Transcript Public Sector Enterprises and the State Ownership Function

Public Sector Enterprises and the State
Ownership Function in Panama
September 2011
Economic Performance
Gross Domestic Product
25,000
14.00%
2002-09 Share
of GDP (% total)
12.00%
20,000
10.00%
15,000
8.00%
10,000
6.00%
4.00%
5,000
2.00%
0
0.00%
2007
2008
GDP (millions USD)
Source: Instituto Nacional de Estadistica
2009
2010(P)
GDP growth (% change)
Source: INDESA
Panama achieved Investment Grade status from the three major rating agencies between
March and June of 2010. Since that time, Panama has continued on a path of growth and
development.
Economic Performance
Better economic performance contributes growth of trade activity and decreasing in the
unemployment rate, since it stimulates new jobs.
GDP per capita
Unemployment rate
7000
12.0%
6000
10.0%
8.70
5000
6.40
8.0%
6.60
6.50
2009
2010 (P)
5.60
4000
6.0%
3000
4.0%
2000
2.0%
1000
0
0.0%
2006
2007
GDP per capita
2008
2009
2010 (P)
GDP per capita growth (%)
Source: Instituto Nacional de Estadistica y Censo
2006
2007
2008
Economic Performance
FDI (% GDP)
14.9
Foreign direct investment (FDI) remains
one of Panama´s main driver for growth.
9.5
9.0
FDI inflows reached US$1.7 billion in
2009, or 7.2%
7.2
2006
2007
2008
2009
FDI (US million)
2,557
2,196
1,777
624
818
918
2004
2005
1,773
467
99
2001
2002
2003
2006
2007
2008
2009
Background
1991-1994
• The program to privatize State-owned was launched to increase enterprise
efficiency and production capacity.
• A framework law was adopted to regulate the process and a Privatization Office
(PROPRIVAT) under the Ministry of Economy and Finance.
• During this period, only small enterprises such COBANA, COBAPA, Citricos de
Chiriquí and Cemento Bayano.
1997-1999
• In June, the sale of 49% of the share of the National Telecommunications Institute
(INTEL) to UK company Cable & Wireless concluded.
• The Hydraulic Resources and Electrification Institute (IRHE) was divided into 4
generating, 3 distribution and one transmission company. State, through
COMVA, sold 49%-51% of stake from generating and distribution companies. The
GOP retained control of the transmission company (ETESA).
• Privatization also encompassed the port sector, the ports of Balboa and Cristobal
were transferred to Panama Ports Company under a concession, where Stake
keeps 10% of state.
2003
• Tocumen International Airport was converted into an autonomous company, but the
shares continued to belong to the GOP.
2006
• GOP established an electricity-generating company as a public enterprises.
Background
NOWADAYS
Established
in
September 2009.
New projects and actions are taken in order to improve the
governance in the PPP, as the Code of Conduct and supporting of
DICRE assists the Directors (GOP) with information and replace them,
when they are not available, to assist to BOD through a proxy.
Public Sector Enterprises
Government of Panama (GOP) is shareholder in several companies and sector
industries.
Government of Panama
OWNER
100% of stake
Sector:
Infrastructure, utilities, toll roads and others
TOTALLY OWNED
CO – OWNER
50% or less stake
Sector:
Utilities, pipeline, telecom and ports
PUBLIC PRIVATE PARTNERSHIP
Public Sector Enterprises
Responsibility for the determination of strategic goals depends on the level of
ownership.
TOTALLY
OWNED
PUBLIC PRIVATE
PARTNERSHIP
• Administration Staff and Board of Directors (BOD).
• BOD are appointed by Government.
• Both manage and determine the strategic goals.
• Both coordinate with government officer and Ministry of Economics and Finance (
MEF) all new sensitive actions programs.
• Operator or partner companies are in charge of the management.
• Strategic planning, Budgets and important decisions require approval of the BOD.
• Government is represented by two members in BOD and a representative from
DICRE, this last one has right to speak.
Management Team is responsible for achieving their goals, in both
kinds of companies.
Public Sector Enterprises
Coordinating strategic planning between enterprises and policy makers.
Management and BOD
• Regulated field has to inform to
governmental office.
• Manage the company.
TOTALLY
OWNED
• Set strategic plans according to best
practices of corporate governance.
Management
PUBLIC
PRIVATE
PARTNERSHIP
• Manage the company.
• Set strategic plans
according to best practices
of corporate governance.
• Present strategic plan to
BOD.
GoP regulation offices & MEF
• Keep open communication with MEF
authorities.
BOD
• Approve plan strategic
and other issues, that
establish incorporation
deed.
Directors
• 3 from Int’l Operator
• 2 from GOP
Public Sector Enterprises
Balance between commercial and non-commercial objectives.
TOTALLY
OWNED
• Set goals on a balance of commercial and non-commercial
objectives are carried with no major difficulties.
• Both objective can be decided by one part.
PUBLIC
PRIVATE
• It is harder but achievable to reach an agreement on
sensitive matters like balance of objective, but always both
parties have been able to arrive at consensus.
PARTERNSHIP
Public Sector Enterprises
Privatization strategy and implementation
COMVA
established
FDD
COMVA lead
privatization
process
MEF created
COMVA
COMVA sold
share of
utilities
companies
Privatization Process
(1997-1999)
MEF is
responsible
office of
privatizations
Currently, MEF doesn’t have
a program or strategy to
privatize other companies or
services, so far.
Public Sector Enterprises
Private-public dialogue
company.
DICRE (MEF) &
Directors from GOP
is through DICRE and government’s directors in each
Board of Directors
Management Team
Public Sector Enterprises
Representing the state interest, modalities and responsibility for governance PSE
Directors are
appointed by
GOP
BOD
DICRE
MEF created
in Sept. 2009
DICRE assists government directors with reports, analysis and evaluations so the positions adopted are well
informed and discussed.
Besides, DICRE is in charge of the coordination with each company, representing the State interest as
shareholder, and given that they are in different industries, there are different regulators and control offices,
which are in direct and constant communication with each PSE, including Ministries and Authorities.
Government as shareholders
The Government owns 100% of stakes of some companies and participates in their BOD.
Net Income 2010: $11.7M
100% GOP’s stake
Net Income 2010: $59.1M
100% GOP’s stake
Net Income 2010: $963.9M
100% GOP’s stake
Net Income 2010: $0.25M
100% GOP’s stake
During 2010, these companies have contributed to National Treasury in $845
millions approximate.
Government as shareholders in private sector
The Government evaluates the possibilities to consolidate its shareholding in public
companies private.
EBITDA 2010P: $272.3M
Value: $742M according to Goldman Sachs
49% GOP’s stakes
EBITDA 2010: $15.9M
50% GOP’s stake
EBITDA 2010: $99.7M
Value: $300M according to Citi
49.9% GOP’s stake
EBITDA 2009: $7.5M
49% GOP’s stake
EBITDA 2010: $58.8M
48.25% GOP’s stake
EBITDA 2009: $105.6M
10% GOP’s stake
EBITDA 2010: $108.4M
48% GOP’s stake
(ESEPSA, EDEMET, EDECHI)
EBITDA 2009P: $113.4M
50.5% GOP’s stake
•
According to EBITDA multiples (5 to 8x) the Government position value in these enterprises is between
US$ 1,634 millions and US$ 2,614 millions approximate.
•
MEF, through State’s Investment, Concessions and Risk Office (DICRE), is planning a strategy in order
to maximize the government stakes value.
•
GOP is evaluating an effective way to consolidate and maximize its stakes, through a Sovereign Wealth
Fund.
Thank you