Techniques of Privatization of State-Owned Enterprises J- Y / D 5 Public Disclosure Authorized Volume I Methods and Implementation FILECOPY Charles Vuylsteke

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Techniques of Privatization of State-Owned Enterprises J- Y / D 5 Public Disclosure Authorized Volume I Methods and Implementation FILECOPY Charles Vuylsteke WTP- 88 WORLDBANK TECHNICALPAPER NUMIBER 88 Techniques of Privatization of State-Owned Enterprises J- y / d 5 Public Disclosure Authorized Volume I Methods and Implementation FILECOPY Charles Vuylsteke mm'L-m Public Disclosure Authorized ! ~~* *rU *U Jl * ~~* *U- *r :_ * _ * U_ Public Disclosure Authorized J 1~~~ . z U L[ .,,, .L4L!A, ,. Public Disclosure Authorized RECENT WORLD BANK TECHNICAL PAPERS No. 40. Plusquellec and Wickham, Irrigation Design and Management: Experience in Thailand and Its General Applicability No. 41. Bord na M6na, Fuel Peat in Developing Countries No. 42. Campbell, Administrative and Operational Proceduresfor Programs for Sites and Services and Area Upgrading No. 43. Simmonds, Farming Systems Research: A Review No. 44. de Haan and Nissen, Animal Health Services in Sub-Saharan Africa: Alternative Approaches (also in French, 44F) No. 45. Sayers, Gillespie, and Queiroz, The International Road Roughness Experiment: Establishing Correlation and a Calibration Standard for Measurements No. 46. Sayers, Gillespie, and Paterson, Guidelines for Conducting and Calibrating Road Roughness Measurements No. 47. Segura, Guidelines for Evaluating the Management Information Systems of Industrial Enterprises No. 48. Tschannerl and Bryan, Handpumps Testing and Development: Proceedings of a Workshop in China No. 49. Gunnerson and Stuckey, Anerobic Digestion: Principles and Practices for Biogas Systems No. 50. Turtiainen and Von Pischke, Investment and Finance in Agricultural Service Cooperatives No. 5 1. Shuval and others, Wastewater Irrigation in Developing Countries: Health Effects and Technical Solutions No. 52. Armstrong-Wright, Urban Transit Systems: Guidelines for Examining Options (also in Spanish, 52S) No. 53. Bamberger and Hewitt, Monitoring and Evaluating Urban Development Programs: A Handbookfor Program Managers and Researchers (also in French, 53F) No. 54. Bamberger and Hewitt, A Manager's Guide to "Monitoring and Evaluating Urban Development Programs: A Handbookfor Program Managers and Researchers" (also in French, 53F; Spanish, 53S; and Chinese, 53C) No. 55. Technica, Ltd., Techniquesfor Assessing Industrial Hazards: A Manual No. 56. Silverman, Kettering, and Schmidt, Action-Planning Workshops for Development Management: Guidelines No. 57. Obeng and Wright, The Co-composting of Domestic Solid and Human Wastes No. 5 8. Levitsky and Prasad, Credit Guarantee Schemes for Small and Medium Enterprises No. 59. Sheldrick, World Nitrogen Survey No. 60. Okun and Ernst, Community Piped Water Supply Systems in Developing Countries: A Planning Manual No. 61. Gorse and Steeds, Desertification in the Sahelian and Sudanian Zones of West Africa No. 62. Goodland and Webb, The Management of Cultural Property in World Bank-Assisted Projects: Archaeological, Historical, Religious, and Natural Unique Sites No. 63. Mould, Financial Information for Management of a Development Finance Institution: Some Guidelines No. 64. Hillel, The Efficient Use of Water in Irrigation: Principles and Practicesfor Improving Irrigation in Arid and Semiarid Regions (List continues on the inside back cover) Techniques of Privatization of State-Owned Enterprises TECHNIQUES OF PRIVATIZATION OF STATE-OWNED ENTERPRISES Volume I Methods and Implementation Charles Vuylsteke This volume (World Bank Technical Paper No. 88) reviews how privatization of state-owned enterprises has been accomplished by drawing upon a broad sample of experiences. It describes and illustrates methods which have been tried out and some of the available options. Volume II Selected Country Case Studies Helen B. Nankani This second volume (World Bank Technical Paper No. 89) presents country case studies analyzing transactions carried out by seven countries with a significant record of experience, namely Canada, Chile, Italy, Malaysia, Spain, Sri Lanka, and Togo. They were written in support of the analysis of techniques of privatization presented in the first volume. Volume III Inventory of Country Experience and Reference Materials Rebecca Candoy-Sekse with the assistance of Anne Ruiz Palmer This third volume (World Bank Technical Paper No. 90) contains an inventory of planned, ongoing and completed privatization transactions in 83 countries indicating the methods