As one of the plans aimed to stop the depreciation of GEL the Government of Georgia has pledged to privatise state property which should facilitate the inflow of investments into the country. The issue of privatisation not existing previously as a means for encouraging investment has also been raised. The Minister of Economy and Sustainable Development of Georgia, Giorgi Kvirikashvili, stated that the government did privatise state property in the previous years and now has doubled its efforts in this direction.
FactChecktook interest in the accuracy of the Minister’s statement and looked into it.
According to the state budget implementation reports, the overall amount of revenues from the sales of state properties[1]equalled GEL 63.2 million in 2014. It was equal to GEL 27.8 million in 2013. If we look through the state budget implementation reports from 2010 to 2012 it becomes obvious that the revenues from the sales of state properties were much higher then. For example, it amounted to GEL 146 million in 2010 whilst in 2011 it equalled GEL 189 million.
It is difficult to assess the government’s determination to privatise state properties from the state budget implementation reports; however, if we look at the budget implementation as compared to the initial plans it becomes clear that there was a significant shortfall in 2013. The revenues from the privatisation of state properties were planned to amount to GEL 100 million in 2013 whilst the actual revenues amounted to just GEL 28 million (28% of the initial plan). The situation improved in 2014 and the implementation constituted 98% of the initial plan.
Graph 1:
Revenues from the Privatisation of State Property
Source: State Treasury
FactCheck
addressed the National Agency for State Property in order to figure out which state assets were privatised from 2010 to 2014 and the amount of their value. The Agency only provided information about state-owned enterprises.
According to the Agency, just five state assets were privatised in 2013 and 2014 and their overall value equalled GEL 2.25 million. It should also be pointed out that only one state asset was privatised in 2014 which comprised a 100% share of the Akhalkalaki Mobile-Mechanised Convoy with the overall revenue amounting to GEL 76,000.
It should be noted that a total of 20 state-owned assets were privatised in 2012 with the overall amount of the revenues equalling GEL 17 million. Only one object, Ratevani 2000 Ltd, was privatised after the October 2012 elections with revenues amounting to GEL 10,000.
Table 1:
Number of Objects Privatised from 2010 to 2014 and their Revenues
| 2010 | 2011 | 2012 | 2013 | 2014 | |
| Number of Objects | 7 | 32 | 20 | 4 | 1 |
| Value (GEL) | 1,999,561 | 213,641,835 | 16,981,516 | 2,171,000 | 76,000 |
As for 2010 and 2011, a total of seven state-owned objects were privatised in 2010 with the revenues amounting to GEL 2 million whilst 32 state properties were sold in 2011 with their overall amount of revenues equalling GEL 213.6 million. The majority of the objects were medical facilities which were sold to investors with the obligation of preserving their main purpose. In addition, apart from maintaining their purpose, investors were in some cases obligated by these agreements to make solid investments.
It is interesting to note that two of the objects privatised from 2010 to 2014 – the Torpedo football club (2010) and Tevzsasheni Ltd (2012) – were sold for a symbolic price of GEL 1. However, in the case of Torpedo the investor was obligated by the contract to make at least a GEL 1 million investment annually. Tevzsasheni Ltd was also transferred to its investor with the obligation of investing at least GEL 1 million.
It should be noted that the overall revenues from the privatisation of state-owned assets amounted to GEL 17 million in the first quarter of 2015 which constituted 170% of the quarterly plan.
Conclusion
According to the state budget implementation report for 2014, the overall amount of revenues from the privatisation of state-owned assets amounted to GEL 63.2 million in 2014 whilst it equalled GEL 27.8 million in 2013. The amount of revenues in 2013 constituted just 28% of the planned amount. A total of GEL 17 million (170% of the initial plan) was received from privatisation in the first quarter of 2015.
As for the privatisation of state-owned enterprises, according to the National Agency for State Property, a total of five objects were privatised in 2013 and 2014 with the revenues amounting to GEL 2.25 million. In addition, only one object was privatised in 2014.
Despite the fact that it is difficult to assess the government’s determination to privatise state properties, it is a simple fact that the revenues from privatisation were much higher in 2010 and 2011 than in the following years. In addition, the number of privatised state enterprises also decreased in 2013 and 2014.
FactCheck concludes that Giorgi Kvirikashvili’s statement is HALF TRUE.[1] Revenues from the sales of state properties include the revenues from the privatisation of major assets, material supplies and land. Revenues from the privatisation of state-owned properties are calculated under the article of non-financial asset reduction of the state budget; however, apart from material properties the non-financial assets also include the revenues from licenses and permits for using natural resources distributed by the state.
