Proposals on trading shares of strategic deposits are followed by cautions

The Parliament started to discuss a draft resolution on guidelines for privatization of state-owned properties in 2010-2012. The novity of the guidelines is a proposal by the Government to trade state-owned shares of shareholding companies through the stock exchange besides traditional ways of privatizations in the coming three years. Also the guideline enables issuance of IPO at the domestic and international markets by companies that need investments through consessional way. Majority of Parliamentarians, who commented with respect to the draft reolution, criticised the erroneous privatization 20 years ago and asked the draft initiators if there is a guaranty that it would not repeat the same mistake. The issue of trading state-owned shares of strategically important mineral deposits through the stock exchange drew attention of the Parliamentarians.

GanbyambaMP N.Ganbyamba: Privatizaion of 1990’s had no effect. No single plant has been built in the last 20 years. The guideline says shareholding companies with stateowned properties are to be formed and their shares will be traded. Aren’t any shareholding companies established today?
KhurelbaaatarMP Ch.Hurelbaatar (Head of Cabinet Secretariat of the Government):

State owned shareholding companies are not established yet. After the Parliament passes the guideline, the Government shall decide what to do.


-Can’t you include the privatization of “TETs-I/”in the main list? This power plant, which prospers business of some authorities, puts all pressure on the people’s shoulders. In the energy sector, those except transformator stations could be privatized. What is the position of the Government on this matter?

MP Ch.Hurelbaatar:

-“TETs-IV” (Power Plant IV) can be traded at the stock market as a shareholding company. If the Parliament proposes such offer, it could be included in the guideline.

MP Badelhan
MP Badelhan

MP H.Badelhan:

-No company is working effectively upon privatization of local properties. It is said a state owned “Mongolian infrastructure” shareholding company shall be formed. It should be discussed seriously. Is there any company which should not privatized?

MP Ch.Hurelbaatar:

-Big deposits of copper and coal are used in the south Gobi. In the future infrastructure shall play an important role. Companies in the inrastructure sector can make profits if they become shareholding companies.

bayartsogtMinister for Finance S.Byambatsogt:

-A total of USD 3 billion is needed for providing MNT 1.5 million to every one. Could a particular proportion of this money be obtained from trading shares of state owned shareholding companies?

MP Ch.Hurelbaatar:

-This guideline is linked with Human development fund in two ways. Dividiends from trading shares of strategic deposits shall go to Human development fund.

MP S.Byambatsogt:

-Enterprises including “Erdenet” and “Mongolrostsvetmet” which contribute greatly to the state budget are to be privatized. May Railways and MIAT privatized?

Mp Ch.Hurelbaatar:

-The Railways cannot be privatized because agreement with Russia concluded in 1949 has not been renewed. The Parliament has directed the Government to renew the agreement. Afterwards, the privatization may be considered.

MP S.Byambatsogt:

-51 percent state owned shares of “Erdenet” enterprise shall be transferred to “Mongol Erdenes” shareholding company. Did you talk with Russian party on it? Is there any specific survey on trading shares of “Erdenet” enterprise?

MP Ch.Hurelbaatar:

-We cannot say “Erdenet” is being privatized. State owned 51 percent of this enterprise is transferred to Erdenes Mongol shareholding company for the purpose of trading at the stock market. This is the issue of bringing Erdenet to international stock market and raising fund sfrom there.

D.Sugar (Chairman, State Property Committee):

-Privatization of MIAT has been talked much and is rejected for several reasons: due to extremely high local flight tariff, people will suffer. Thus, I think it is proper to improve state owned company management, and encourage transparent activities. As per Erdenet, its equity estimates MNT 737 billion and upon trading of shares at the stock exchange, its market prise would go up.

MP S.Oyun:

-As I get, shares of “Erdenet” and “Mongolrostsvetmet” are transferred to newly forming “Mongol Erdenes” shareholding company for trading at the stock market. Then shares of Erdenet are included in shares to be traded by “Mongol Erdenes”, aren’t they?Did you talk with Russian side on it?

MP Ch.Hurelbaatar:

-Shares of “Эрдэнэт” will not be traded at the international stock market. Only those of Mongol Erdenes company will be traded. Don’t you afraid state owned 51 percent of Erdenet transferred to this company will be lost. Russian side has transferred its 49 percent shares to “Rostechnology” company. Similarly, why can’t we transfer state owned 51 percent to Mongol Erdenes company?

Mp Ts.Sedvanchig:

-Is it possible to incorporate social sector privatization in the guidelines? Do you consider privatization of major state owned hospitals, universities, colleges and recreations?

MP Ch.Hurelbaatar:

-Policy changes shall be made in health and education sectors in accordance with the law on Human development fund. Health and education systems shall be changed fully. On the other hand, income from mining sector will be provided to health and education. Privatization can only be considered when these two  policies are integrated.

MP D.Odbayar:

-Isn’t it possible to include Asgat, Mardai and Tumurt deposits in the privatization guidelines except Erdenet and Oyutolgoi?

MP Ch.Hurelbaatar:

-Deposits may be added to the guideline. It is open if the Parliament proposes some deposits for inclusion.

MP G.Bayarsaihan:

-There must be particular limits on trading shares of state owned companies at the international stock market. Share price of companies fall down at the international stock market during global crisis. It is important to consider what to do at such cases.

The parliamentarians agree that the guidelines for for state property privatization in 2010-2012 have incorporated new ways however they were cautous on trading of shares of strategic deposits at the international stock market. Members including N.Batbayar and Ts.Batbayar said this is an important issue related to the destiny of Mongolian people and it decides whether Mongolia is to be or not be. Calling the Prime Minister at the session, N.Batbayar warned the PM that trading shares of strategic deposits at the international stock market would be risky. He also noted that this guideline is a plan to sell Mongolia as a whole. PM  S.Batbold said we could raise money at the international market while forein companies raise money at the international market by pledging our minerals.

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