used. It presents data collected for the purpose of examining the record of experience with varying techniques of privatization. A systematic listing of relevant reference material is also included. WORLD BANK TECHNICAL PAPER NUMBER 88 Techniquesof Privatization of State-Owned Enterprises Volume I Methods and Implementation Charles Vuylsteke The World Bank Washington, D.C. Copyright () 1988 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing July 1988 Second printing July 1989 Technical Papers are not formal publications of the World Bank, and are circulated to encourage discussion and comment and to communicate the results of the Bank's work quickly to the development community; citation and the use of these papers should take account of their provisional character. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Any maps that accompany the text have been prepared solely for the convenience of readers; the designations and presentation of material in them do not imply the expression of any opinion whatsoever on the part of the World Bank, its affiliates, or its Board or member countries concerning the legal status of any country, territory, city, or area or of the authorities thereof or concerning the delimitation of its boundaries or its national affiliation. Because of the informality and to present the results of research with the least possible delay, the typescript has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to Director, Publications Department at the address shown in the copyright notice above. The World Bank encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Permission to photocopy portions for classroom use is not required, though notification of such use having been made will be appreciated. The most recent World Bank publications are described in the catalog New Publications, a new edition of which is issued in the spring and fall of each year. The complete backlist of publications is shown in the annual Index of Publications, which contains an alphabetical title list and indexes of subjects, authors, and countries and regions; it is of value principally to libraries and institutional purchasers. The latest edition of each of these is available free of charge from the Publications Sales Unit, Department F, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from Publications, The World Bank, 66, avenue d'1ena, 75116 Paris, France. Charles Vuylsteke is senior counsel in the Legal Department of the World Bank. Library of Congress Cataloging-in-Publication Data Techniques of privatizationof state-ownedenterprises. (World Bank technical paper ; no. 88-90) Includes bibliographies. Contents: v. 1. Methods and implementation/ Charles Vuylsteke -- v. 2. Selected country case studies / Helen Nankani -- v. 3. Inventory of country experience and reference materials / Rebecca Candoy-Sekse,with the assistance of Anne Ruiz Palmer. 1. Privatization. 2. Privatization--Casestudies. I. Vuylsteke, Charles, 1947- . II. Nankani, Helen. III. Candoy-Sekse,Rebecca, 1956- IV. Ruiz Palmer, Anne, 1954- . V. Series: World Bank technical paper ; no. 88-90. HD3850.T436 1988 338.9 88-20699 ISBN 0-8213-1111-5 (v. 1) ISBN 0-8213-1112-3(v. 2) ISBN 0-8213-1113-1(v. 3) A B S T R A C T This report was initiated largely in response to interest by member governments and staff of the World Bank for information on the practical aspects of privatization of state-owned enterprises. It reviews what is known about the recent experience of selected developing countries and developed countries. It describes and illustrates methods that have been tried and options that are available to governments. The report deals strictly with techniques (that is, how to privatize and not whether to privatize). The issues analyzed are the most recurrent in the process of implementing privatization. The report, which consists of three volumes, is largely the result of a cooperative effort by various contributors within and outside the World Bank. Volume I, Methods and Implementation, relies extensively on Volume II, Selected Country Case Studies, and Volume III, Inventory of Country Experience and Reference Materials. I I A A - vii - TABLE OF CONTENTS Page No. PREFACE .......................................... xi INTRODUCTION AND SUMMARY ........................................... 1 PART I - METHODS OF PRIVATIZATION..................................... 7 1. BASIC METHODS OF PRIVATIZATION ................................ 8 Public Offering of Shares ...................................... 11 Private Sale of Shares .......................... 16 Sale
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