Click here for search results

Privatization Methodology

This site contains data on the sale price of privatization transactions of over $1 million, carried out in developing countries between 2000 and 2008. It only includes transactions which generate proceeds or monetary receipts to the government resulting from partial and full divestitures, concessions, management contracts, and leases. Thus, only those transactions that generate revenue for the government from privatization or private sector participation in an existing state-owned enterprise or other government assets (such as wireless license sales) are included. The data give information on the sale price of transactions on an "announcement" basis rather than on the basis of actual flows of receipts, which may be paid for over several years.

Transactions that did not generate revenue for the government are excluded from the database. As such, the database does not include firms transferred to the private sector through mass or "voucher" privatizations (as in Eastern Europe). It also does not include new greenfield investments that did not involve payments to the government, funds committed or invested by new owners, and build-operate-transfer schemes which do not involve payments to the governments.

Data sources

Data are aggregated from the following sources:

  • Private Participation in Infrastructure (PPI) database (excluding new greenfield investments, investment commitment by new owners or operators, and build-operate-transfer contracts)
  • Organisation for Economic Cooperation and Development (OECD) data on privatization in Africa
  • European Bank for Reconstruction and Development (EBRD) data on privatization in Europe and Central Asia
  • Privatization Barometer for selected European countries
  • Periodicals such as Latin Finance and Privatization International
  • Various government and non-government Web sites
  • World Bank internal sources

Data definitions

The main fields in the database are defined as follows:

Country

The database includes only developing countries classified by the World Bank’s World Development Indicators as low-income, lower middle-income, and upper middle-income. High-income countries (OECD and non-OECD) are not covered in the database. Recent analyses of privatization trends in developed countries can be found on the OECD Web site. Additionally, only developing countries for which data on privatization transactions was found have been included.

Year

The year given is the year in which the privatization transaction was approved and recorded by the government. In a few cases, transactions may have been recorded on a basis of when the funds were paid as opposed to when the deal was announced.

Sector

The database covers five sectors as defined below:

  • Energy, which includes the exploration, extraction, and refinement of hydrocarbons, oil, and natural gas
  • Financial, which includes banks, insurance, real estate, and other financial services
  • Infrastructure, which includes transportation, water and sewerage, telecommunications, natural gas transmission and distribution, and electricity generation, transmission, and distribution
  • Manufacturing and services, which includes agribusiness, cement, chemicals, construction, steel, hotels, tourism, airlines, maritime services and other sub-sectors that are not infrastructure or finance related
  • Primary, which includes the extraction, refinement and sale of primary minerals and metals such as coal and iron ore

Transactions were classified into these sectors based on the classifications made in the data sources from which they were drawn. For the most part, vertically integrated companies (such as steel) were classified as manufacturing companies even though part of their activities might be primary in nature (e.g. iron ore extraction).

Privatization transactions that did not easily fall under any of the above sectors were grouped under the category "Other." Transactions in the "Other" category appear in the Custom Query selection of a specific country or region.

Name of transaction

The name of the privatization transaction is given as recorded in the data source from which it is drawn. Each sale of shares or assets is defined as a separate transaction, even for the same company. Thus, in many cases there are several transactions recorded at different points in time for a single company.

Proceeds

Proceeds are defined to include all monetary receipts to the government resulting from transactions involving partial and full divestitures, concessions, and leases. Thus, only those transactions that generated revenue for the government from privatization or private sector participation in an existing state-owned enterprise and other government assets are included. The data on proceeds was drawn directly from the various data sources used for the different time periods. It should be noted that the different sources might have calculated proceeds in different ways (e.g. market value vs. face value) and thus there might be some discrepancies between the databases used. Moreover, proceeds are recorded on an "announcement" basis rather than on the basis of actual flows of receipts, which may be paid for over several years. All data on proceeds are in U.S. dollars as reported, or are converted from local currencies into U.S. dollars at the annual average exchange rate.

Data note

Privatization proceeds of ".." means that data is not available.

Data caveats

Proceeds are a common proxy for measuring privatization trends. But several caveats should be highlighted:

  • A wide variety of data sources have been used, creating the potential for data discrepancies.
  • Privatization transactions and proceeds may be under-reported in some countries because of lack of data or poor quality of data.
  • Proceeds do not reflect investments in the enterprise, a potentially important component of privatization transactions.
  • There are varying definitions of proceeds, but for the most part the data are based on gross rather than net proceeds to the government (the latter are likely to be lower after all privatization costs have been covered).
  • Classifying enterprises into sectors involves a certain element of subjectivity, particularly in the case of vertically integrated companies.
  • Data on the type of privatization method and foreign vs. domestic participation are not systematically available and are thus not included here. The goal is to gather such data and include it when the database is next updated.
  • Data on proceeds are available mostly for central level enterprises, with a few exceptions of state or provincial level utilities in a few major countries.
  • Proceeds are subject to swings from a few large transactions in a few countries and are thus not necessarily indicative of widespread activity or radical restructuring of the state sector in a particular country or region.
  • Proceeds from minority share sales may raise revenues but do not necessarily imply major changes in the control of state-owned enterprises or their improved efficiency.

Given these caveats, the database should not be seen as an exhaustive or fully accurate listing of each and every transaction in every developing country. It is very likely that a few transactions have been missed or that there are slight inconsistencies between databases. Rather, the objective is to provide available data to help estimate privatization activity and trends by country, region, and sector.

Additional data sets

Transactions from 1988 to 1999:

  • An earlier version of this database included the period 1988 to 1999, using data drawn from MIGA’s no longer updated Privatization Database. This database provides the sale price of a privatization transaction and the year in which the privatization took place. The data, therefore, gives information on privatization transactions on an "announcement" basis rather than on the basis of actual flows of receipts, which means that privatization proceeds do not accurately reflect receipts in a particular year since transactions may be paid for over several years.
  • An Excel spreadsheet containing this data is available for download (Excel, 1.15MB).

Transactions of under $1 million, 2000 to 2008:

  • After collecting the 2005 data, a $1 million threshold for transaction size was determined for the years 2006 and following. Transactions under this amount were removed from the database for the period 2000 to 2008. They are included here for reference.
  • An Excel spreadsheet containing this data is available for download (Excel, 288KB).

Acknowledgements

The database drew on existing World Bank databases, in particular the Private Participation in Infrastructure (PPI) Database.

Important contributions to the database were also made by the following organizations:

  • OECD - for data on Sub-Saharan Africa
  • EBRD - for data on Eastern and Central Europe
  • Privatization Barometer - for data on European countries




Permanent URL for this page: http://go.worldbank.org/CRVI8K21H0