Mateusz Bialas, Analyst of the School of Public Management
In August 1990 in Poland existed 8,5 thousand state-owned enterprises (SOE). Today the state owns just 41, out of which operates only 19.
Privatisation and commercialisation of SOE were elements of Balcerowicz’s “shock therapy”. Thanks to the widespread privatisation the state was able secure income to the budget during a tuff transition period and to leave the burden of ineffective SOE behind.
During the first five years, until 1995, the ownership structure of 2,2 thousand SOE was changed. 1,4 thousand of the least effective state-owned enterprises were closed during this period, and 2 thousand SOE were closed until 2015. Restructuration of some branches of the post-soviet economy caused a serious resistance of employees. Nevertheless, the process had continued. The main phase of restructuration last until the end of 1990s, when more than 80% of SOE were sold, commercialised or closed.
Several “strategic” SOE remained under the state control, for instance Gaz-System, gas transmission operator. Commercialisation allowed development of the Warsaw Stock, as in the biggest SOE the state preserved some shares while some were sold out to attract capital. This applies to the PGNiG (Naftogaz-like company), Polish Energy Group, and other SOE from the energy sector.
Sometimes just small amount of shares was available on the stock first and when investors were eager to buy more, the state sold out the control package. By this way was privatised on the biggest and the oldest Polish banks – Pekao. A public offering allows to attract foreign and domestic private capital, which SOE often badly need.
As for mid-2015 the state preserved minority share in 346 enterprises, and majority share in 47 and these numbers constantly decrease as the state sells or liquidates existing companies. In more than half of these companies the state has less than 10% shares.
Until the end of the previous year the total income from privatisation reached $45,6 bln. Until 2004, when Poland joined the EU, the state privatised substantial majority more companies, however earned less in comparison to the period 2004-2015. The biggest investments came to Poland after the country joined the EU preserving stability and transparency according to EU acquis communautaire.
Furthermore, the state treasury receives additional income from dividends. In 2015 an income from dividends reached 12 bln USD and was 10-times higher than income from the privatisation itself.
The state continued selling big, inefficient, conglomerates. At the beginning of 2000s, Poland privatised steel mills, which were not able to compete on the free market and required substantial capitalisation. One of the new owners of Czestochowa Steel Mill became Taruta’s Industrial Soyuz of Donbas. In the second half of 2000s, Poland was obliged by the European Commission to stop state financial support for the state-owned shipyards and to privatise them.
The privatisation process in Poland has its supporters and its opponents. The second stress on undervaluation of companies, lack of transparency, and on possible corruption schemes.
In Ukraine, privatisation is one of the top priorities of the post-Maydan governments. Unfortunately, little has been done to move forward.
Furthermore, officials have to fight with the post-soviet mentality and convince citizens that the state does not have to be present in all field of economy and everyday life. State functions have to limit to general public issues, such as security, provision of services or creation of a proper business environment. Thus, reduction of the centralised influence of the state on everyday life, through privatisation or decentralisation, is the main goal of reforms in Ukraine.