Cyprus Mail
Cyprus

‘No decision’ on state lottery privatisation

The government lottery has contributed €600 million in the last 25 years

By Angelos Anastasiou

Claims that the state lottery’s is to be privatised are unfounded as, contrary to other semi-state organisations such as CyTA, no cabinet decision has been made to that effect, a source from the lottery department told the Cyprus Mail on Monday.

He was commenting on a story run in local daily Phileleftheros, which said that despite the state lottery’s astounding profitability (with revenues of €22.3 million versus operating expenses of €1.05 million, or income over 20 times its expenditure in 2013), the government has left it “in the mercy of time” because it has been slated for privatisation.

And this, the paper argued, will negatively impact the organisation’s selling price when privatisation plans are green-lit, but did not specify in what ways the government ignored the department.

“We have no complaints from the government,” the state lottery source said. “We are a government department, and do not consider ourselves slated for privatisation as no such cabinet decision has been made.”

The auditor general’s 2013 annual report read that “the finance ministry promotes the privatisation of the government lottery, based on a cabinet decision dated December 5, 2013.”

“It is noted that in the above-mentioned decision, the organisations whose privatisation was approved, as well as those for which further evaluation has been decided, were listed by name and have since been deemed ‘Entities Subject to Privatisation’, whereas the government lottery has not been designated as such,” the report added.

Nonetheless, in both the finance minister’s December 2013 proposal to the cabinet with regard to the privatisations procedure, which set the privatisations process in motion, as well as the government’s privatisations action plan, the state lottery is listed. Both items are published on the finance ministry’s website, under the heading “Privatisations”.

In fact, according to the action plan, selling the rights of the state lottery is scheduled to have been completed by the third quarter of 2015.

As part of a €10-billion emergency bailout loan from international lenders (EU and IMF), Cyprus has undertaken the obligation – among others – to raise €1.4 billion through the privatisation of state-controlled enterprises by 2018.

Major entities slated for privatisation were CyTA, the EAC, and the Ports Authority. Minor entities include the Cyprus Stock Exchange, the Cyprus Forest Industries, the Cyprus State Fairs Authority, and the Pancyprian Company of Bakers. “Other assets”, according to the government’s privatisations plan, include granting rights to a casino, as well as VLT machines (slot machines) and the state lottery.

The government’s first steps towards the privatisation of state entities were met with fierce opposition by employees and unions of the larger semi-state organisations, with numerous protests which sometimes tested the boundaries of civility – especially during the House vote of the relevant bills in March 2014.

In turn, the lottery department’s employees don’t seem too happy with the prospect of privatisation, citing the organisation’s profitability as an argument against it – meaning the state could be looking at more trouble brewing ahead.

“Over the course of the last 25 years, the government lottery has contributed over €600 million in the government’s coffers,” the source told the Cyprus Mail. “We don’t think privatisation would be prudent at this point in time, given the state of our economy. Our approach would be that the government should focus on fixing the economy first, and then considering privatisation.”

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