CAIRO: Egypt’s government has shelved plans to partially privatize some public sector firms through distributing free shares to citizens, the investment minister said.
Egypt’s ruling National Democratic Party (NDP) had proposed in November 2008 selling government minority stakes in up to 150 state-run firms in a move it claimed would make privatization more popular and provide poorer households with a cash boon.
"No shares shall be distributed among people under the proposed ‘citizen ownership’ program, neither through free bonds nor through any other forms," Minister Mahmoud Mohieldin said in a statement issued this week.
The proposal included giving all Egyptians over the age of 21 — about 41 million people — free coupons redeemable for shares in public firms slated for privatization.
The statement said the scheme was cancelled for reasons that included "the age of those eligible for the distribution" and issues related to the distribution mechanism. The minister gave no further explanation.
Egypt’s cabinet of economic liberals, appointed in 2004, has been selling stakes worth billions of dollars in state-owned companies including banks and transport and industrial firms ahead of the global financial crisis.
But privatization has met fierce resistance from Egyptian workers, who fear losing their jobs or mistreatment from new management, and sales have often been criticized in local media.
Analysts say no significant privatization is likely to take place before a parliamentary election this year or presidential polls next year.
Egypt’s latest privatization attempt was in 2008, when the government’s sale of Banque du Caire flopped because the offer price was too low and the global economy fell into crisis shortly afterwards.
The government’s last major successful privatization was the sale of 80 percent of Bank of Alexandria in 2006 to Italy’s Intesa Sanpaolo for $1.6 billion.
Privatizations helped the Egyptian economy grow by 7.2 percent in fiscal year 2007/08, its fastest pace of growth in almost two decades. Growth has since slipped to about 5 percent.