Tuesday, July 5, 2022
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The CCP's role in the privatisation process

Luis Gámir. Chairman of the Advisory Council on Privatisation

The Advisory Council on Privatisation (CCP) was established in June 1996 and since then has until the end of 2014 analyzed nearly 90 privatisation transactions in which 75 companies have been privatised and been paid 50 thousand million Euros in current terms (34 thousand million in real terms). These figures might be be augmented soon with operations such as AENA or CESCE.

Just over 70% of revenues were obtained in 13 public offerings (IPOs) made, proceedings that have privatised larger companies. The largest such operations were concentrated in 1997 and 1998, reaching privatisation receipts figures above 2% of GDP. In recent years, there has been the sale of a number of companies, although of much reduced dimension, so its incidence in the main statistics is limited.

Since the eighties, the privatisation of companies has affected virtually all OECD countries to varying degrees. The beginning of this process in Spain has its origin in privatisation, especially from 1984, in the companies from the nationalization of Rumasa the previous year. From that time on, privatizations came to large industrial firms in difficulty, including the old INI, as SEAT or ENASA, and in the late eighties the first major IPOs of companies such as Repsol, Endesa and Telefonica were carried out, in the latter cases, keeping a percentage for the State sufficient to maintain control.

Since 1996, a new period for privatisation began in Spain, due to the approval of an explicit privatisation programme that introduced at least three major novelties. First, in order to privatise all public companies whose presence in the public sector had no special justification, which meant that most of the industrial or commercial enterprises in the public sector were doomed to be privatised. Secondly, the will to privatise 100% of the capital of such companies, that is, that thereafter the objective was the transfer of management to the private sector through the total transfer of public sector capital, unlike what previously occurred in the case of large public companies. Thirdly, the system of guarantees and controls of privatisation of these operations was reinforced with the aim of adapting to a series of principles among which were those of transparency, competition and advertising.

The CCP was created to make inspections

Indeed, within the actions to achieve this ultimate goal, the CCP was created to make inspections "ex ante" in privatisation and supplemented by other agencies such as the IGAE and the Court of Auditors to complete the "ex post" inspections involved once the privatisation operations were approved and implemented. Thus, before making the final decision, the Council of Ministers had the specific information on the proposed sale by the management of privatisation agent, as well as a report by an independent body of the former, the CCP, in which the proposal was analyzed.

Privatisation operations since then follow the following process. The "managing agents" of the privatisation have the initiative in the privatisation process, being responsible for the selection and recruitment of "advisers", as well as developing the design of privatisation and the specific sale proposal. In 1996, there were three managers agents: SEPI (Sociedad Estatal de Participaciones Industriales), the SEPPa (State Society of Heritage Units) and the IEA (Industrial State Agency). Subsequent reforms of State public sector enterprises have led to these being grouped together and at present, the only initial managing agent remaining is SEPI. Additionally, for certain specific operations, new managing agents have been appointed.

In this process, the managing agent could make intermediate CCP consultations on specific aspects of the operation. Finally, the managing agent would prepare a concrete sale proposal and send the file to the CCP to issue its report both on the process followed and on the proposed sale.

Thus, the Council of Ministers, after previously passing through the Government Commission for Economic Affairs, received the managing agent proposal, and reported to the CCP on the proposal so that they could make a final decision on each privatisation.



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