding companies. This has been handled quite effectively and the government has already disposed of a significant stake of its holdings.

Completed Schemes

• Jordan Telecom

• Jordan Cement Factories Company

• Water Distribution in Amman

• Public Transportation

• Royal Jordanian (non-core businesses) – some are still open for private investments

• Aqaba Railway Corporation

• Jordan Investment Corporation portfolio

Undergoing Schemes

Electricity Sector

In January 1999, the National Electricity Power Company (NEPCO), and in preparation for privatization, was unbundled into three operating companies:

• Central Electric Generating Company (CEGCO) for electricity generation.

• Electric Distribution Company (EDCO) for electricity distribution.

• National Electric Power Company (NEPCO) for electricity transmission.

Privatization Status:

• The privatisation transaction comprises the sale of 60% of the Government’s total shares in CEGCO, 100% of its shares in EDCO, and a total of 55.4% of the government’s shares in the Irbid District Electricity Company (IDECO). NEPCO will remain fully owned by the Government of Jordan.

• On 15 December, 2001, Rothschild was appointed as the financial advisor to assist the Government of Jordan in implementing the transaction.

• A draft of the amended electricity law was prepared and forwarded to the Council of Ministers for consideration and endorsement on 12 June, 2002.

• Phase one of the draft report on the sector’s privatisation plan was submitted by the financial advisor - Rothschild in July 2002.

• A Steering Committee meeting was held on 5 September, 2002 to review the above-mentioned report. Further comments were made by the Steering Committee.

Jordan Phosphate Mines Company (JPMC) 

Summary: 

Jordan Phosphate Mines Company has been in the international market for the past 60 years and has established itself as a prime source in the international fertilizer industry; ranked as the sixth largest producer and the third largest exporter of phosphate in the world. On a national scale, JPMC enjoys a monopoly in mining phosphate in Jordan.

• In January 2002, the Canadian Company, Potash Corporation of Saskatchewan (PCS), expressed its interest in acquiring the Government of Jordan’s tradable shares in JPMC.

• In March 2002, PCS was provided with the requested financial figures and papers in order to revise its first proposed offer.

• Accordingly, a Special Committee reassessed the JPMC financial model in order to estimate the company’s net value.

• During the first week of June 2002, a specialist from the World Bank was assigned to revise the financial model and advise the Committee of strategies needed to be taken for the continuance of negotiations with PCS.

• PCS was contacted on 12 June, 2002, to discuss the offered proposal and determine the share value in response to the 40% sale of shares, in addition to identifying basic conditions arising from the sale.

• On 15 July, 2002, PCS suggested that a Jordanian technical expert visit the company for negotiations.

• A round of negotiations were held between both parties from 30 July, 2002 to 4 August, 2002, in where an agreement was reached on providing PCS further time to adequately evaluate the arising implications from the information and figures provided to them by JPMC on 12 June, 2002.

• On a parallel track, requests for consulting agencies to help in the restructuring and privatisation of the company were issued.

• Nineteen offers from international consulting firms were received. A specialised technical committee studied and evaluated the offers and accordingly, five out of the nineteen firms were chosen as prime candidates.

• The technical evaluation of the selected offers were completed on 4 April, 2002.

• On 16 October, 2002, the privatization committee ordered a final round of negotiations with PCS, with the presence of a World Bank expert to assist the Jordanian delegation.

• Based upon the resulting negotiations with PCS and the approval of the World Bank and the consulting firms, financial evaluation and the appointment of a financial advisor was extended until 20 October, 2002

Arab Potash Company (APC) 

The Arab Potash Company (APC) is a pan Arab company formed in 1956 and was granted a monopoly concession by the Government of Jordan in 1958 to manufacture potash, and exploit and market the mineral resources of the Dead Sea for 100 years. APC is a major player in the world market of potash, classified as the fifth largest potash producer and constituting a noticeable 5% global market share. As one of the world's largest potash producers, APC is a leading producer of Potassium Chloride (MOP) / Fertilizer grade (2 million tons per year) and Industrial grade Potash Plant (100,000 tons per year). Additionally, APC enjoys increasing value due to its heavy investments in down-stream, and high value-added industries. 

Privatization Status: 

• The GOJ aims to retain 26% of its total shares (52%) in APC.

• In January 2002, three international specialized companies expressed their interest in acquiring the Government of Jordan’s tradable shares in APC.

• On 30 May 2002, HSBC was appointed as a financial consultant.

• The steering committee together with HSBC prepared the second draft of the statistical report in addition to the sales and purchasing agreement.

• Six potential investors out of a total of twelve were selected as qualified strategic investors.

• On 16 September 2002, the steering committee convened a meeting with the Government Economic Team in order to inform them of the progress of the privatization process and determine the subsequent procedural steps for the continuance of the privatization process.

• The sales procedure is anticipated to be completed by the end of March 2003.

Postal Services

 Summary:

• The new postal services law No.5/2002 was issued in the National Gazette on 17 February 2002; separating the post from the Ministry of Telecommunications and transforming it into a public shareholding company totally owned by the government.

• On 16 April 2002, the Jordan Post Company was officially registered as a public shareholding company.

• The company’s Board of Directors was appointed on 21 May 2002, while the Director General was appointed soon after.

• The appointed Dutch consulting agency, Nepostal Postal Affairs, completed the primary consulting services for phase one of the re-structuring and privatization of the postal sector.

• The steering committee is currently in the process of studying the most efficient privatization measure and drafting a plan of action for phase two of the re-structuring and privatization of the postal sector.

Agricultural Marketing & Processing Company of Jordan

 Summary:

• In 1998, all activities of the Ministry of Supply (MoS) were transferred to the Ministry of Industry and Trade (MIT). Among the activities transferred were the grain silos, mills, and ordinary and refrigerated warehouses.

• In January 2001, the Government of Jordan registered a shareholding company (Jordan Silos And Supply General Company), a Company totally owned by the Government of Jordan, and transferred all assets and liabilities associated with the activities to the new company.

• A contract was signed on 13 June, 2002 between the Executive Privatization Commission and the Consortium: HC Securities and Investment (Egypt), the Jordan Investment Bank, Shair Law, and the General Silos and Storage Company (Egypt), to assist with the development of a privatization strategy for restructuring the activities and responsibilities.

• In September 2002, the Inception Report submitted by the Consortium was approved.

• The assignment of the Consortium is to be finalized in September 2003.

Civil Aviation Authority (CAA)

 Summary:

• The Cabinet endorsed the amendment law no. 38.2000 to pave the way for restructuring the Civil Aviation Authority (CAA) and the privatization of the three airports.

• Price Water House Coopers has been retained to help the Government of Jordan restructure the Transport Sector including the Civil Aviation.

• The Airports Hotel Company was established in 1996 with the main objective of managing Queen Alia International Airport as well as the establishment and operation of hotels in Jordan and abroad, in addition to the establishment of international travel offices and agencies.

• The Government of Jordan currently owns 100% of the company. Alia Hotel is a four star hotel, about 35 km away from the capital Amman and situated adjacent to the airport on a land measuring 42,000 m² that is totally owned by the Treasury.

• In 2000, the company's assets amounted to US$ 14 million

The company currently stands at the evaluation stage in order to determine the share value in preparation for sale.