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Draft Allowing IPO of State Enterprises Endorsed
Civil Georgia, Tbilisi / 13 Sep.'11 / 19:22

Parliament approved with its first reading a draft of legislative amendment allowing the government to float stake of state enterprises on international stock markets.

The proposal, slammed by many parliamentary and non-parliamentary opposition parties, was first voiced by PM Nika Gilauri in August, when he said that the planned legislative amendment would pave the way for initial public offering of 15-25% of stakes in several major state-owned enterprises.

Among these enterprises are the Georgian Railway and Georgian State Electric System, which is in charge of power transmission throughout the country, as well as Georgian Oil and Gas Corporation (GOGC), which operates the North-South Gas Pipeline, transporting gas from Russia to Armenia via Georgia.

The government also said in February that it was considering IPO of its minority stakes in Russian-controlled electricity distribution company in Tbilisi.

75% of Telasi, the electricity distributor in the capital city, is owned by the Netherlands-registered Silk Road Holdings B.V., which is wholly owned by Russia’s state-controlled power trader, Inter RAO; 24.53% of Telasi stakes is owned by the Georgian state.

The opposition has strongly criticized the proposal saying that there was no reason to trust the government’s “verbal assurances” that it was considering IPO of only minority stakes.

During the debates before the voting on September 13 lawmakers from the parliamentary minority were saying that although placing minority stakes on the international stock markets was not in itself a problem, additional guarantees were needed to avoid selling of controlling stakes in the state-owned strategic facilities. They were also expressing fears that the move would pave the way for Russia to grab Georgia strategic assets.

“That amounts to enmity to the country’s interests and undermining economic interests of our country and its geopolitical function,” MP Giorgi Targamadze, leader of Christian-Democratic Movement and of parliamentary minority group, said during the debates.

“Controlling stake of these assets will always and forever be under the state ownership,” said ruling party lawmaker Zurab Melikishvili, who chairs committee on finances and budget.

Last month Irakli Alasania, leader of Our Georgia-Free Democrats, said that the initiative posed “serious risks” and that any final decision on the matter should be preceded by broad public discussions.

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