The Ethiopian government in line with its commitment to encourage the private sector, has so far taken a broad-based economic reform program. One of the reform measures is a privatization program which has transferred so far over 200 enterprises.

As long as public enterprises have to continue under state ownership until such a time that they would be ready for privatization, it is necessary to provide them with appropriate guidance and support. Moreover, it is also necessary to support the public enterprises so as to enable them to be competitive and profitable.

order to arrive at the above mentioned goals, it has become necessary to merge the Ethiopian Privatization Agency and the Public Enterprises Supervising Authority with a view to coordinating the implementation of the Privatization Program with the activities of public enterprises. Therefore Privatization and Public Enterprises Supervising Authority has been established by Proclamation No. 412/2004.

1. To implement the Privatization Program in accordance with the provisions of Proclamation No. 146/1998,it performs the following duties:-
   • Submits the list of public enterprises and government shareholdings to the Ministry of Trade and Industry and obtains approval
   • Undertakes the necessary preparatory work for the privatization of enterprises
   • Determines the bid evaluation criteria for the selection of investors participating in the privatization and designs ways and means to encourage domestic investors.
   • Takes all necessary measures to publicize the Privatization Program and its implementation.
   • Through post privatization monitoring, ensures compliance of investors� obligations, and undertakes impact assessment of the privatization process in general.
     
2. In accordance with the relevant provisions of Proclamation No. 25/1992 and other pertinent laws
   • Undertakes project studies for the establishment of enterprises which may be of strategic significance and beyond the capacity of private investors
   • Evaluates partnership proposals submitted by investors and seeks approvals from the Ministry of Trade and Industry.
   • Undertakes studies and provides guidelines to public enterprises in their endeavor to build their capacities.
   • Appoints and relieves members of the boards of management including the chairperson of public enterprises and fixes their allowances.
   • Approves corporate targets and investment plans of public enterprises
   • Follows up and evaluates the performance of public enterprises
   • Approves the financial reports of public enterprises submitted by external auditors.

• To enable public enterprises to attain a higher level of performance by properly utilizing their capacities and by employing better management systems and technology
• To establish new enterprises which are beyond the capacity of the private sector
• To supervise the management of public enterprises 
• To protect the ownership rights of the government in public enterprises and share companies.

1. business valuation will be applied to these enterprises
2. The business valuation will be the floor price of the enterprises in the bid document.
3. If the business valuation is less than the total liability of the enterprise, the loan will be the floor price in the bid document.

1. The method employed will be asset valuation. In addition to that the total condition of the enterprises, their future economic life, their previous service life, the down time and maintenance cost, technology and capacity utilization will be taken into account. Moreover, the overall productivity of the enterprises compared to their capital will also be considered.
2. After the valuation has been calculated by using the above criteria, the total asset will be compared with the total liability. If the total asset is greater than the total liability, the net asset will be the floor price of the enterprise in the bid document. However, as long as the proposed price covers the total liability, the hand-over will take place even if there is no transaction.
3. When the total asset is less than the total liability, the total liability will be the floor price in the bid document. Therefore, for such enterprises the Authority expects a price not less than the total liability.

1. 35% will be paid upon the signing of the sales agreement.
2. The remaining 65% will be paid evenly within a period of five years.
3. The current bank interest rate will be applied for the amount of money still owing.

Establishment of Enterprises, Legal personality and Capacity

5.                  Requirements to be met before Establishment

1/   Before the establishment  of an enterprise the supervising authority shall ascertain that:

a)                  if there is any payment in kind as part of the capital, the property is correctly valued by experts:

b)                  any cash paid as part of the capital is deposited in a bank in the name and to the account of the enterprise.

2/   Notwithstanding sub-article a (a) of this Article, if the payment made in kind has audited accounts, the book value of such payment in kind may be taken in to account.

3/   The experts appointed under sub-article a (a) of this Article shall prepare a report containing a detailed description of the property, the value given to each item and the method of valuation. The supervising authority and the enterprise shall get one copy each of such report.

4/   If there are any expenses incurred by the supervising authority for but prior to the establishment of the enterprise, such expenses shall form part of the capital where they are conformed by auditors.

