Albanian Power Distribution Privatization Privatization by gabyion


									Albanian Power Distribution Privatization
Privatization Transaction Process

           Investors Roundtable
          Tirana, April 8, 2008

   Ministry of Economy Trade and Energy

Privatization Process and Government
            Entities Involved

 DSO Privatization Form and Formula

   Transaction Steps and Schedule
  Government’s Decisions and Support with
  Regards to DSO Unbundling and Privatization
 DSO is a duly established joint stock company, with a
  share capital of 2 million Lek, divided into 2 000 shares
  with the nominal value of 1 000 Lek
      On 20 December 2006, the Council of Ministers adopted the
       Decision on the Establishment of the Joint Stock Company
       “Distribution System Operator” sha. It is presently being revised
       to reflect government’s decision to adopt a wholesale/retail
       public supply model

      On 30 May 2007, KESH Supervisory Council approved the
       creation of DSO and the new structure of KESH distribution
       division, which includes 8 branches

      On 19 June 2007, DSO was registered with the Tirana
       District Court
  Government’s Decisions and Support with
  Regards to DSO Unbundling and Privatization
 Government of Albania has decided to:
       Adopt a wholesale – retail public supply model. Wholesale public supplier will
        have the obligation to supply enough energy to meet demand. The Retail
        Public Supplier will have the obligation to sell to end consumers the energy
        bought by the Wholesale Public Supplier

       Privatize the functions of distribution system operator and the retail public
          The Distribution operator will be granted a license for distribution and

            retail public supply for the whole country.

       Assign the long term debt that KESH has been granted for Distribution
        specific projects to the newly created DSO. A liability account will be created
        at KESH level and DSO will repay the assigned amount to KESH. KESH (or
        the Government where applicable) will remain the borrower of account
        towards third parties.
Government’s Decisions and Support with
Regards to DSO Unbundling and Privatization
 Trade Receivables:
   The amount of Trade Receivables is substantial. At
     31.12.2006 the gross amount of trade receivables was ALL
     46 bln, or EUR 374mln.
   Old receivables, prior to 31.12.2006 will remain with KESH
     and will be collected by DSO on behalf of KESH (with a
     commission to be paid to DSO for all old bills collected)

 DSO Property Titles
   This issue is being addressed among KESH, METE, DSO
    and the Property Register Office in order to accommodate
    the necessity of the future private investor for having the
    clear title of property on DSO assets.
   DSO Privatization Process and
   Government Entities Involved
 The Power Distribution falls into the strategic sectors,
   therefore the privatization "Form" and the privatization
   "Formula" are defined in a special law, which was approved
   by the parliament on the 20 March 2008.
 The same law stipulates that the transfer of shares will take
   place through an “Open International tender”.
 The selection and evaluation criteria are defined by the
   Council of Ministers.
    a decision of the Council of Ministers that defines the tender
     stages and criteria will be adopted as soon as the Distribution
     Privatization Law enters into force (expected date third week
     of April)
 Tender procedures are prepared and followed by the
   Ministry of Economy Trade and Energy
   DSO Privatization Process and
   Government Entities Involved
 To secure the necessary transparency in this project, all
   strategic decisions with regards to the privatization of the
   DSO are approved by the Committee for Consultancy and

      The committee was established for purposes of the DSO
       privatization by the Order of the Minister of Economy,
       Trade and Energy n°822 of 17 November 2006

      The committee is an interministerial entity headed by the
       Minister of Economy Trade and Energy
DSO Privatization Process and
Government Entities Involved
 The bids will be evaluated by the Bid Evaluation

 The winning bidder will be approved by the
  Council of Ministers.

 The Sale Purchase Agreement that will be signed
  between METE and the winning bidder will be
  ratified in the Parliament of Albania
     DSO Privatization Form and Formula
 Albanian legislation allows for different forms of private
  sector participation:
    Sale of shares
    Concession

 In order to achieve the highest efficiency, by introducing a
  strategic investor in the sector, the government decided to
  apply the sale of shares

 Not less than 51 percent, but not more than 76 percent of
  the share capital of DSO will be offered to a strategic
        DSO Privatization Formula
        Remaining Shares
   The remaining percentage of shares will be offered to:

       Former Owners – An appropriate percentage of shares shall be determined
        to provide a fair compensation to the former land/building owners to a
        value equal to the value of the land and/or buildings in question as
        evaluated in accordance with actual legal framework of Albania, on the
        criteria of evaluation of the state property that is going to be privatized.

       Employees - An appropriate percentage shall be determined in exchange
        with privatization vouchers held by such employees.

       Remaining Shares – The options are:

        a)   grant a pre-emptive right to the strategic investor for the purchase
             of the remaining shares that have not been transferred to the
             former owners of the land and/or buildings and employees.
        b)   sale through public offer and/or public auction or METE may decide
             to retain such shares.
   Transaction Steps (1)
Request for Prequalifications:
 Publication of the invitation for prequalification;
 Deadline for prequalification; and
 Announcement of pre-qualified bidders.

Due Diligence and negotiation:
 Data room visitation and general due diligence
 Transaction documentation preparation and negotiation
 Investor Conferences (one or more rounds)
 Council of Ministers Decision setting out the criteria for the selection of the
  strategic investors and the evaluation of the bids

The Tender Process:
 Publication of the invitation for bids;
 Submission of the bids;
 Opening and evaluation of the bids by the Evaluation Committee;
 Presentation by the Evaluation Committee of its report to the Council
  of Ministers; and
 Approval of the winning bidder by the Council of Ministers and Decision
  on the final choice on the form and formula of the privatization of DSO.
    Transaction Steps (2)

   Execution of the transaction documents between the
    winning bidder, METE and KESH

   Fulfillment of the conditions precedent to the
    transaction (i.e. approval of the purchase and sale by
    the Competition Authority (CA), authorization of the
    Power Regulatory Entity (ERE) for the changes in the
    ownership of DSO, etc.)

   Sale of the shares and payment of the price (and
    capital investment if provided) ("Closing")
        Data Room and Public Documents
   Data Room will be available only to prequalified bidders. Physical Data
    Room will be set up at KESH premises. Electronic Data room will be
    password protected and included in the project website:
   Documents page of project website will include all public documents
    available to all. Tender documents will be published in this page too

   Documents already available





Thank You

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