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Lithuania: Enthusiasm For Privatization At Less Than Fever Pitch

By Rasa Drazdauskiene

Vilnius, 24 March 1997 (RFE/RL) -- Lithuania's ongoing privatization program is hitting a low point at the moment because of a distinct lack of enthusiasm among the buying public.

In February, only seven out of 81 entities offered at auction were sold. And an RFE/RL correspondent in Vilnius reports that this month's list of 50 small- and medium-size entities wholly- or partly-owned by the state includes such unpromising possibilities as the half-ruined "military canteen in the Gulbiniskes village" and the "military barracks" in the same village. Those two are fully state-owned and are going for $500 and $600 dollars.

Bigger entities, such as the drill manufacturing factory Vilniaus Graztai, being offered at nearly $1 million, and the construction equipment factory Statybos Apdailos Masinos, offered at a quarter of a million dollars, are expected to attract more interest.

Experts at the state privatization agency say that in view of the generally low demand, the agency is now considering changing the auctioning principles: namely so that if an entity is not sold at three auctions, it must be dropped from the list, and offered again only after some time has elapsed or after conditions have changed.

Our correspondent reports there are several reasons why it's hard to sell the less-popular entities in Lithuania's present "second wave" of privatizations. Many of the entities listed are either unprofitable buildings such as the barracks or small remaining state holdings in companies previously largely privatized. These share packages, typically of 10 percent, are rarely of interest to prospective customers except perhaps for workers in that company, who may have already bought shares with their privatization vouchers four or five years ago.

According to the Lithuanian Property Valuers Association, in view of the growing likelihood of increased taxation on real estate, the state wants to transfer the ownership of non-profitable entities to private tax-paying owners.

Lithuania's first-wave privatization, which is commonly nicknamed "prichvatization" (from the Russian word "prichvatit - to grab"), raised much more enthusiasm and greater competition. Practically all reasonably healthy companies and enterprises were bought, openly or through mediators, by their managing staff.

One of the best examples is the present Achema mineral fertilizer plant, formerly known as the Azotas enterprise, in Jonava. It was privatized as a lackluster performer and is now among the strongest Lithuanian companies. It's even planning to establish its own bank.

The privatization agency hopes that the process will gather steam again when strategically important entities -- such as communications, transport and energy supply companies -- are opened for privatization later this year or next year. In that phase, 14 key strategic entities, such as the Butinge oil terminal, The Lietuvos Telekomas communications company and the aviation company Aviakompanija Lietuva, will be offered to buyers.

Vytis Atkociunas, director of the state privatization agency, says that foreign consulting expertise is needed to prepare a serious privatization program for these and other entities "aimed at attracting foreign investors." The company Konsulta, an agency of the World Bank for consulting services, is working with the privatization agency to help locate the necessary expertise.

Rasa Drazdauskiene is a Vilnius-based journalist who regularly contributes to the Lithuanian service of RFE/RL.