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House passes privatisation bill after another heated debate

04 March, 2014

The House of Representatives passed the landmark privatisation bill on Tuesday, in a narrow vote of 30 in favour and 26 against, overturning last Thursday’s marathon session that resulted in a hung parliament and five abstentions.
This paves the way for three of the leading semi-government organisations to be restructured and partly or fully privatised in stages up to 2018, by when the state should have earned about 1.4 bln euros in the process.
This time round, probably having secured some assurances that were aimed to appease the highly unionised workers at the Electricity Authority of Cyprus and the state-owned telco Cyta who were protesting outside parliament, the centre right Democratic Party (Diko) united all of its eight MPs and supported the bill, despite differences with President Anastasiades that resulted in them dropping out of the coalition government last week.
In Thursday night’s session, the party’s recently elected president Nicolas Papadopoulos and two others supported the government bill, while ousted party leader Marios Karoyian and four other abstained, sending the whole bailout package into disarray that would have delayed the next tranche of EUR 236 mln from the European Commission and the IMF.
The ruling Democratic Rally (Disy) led the vote with 20 MPs, as well as Evroko’s Demetris Syllouris and independent Zacharias Koulias.
In the opposing camp, which generated most of the noise during a heated debate that included accusations of selling off national assets at a cheap to outright national betrayal and absence of patriotism, the communist Akel party mustered 19 MPs, together with five from the socialist Edek, the Greens’ MP and Nicos Koutsou, formerly of Evroko and now the sole deputy for the Citizens’ Allianmce that has opposed the bailout, the memorandum signed with the international lenders and the privatisation deal.
To date no viable counter proposal has been put forward, either by opponents of the privatization bill, or even the trade unions that have rejected every offer and went as far as to cut off power distribution islandwide over the past two weeks. Cyta staff went on strike, but telecoms seemed to be working, while staff at the Ports Authority and the dock workers caused several ships to remain anchored in Limassol port or unable to approach to offload and pick up valuable cargo, causing hundreds of thousands worth of damage.
Farmers were mostly annoyed as their orange and potato exports with refrigerated containers missed several shipments, adding to their frustration caused by the ongoing drought that is hampering the troubled agriculture sector.
Alternative energy producers and operators or solar and wind parks called for an immediate liberalisation of the power distribution network, currently monitored by the Raek watchdog, while in the telecoms sector, rival MTN was delighted at the Cyta stoppages that caused 14,000 subscribers to switch from the state telco to the private operator in December alone, it said.
The amended bill provides the legal framework which will oversee the privatisation of the SGOs as well as the establishment of relevant bodies to oversee the process.
The House Finance Committee had met in a closed session earlier in the day and discussed the bill in its amended form, in the presence of Finance Minister Harris Georgiades and Attorney General Costas Clerides.
Rejecting the bill would have meant that the Cyprus government would miss the March 5 deadline and approval at the next Eurogroup of Eurozone finance ministers on March 10 and that the aid would not be paid leaving civil servants in limbo and probably unpaid at the end of March.
The ruling Disy and Diko MPs said the amendments also included provisions to safeguard national security issues and to consult with the House on the name of the ‘privatisation czar’ before his or her appointment.
In a statement after the passage of the bill, government spokesman Christos Stylianides said that the vote “reinstates the level of credibility and prestige the country has managed to attain over the past year during which the people of Cyprus had to make great sacrifices.”
Stylianides added that the decision paves the way for the implementation of certain provisions of the bill which aim to modernise and restructure the SGOs, to the benefit of the staff, consumers and the economy in general.
The process, he noted, will offer new possibilities and the framework to improve the economy’s growth prospects with a view of recovering from the crisis.
Finance Minister Harris Georgiades was also relieved that the bill was passed and that it would not put him an awkward position at the next Eurogroup meeting.
He said that the approval of the privatisations bill opens the way to modernisation and reform.
“Apart from being an obligation of Cyprus vis-à-vis its international lenders, the privatisations programme constitutes an opportunity to attract investments, enhance performance and competitiveness and less state in important sectors of the economy,” he pointed out.