The Cyprus National Economy Council (NEC) has revealed that it favours a full privatisation of state-owned enterprises (SOEs) and semi-governmental organisations (SGOs), which is considered a pre-condition for the disbursement of the third tranche of the country’s financial assistance package worth EUR10 billion (USD13.48 billion), local news agency Famagusta Gazette reports. According to the article, the Memorandum of Understanding (MoU) signed between the Cypriot authorities and the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF), stipulates that the government should present a privatisation plan for SGOs Cyprus Telecommunications Authority (Cyta), Electricity Authority Cyprus (EAC) and the Port Authority by the end of December 2013.
In a document published on 21 November 2013, the NEC stated that ‘full privatisation, wherever possible, should be pursued… Privatisations will yield significant proceeds and will manifest Cyprus` determination to proceed with reforms that would satisfy the relevant provisions of the MoU’. Further, the NEC suggested that the telecoms authority Cyta should be the first to be privatised, as it already operates in an environment defined by functioning competition.
As previously reported by TeleGeography’s CommsUpdate, the Republic should accumulate EUR1.4 billion from the privatisation process. An estimated initial deposit of EUR1.0 billion (USD1.35 billion), and a further EUR400 million must be secured by 2018, according to the terms of the bailout deal struck by the government and international lenders. However, in a bid to avoid privatisation, Cypriot SGOs proposed to secure EUR1.4 billion by mortgaging their property for EUR1.2 billion and funding the remainder via loans from international companies. Further, incumbent telco Cyta’s chairman Stathis Kittis revealed in May 2013 that three institutions, originating from the UK and US, were interested in the proposal, although he did not name them.