DOMINICAN REPUBLIC:Gov't Privatization Plans Run Into Trouble

[Robert Weissman <rob@essential.org>]

Gov't Privatization Plans Run Into Trouble
NewsEdge (8887) 
DOMINICAN REPUBLIC;
Date: Monday, 2/15/99

SANTO DOMINGO - Inter Press Service via NewsEdge Corporation : When
44-year-old Leonel Fernandez moved into the presidential palace
two-and-a-half years ago, he promised to modernize this Caribbean state,
moving it out of decades of state domination of the economy and
establishing links with neighbors to end years of isolation. 


Since then, the young, dynamic president has made the country of 8 million
people more visible in the region. He has established firm ties with
Central American countries and the Caribbean Community, and is trying to
reform the republic's trade and economic infrastructure. 


However, Fernandez' administration has failed in one key element of his
reform program. His plans for extensive privatization of several major
state enterprises have run into trouble. 


Hopes were raised for a jump-start of the privatization program with the
sale late last year of two flour mills to local and U.S consortia. But the
prospects for selling another 19 state enterprises have been set back by
the failure of the buyers and the government to agree on a valuation of
the Electricity Corporation (CDE). 


The administration thinks the sale of the insolvent power company will
give a boost to the wider privatization effort, and had announced a
December 1998 deadline for its divestment. 


Next in line as prospective investors were the financially troubled State
Sugar Company, the Tobacco Company and the national airline. 


Insisting that the failure to meet the December deadline for selling the
CDE was not a major problem, the Public Enterprise Reform Commission,
which is responsible for privatizing state agencies, has now set an end of
March target for the company's divestment. 


The airline and the tobacco and sugar companies will also be sold by the
end of March, said Antonio Isa Conde, chairman of the Commission. 






Dominican business leaders consider these deadlines unfeasible, and some 
suggest that the government should spend more time in planning the 
privatization program to give it a better chance of success.


"There is a lot of work which has to be done in valuing these assets and 
in doing due diligence studies," said a prominent Santo Domingo banker, 
who asked not to be named as his company is planning to bid for state companies
which are being sold.		
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10:14 AM on 2/15/99