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Alasania Warns Against Intended IPO of State Enterprises
Civil Georgia, Tbilisi / 15 Aug.'11 / 14:42

The government’s intention to float stake of several major state-owned enterprises on stock exchanges poses “serious risks” and any final decision should be preceded by broad public discussions, Irakli Alasania, leader of opposition Our Georgia-Free Democrats (OGFD) party, said.

Last week the government discussed legislative amendments to pave way for initial public offering of 15% or up to 25% of stakes of several major state-owned enterprises on London and Warsaw stock exchanges.

Stakes in the Georgian Railway; Georgian State Electric System, which is in charge of power transmission throughout the country; Georgian Oil and Gas Corporation (GOGC), the company which also operates the North-South Gas Pipeline, transporting gas from Russia to Armenia via Georgia; as well as electricity distributor in capital Tbilisi, Telasi, in which the state owns 24.53% are believed to be considered for IPO.

“Although placing company stakes on stock exchanges is an acceptable practice in itself, in our reality this decision contains serious risks,” Irakli Alasania said in a letter sent to PM Nika Gilauri on August 15.

In the letter Alasania says that because of current difficult situation on stock markets, shares of the Georgian state companies would be "significantly” undervalued now. Alasania questions how credibly valuation of these state-owned enterprises has been carried out.

"Doubts emerge that the authorities are interested in placing shares of these companies on stock exchanges under the reduced valuation so that to allow particular investors to covertly privatize these facilities and on later stage to seize controlling stakes of these facilities," Alasania said in the letter.

"There are multiple examples in recent years of how... the government sold strategic facilities for irrelevantly low prices."

“Because of strategic importance of these facilities only our neighboring countries can become potential buyers in order to strengthen their political and economic influence over our country," Alasania said.

He also writes in the letter that the society “deserves to be informed about the financial situation of strategic facilities” and “to be actively engaged in discussion process over expediency of their privatization.” He said that the society should also know how funds “received from privatization will be spent.”

"We categorically demand to stop selling of strategic facilities in detriment of the country's interests unless these conditions are met,” Alasania said.

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