5/   The sums deposited under sub-article a (b) of this Article may not be withdrawn from the bank until the establishment regulations are issued and published in the Negarit Gazeta.

6.                  Establishment Regulations

Every enterprise shall be  established by regulations to be issued pursuant to this Proclamation. The establishment regulations shall contain:

1.                  the name of the enterprise;

2.                  a statement that the enterprise shall be governed by this proclamation:

3.                  the purposes for which the enterprise is established;

4.                  the authorized capital;

5.                  the amount of the initial capital paid up both in cash and in kind;

6.                  a statement that the enterprise shall not be liable beyond its total assets;

7.                  the head office of the enterprise;

8.                  a statement that may authorize the enterprise to open branches;

9.                  the name of the supervising authority;

10.              the duration for which the enterprise is established.

7.                  Legal personality and Liability

a)                  An enterprise shall have legal personality and as such it shall have rights and duties.

b)                  An enterprise may not be held liable beyond its total assets.

8.                  Address

The address of an enterprise shall be the place where its head office is situated.

9.                  Capacity

a)                  An enterprise shall have such capacity  as is necessary to accomplish its purpose and to perform related activities.

2.                  Without limiting the generality of sub-article 1 of this Article, an enterprise shall have the capacity to:

a)                  sue and be sued in its own name;

b)                  acquire, possess, own dispose of, pledged and mortgage moveable and immovable property;

c)                  enter in to contract and borrow money;

d)                 issue and accept commercial and other instruments;

e)                  open and operate bank accounts;

f)                   invest money.

Chapter  3

Organization and Management of an Enterprise

10.                          Organization

Each enterprise shall have

a)                  a supervising authority;

b)                  a management board;

c)                  a general manager, deputy general managers as may be necessary; and

d)                 the necessary staff.

11.                          Powers and Duties of the Supervising Authority

The supervising authority shall;

a)                  appoint and remove the members of the board subject to Article 12 (s) of this proclamation;

b)                  appoint the chairman of the board from among the members appointed by it;

c)                  fix the allowances to be paid to the members of  the  board;

d)                 appoint external auditors;

e)                  cause the allocation of the initial capital of the enterprise;

f)                   decide the increase or decrease of the capital of the enterprise in accordance with Article 21 or 22 of this Proclamation.

g)                  Cause the establishment of reserve funds or the allocation of funds by the Government so that the authorized capital of the enterprise shall be fully paid up within the period specified under Article 20(2) of this Proclamation;

h)                  Determine, based on the proposals of the Board and following the relevant provisions of this Proclamation, the amount of state dividend to be paid to the Government from the net profits of each financial year;

i)                    Approve financial reports of the enterprise and external audit reports;

j)                    Approve the investment plan of the enterprise submitted to it by the Board;

k)                  Propose, where necessary to the Council of Ministers the dissolution, amalgamation or division of an enterprise under its control, or the transfer of the enterprise or its management in any other manner;

l)                    Approve in consultation with the Board, the annual and long-term corporate targets of the enterprise; and follow up their fulfillment;

m)                Without prejudice to the powers and duties given to the Board, perform other functions necessary for the protection of the ownership rights of the State.

Source : Negaret Gazeta

  Proclamation No. 25/1992

• In order to contribute for the over all growth of the economy, public enterprises have to improve their products and services in quantity as well as quality. More over, to make the growth sustainable they are required to update their technologies and replace imported items and there by save foreign exchange.
• this respect special attention has been given to industries which manufacture goods for international markets such as sugar, textile, leather and shoes. Moreover due attention is given to chemical and mining industries which are engaged in import substitution. In addition, the agro-industry sector, (vital for the export trade) which is engaged in, food, fruit, vegetable, beverage production is given special attention.
• In recent years, a large amount of sugar has been sold in the European market. An encouraging effort has been made to penetrate the Italian and the American markets in the textile sector.
• To strengthen this initiative 43,692,799,499 birr has been allotted to 36 public enterprises so that they would use it for their projects.
• Export production out put, sales and performance of public enterprises for the last four years has been shown in tables 2 and 3.