Privatisation and KTA

What is the Kosovo Trust Agency?

A component of the EU Pillar, the Kosovo Trust Agency (KTA) was established by UNMIK Regulation 2002/12 on 13 June 2002. The KTA holds in trust and administers the Socially Owned Enterprises (SOEs) and Publicly Owned Enterprises (POEs) of Kosovo.

As a trustee, the KTA is charged with "preserving and enhancing" the value of the SOEs and POEs of Kosovo. The KTA is following two strategies to preserve and enhance the value of these enterprises.

For the POEs – which are public utilities, such as the electric company (KEK) and the post and telephone company (PTK), the KTA is engaging in incorporation, thus creating new joint stock companies and introducing proper corporate governance to these enterprises.

For the SOEs – which are industrial enterprises, and many of the best areas of commercial real estate – the KTA is engaged in privatisation, via spin-off, or else via liquidation sales when an enterprise is no longer functional.

The chief decision-making authority in the KTA is its Board of Directors, which is comprised of 4 international members and 4 local members. The international members include the Deputy Special Representative of the Secretary General (DSRSG) for EU/Pillar 4 and the Managing Director of the KTA. The local members of the KTA Board include at least one representative of the PISG from the minority communities of Kosovo, and head of the Federation of Independent Trade Unions of Kosovo, as well as the Ministers of Finance, and Trade and Industry.

The KTA is managed by a Managing Director, who is appointed by the KTA Board. He or she is assisted by two Deputy Managing Directors, who are also appointed by the KTA Board.

The KTA is funded with a mixture of EU money, and money from the Kosovo Consolidated Budget. The EU pays for the majority of the staff, and the KCB provides money for certain capitol-intensive projects, such as the on-going refurbishment of the electric utility, KEK, which is the largest single budget item. In addition, other stakeholders such as EAR and USAID contribute to the KTA.

Publicly Owned Enterprises (Utilities)

The main strategic goal of the KTA for its POEs is to engage in incorporation to create modern joint stock companies. By the end of 2005, PTK (the telephone and post company), Pristina International Airport (PIA), KEK (the electric company), Kosovo Railways, the District Heating companies in Gjakova/Djakovica and Pristina and the Kosovo Landfill company were all incorporated into new joint stock companies with their assets registered and valued, cadastre reviewed and new opening balance sheets. In addition, KEK’s transmission assets were incorporated into a separate legal entity, which is expected to become fully operational in the near future. The introduction of modern corporate governance in all the POEs is proving to be an excellent vehicle for the kosovarisation of the management of the POEs, and involving the PISG in POE matters.

Socially Owned Enterprises (SOEs)

Over 500 business enterprises in Kosovo have been identified as potentially being Socially Owned Enterprises ("SOEs"). These Business Enterprises operate in all sectors of the economy including:

Spin-off and liquidation

KTA engages in privatisation through two methods: spin-off and liquidation. The spin-off system was adopted (whereby assets of an SOE are transferred to a NewCo and the NewCo shares sold to an investor) as the main methodology for privatisation, as it helps to better preserve the activities of SOEs that are judged to still be going concerns. The other method of privatisation is liquidation, which is especially useful when an SOE has long since stopped trading and its debts far exceed the value of its assets.

The economic challenge

Most of Kosovo’s industrial assets, prime agricultural land, forests, urban commercial land, and commercial properties are owned by SOEs. So privatisation of these assets – and the attraction of local, regional, diaspora, and international investors to the privatisation programme – will have a profound and positive impact on the economy and job creation.

Privatisation and private sector investment, and the new technology, new management, and new markets that come with such investment, will lead to the productive use of SOE assets and, over the long-term, the creation of thousands of new jobs for Kosovo's youth and a vibrant private sector-driven economy.

Privitisation success stories

The privatisation process has gained momentum steadily throughout 2004 and 2005.

As of January 2006, KTA privatisation sales have generated:

Notable privatisation success stories include:

Major enterprises, which have been tendered and should be sold shortly include: