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Akel moves to scrap state’s privatisation unit

MAIN opposition Akel on Monday unveiled its intention to submit a bill abolishing the Privatisations Unit.

The news was announced at the House finance committee, where MPs were discussing whether to release extra funds requested by the government for the Privatisations Unit (PU) .

Lawmakers have been holding back on giving the nod to €395,000 covering the salaries of Privatisations Commissioner Constantinos Herodotou and his staff, as well as €300,000 for a ‘strategic study’ to be carried out by the PU into the Cyprus Stock Exchange – code for whether the CSE should be privatised or not, and how.

Akel spokesman Stefanos Stefanou explained why they were drafting legislation to scrap the PU:

“The unit no longer has a purpose. It is costly, its Commissioner is paid some €170,000 a year, so far it has conducted studies costing about €3.5 million, and we feel that this is a waste of public funds.”

Akel has been at odds with the government over the PU ever since it was established. The party is against the privatisations drive announced by the administration, after a March 2013 bailout deal with international creditors requiring Cyprus to denationalise certain state assets.

Countering, ruling Disy MP Onoufrios Koulla said the PU was established by law, adding that if some quarters were opposed to its existence they ought to have spoken out when the legislation was being voted on in parliament.

“We are not talking about selling off state assets, but rather the best possible usage of these assets,” he added.

Diko deputy Angelos Votsis argued also that the PU cannot be disbanded as it has pending contractual obligations.

The following entities/assets have been so far declared as subject to privatisation: Cyprus Telecommunications Authority; Cyprus Stock Exchange; Cyprus State Fairs Authority; Pancyprian Company of Bakers Ltd; Cyprus Petroleum Storage Company Ltd; National/Government Lottery; and certain real estate assets in Troodos.

There was friction during the parliamentary discussion between Privatisations Commissioner Herodotou and the CSE chairman Marios Pilavakis, debating whether a new study should be carried out into the CSE’s status.

Pilavakis said the CSE already conducted such a study, back in 2013, which did not cite privatisation as an option.

The study, titled ‘Strategic considerations for the CSE’, had been assigned to PwC, who at the time also acted as the CSE’s external auditors.

At the time, Pilavakis said, there was no guidance from the government on the CSE being subject to denationalisation, so this option was not explored.

And he lambasted Herodotou for keeping them in the dark when the PU was inviting tenders for carrying out a new study.

Herodotou denied this, saying meetings with the CSE board had in fact taken place.

On the state-owned buildings in the Troodos mountains that are not generating income, Herodotou said the intention was to lease and not sell them.

A study by the PU into how to best manage these assets has been put on ice because parliament is holding back the relevant fund, he added.

Regarding the privatisation of the state lottery, Herodotou cited PU consultants who found that revenues could be tripled were the operation farmed out.

This would be achieved via better distribution and marketing as well as by introducing an online scratch card.

Weighing in, state lottery director Stavros Michael said the entity’s revenues have declined to €11 million today from €27 million in 2008, due to competition.

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