By Elias Hazou
A bill governing the establishment and running of state-owned and semi-public enterprises does not pertain to organisations slated to be privatised, finance minister Harris Georgiades told MPs on Monday.
Georgiades was seeking to reassure lawmakers that, with the bill, it was not the government’s intention to sidestep parliament when it came to the privatisation of semi-governmental organisations (SGOs).
The administration, he said, has “no problem” with inserting a clause into the bill explicitly stating that it neither supplants nor supersedes the Law on Privatisations passed last year.
The 2014 Law on Privatisations stipulates that the “Council of Ministers (CoM) takes all decisions of which assets are to be privatized and provides approvals for all major stages of the related process, including that of the final agreement with the potential investor, subject to an overall approval by the HoR (House of Representatives).”
Now, a new government bill is designed to boost financial transparency state-owned and semi-public enterprises, standardizing the drafting of annual budgets and their timely submission.
But because of the absence of an explicit reference, MPs previously claimed the item gave the government of the day “draconian powers” as it would allow it to abolish, merge or sell off departments of these organisations, without parliamentary approval.
“I’d have no objection for it to be clarified [in the text] that the process of mergers or abolishment of any public organisation must be done within the context of the constitution and the laws,” Georgiades told a joint session of the House finance and legal affairs committees.
In any case, said Georgiades, the bill relates to organisations that will remain within the public domain and not those to be privatised.
According to Georgiades, Cyprus has the highest number of SGOs per capita than any European country, hence the need for a legal framework governing their creation and closure, to check wasteful spending.
Trade unions of SGOs are up in arms over the proposed legislation. Last week the Electricity Authority’s (EAC) biggest trade union hinted at industrial action should the government not rescind the bill.
And workers at the Cyprus Telecommunications Authority (CyTA) sent the minister a letter laying out concerns over their job security.
To cover this base as well, Georgiades said on Monday the government is fine with introducing a clause specifically stating that the bill does not touch on workers’ rights whatsoever.
For the item to pass when it goes to the plenum, the ruling party would need the support of DIKO.
DIKO leader Nicholas Papadopoulos told the minister that his party is ready to vote for the bill, provided it spells out that it strictly concerns fiscal consolidation and no more.
Georgiades’ attempt to assuage parliamentarians is likely intended to fend off a move that could land the government in hot water with international creditors – opposition AKEL is mulling a legislative proposal to freeze privatisations until 2017.
Time-wise, the proposed freeze would go beyond the island’s economic adjustment programme, which ends in 2016.
Also on Monday, and shortly after the minister’s briefing, opposition parties met in parliament to consider AKEL’s proposal and decide whether to back it. The parties’ final stance is expected to clear up next week.
“Deliberations will continue, so that if possible we can agree to postpone privatisations until after Cyprus has exited the adjustment programme, by which time we shall all be able to take a stand, freed from the crutches of the troika and on purely political grounds,” AKEL MP Yiannis Lamaris later told reporters.
EDEK’s Chrysos Toloupis said his party disagrees with the notion for a three-year freeze on privatisations. Rather, they would seek the middle ground, by introducing improvements to the government bill revamping SGOs.
By 2018, Cyprus must raise €1.4bn from privatisations to pay down a €10bn international bailout. Electricity, telecoms and the ports are to be denationalised, to varying degrees. But opposition parties, particularly AKEL, say the cash can be generated otherwise, and accuse the government of deliberately targeting SGOs, using the troika as cover.
Resistance to the scheme has already forced the administration to backpedal. EAC unions recently succeeded in changing the procedure for a tender, where an independent advisor was to be hired to prepare a study for the organisation’s legal unbundling, corporatisation and privatisation.
The government has also had to assure SGO employees – who have civil servant status – that their jobs are secure. They will be given three options once their SGO is privatised: retain their job, transfer to a post within the civil service under the same pay grade and benefits, or take an early exit package.
