President wants market reforms on his desk by March

4 Jan 2006

Paraguayan president Nicanor Duarte has set a deadline of March for the government to hand him ‘solid plans’ to reform and modernise state-owned companies and institutions, including fixed line operator Compania Paraguaya de Comunicaciones (Copaco), according to BNamericas quoting local news. Under the terms of a standby economic agreement signed with the International Monetary Fund (IMF) in November, external audits into the state-owned firms must be presented this month to the government review committee, which will then evaluate the reports before returning them to ministries to draft the relevant reform proposals and hand them to the president within two months. Telecoms regulator Conatel is working with fixed line monopoly Copaco to overhaul the telecoms market, including the privatisation of the incumbent operator and liberalisation of the sector. The premier has, however, previously made it clear that the state will retain a significant stake in Copaco, claiming that its market value means that a full privatisation would bring in ‘very little money’ for the Treasury and act as a disincentive for the economy.

The government had hoped to kick start the liberalisation process as early as 1996. That attempt failed, as did two others in 1998 and 2000. The state initiated a sale of Copaco in 2002, but the proposals were challenged by telco’s workers’ union and the process was aborted after protests escalated into rioting in the streets of Asunción. Alongside the sale, the state had formulated plans to open up the local, long-distance and international markets by the end of 2002. The government decided that these liberalisation plans could not go ahead until the incumbent was privatised, so the auction of a new basic telephony licence was subsequently cancelled. The latest attempt to restart the privatisation process was halted in July 2005 when the Chamber of Deputies, the lower house of Congress, rejected redrawn proposals by the Senate for the partial or total sale of a number of state-owned enterprises, including Copaco. The rejected bill was returned to the Senate for further consideration.

Paraguay, Copaco