- What is privatisation?
Privatisation, in its most basic form, is the transfer of ownership operation or control of management of state assets to the private sector.
The terms ‘divestment’ and ‘privatization’ when used are to be understood to include all the types of transactions in which government assets are transferred to private ownership in whole or part, including transfers by way of:
- Sale (assets or shares)
- Management contract; or
- Any other modality that transfers significant management control, risk or both, to a private firm (e.g. outsourcing and PPP Contracts).
- Who is responsible for the GoJ Privatisation Programme?
Cabinet has overall responsibility for the approval of the privatization policy, (more particularly, a Privatisation Committee, a Committee of the Cabinet). The Development Bank of Jamaica will serve as the Privatisation agency and will report to the Privatisation Committee. The GoJ will appoint Enterprise Teams which will be assigned the task of carrying out the privatization of specific GoJ assets.
- How long does a privatization transaction normally take?
The privatization transaction is as varied as the assets which it seeks to privatize. The privatization of an entity programmes through the following typical stage:
- Approval of Asset or Entity to be privatized by Cabinet
- Appointment of Enterprise Teams
- Valuation of assets
- Approval of Privatisation Strategy
- Pre-marketing of opportunity
- Issuance of an Information Memorandum or Request for Proposals (RFP)
- Advertisement of Opportunity
- Evaluation of Offers
- Due Diligence on Bidders
- Selection of Preferred Bidders
- Negotiation with Preferred Bidder
- Approval of Negotiated Privatisation Terms
- Contract Closing
The length of a typical privatization transaction is not prescribed. Assuming no interruptions and the transaction progresses as planned, it should take between 12-18 months for the completion of a privatization transaction. The length of privatization transactions may be impacted by:
- GoJ procurement process for engagement of consultants
- Readiness of entity for privatization (availability of audited or other financial information, legal and other due diligence information)
- Legal or other issues revealed in the due diligence process which may impede the transaction and must be resolved.
- Funding for the privatization transaction including the engagement of consultants
- Protracted negotiations of final terms with Preferred Bidders