United States General Accounting Office

GAO Report to the Honorable

Scott Klug, House of Representatives

December 1995 BUDGET ISSUES

Privatization/

Divestiture Practices in

Other Nations

GAO/AIMD-96-23

GAO United States

General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-262042 

December 15, 1995

The Honorable Scott Klug

House of Representatives

Dear Mr. Klug:

This report responds to your request that we review the divestiture

experiences of central governments of several other nations. Specifically,

we examined issues relating to (1) the privatization process, (2) the

valuation and preparation of the assets for sale, and (3) the use and

display of the sale proceeds for budgetary purposes.

In the United States, the term “privatization” can refer to a broad range of

activities that, to varying degrees, lessen the government’s involvement in

the provision of goods and services. In common discourse, the

privatization spectrum can include contracting out, public-private

partnerships, vouchers, and franchising, as well as the actual

sale—divestiture—of government assets and operations. Our review

focused on the last activity, the transfer of ownership from the

government to the private sector. Specifically, we studied the divestiture

of entire operations, a process which involves the sale of an ongoing

concern along with the physical assets associated with the operation. We

did not address concessioning, which is a process by which the

government sells the right to operate property.

A variety of divestiture proposals are currently under consideration in the

United States—including selling the Naval Petroleum Reserves, the United

States Enrichment Corporation, four Power Marketing Administrations,

and the Helium Program.1

 These proposals raise a number of economic,

policy, and budgetary issues related to the management of the process,

structuring the entity for sale, the role of continued regulation, and the use

of sale proceeds.

Since the U.S. government has limited prior experience with the

divestiture of assets2

 you asked us to look at governments with more

experience with divestiture to see if lessons from their experiences may

prove useful to the United States. For this study, we reviewed the

1

Some of these proposals are discussed in other GAO reports. See the list of related GAO products at

the end of the report.

2

The principal divestitures the U.S. government has undertaken are the sale of Conrail in 1987, and the

sale of the Great Plains Coal Gasification Plant in 1988. The details of these sales can be found in

appendix I.

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B-262042 

divestiture experiences of five countries—Canada,3 France, Mexico, New

Zealand, and the United Kingdom. Many of the industries in the countries

reviewed have always been part of the private sector in the United States.

Nevertheless, we found certain common elements in the privatization

process in each country reviewed. Table 1 summarizes the types of

entities, by industry, that each of these countries has sold.

Table 1: Types of Entities Privatized by Country and Industry

Types of major industries fully or partially privatized

Country

Agricultural

services

Mining and

construction Manufacturing

Transportation and

public utilities

Finance,

insurance,

and real

estate Services

Cumulative

sale proceeds

as percentage

of gross

domestic

producta

Canada Fishing Mining

Oil

Aircraft Airline

Trucking

Telecommunications

Hotel 0.6 (1984-1990)

France Oil Petrochemical Financial

services

Insurance

1.5 (1983-1991)

Mexico Mining Automobile

Steel

Iron

Cement

Petrochemical

Foodstuffs

Airline

Trucking

Toll roads

Telecommunications

Financial

services

Hotel 6.3 (1989-1992)

New

Zealand

Forestry Oil Steel

Printing

Airline

Shipping

Rail

Telecommunications

Financial

services

Insurance

Hotel 14.1

(1987-1991)

United

Kingdom

Oil Automobile

Steel

Ordnance

Aerospace

Foodstuffs

Airline

Airport authorities

Trucking

Shipping

Harbors

Bus companies

Telecommunications

Water

Electricity

Financial

services

Hotel

Public

housing

11.9

(1979-1991)

aCumulative sale proceeds are divided by the average annual GDP for the years indicated for

each country.

3

The references to Canada relate only to the federal government and not to the activities of the

provinces, which may have different mechanisms in place for their divestitures.

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Results in Brief The Privatization Process: In the governments examined for this study, the

goals for the privatization program were central to the process and

influenced how and what entities would be offered for sale. For example,

privatization in the United Kingdom was based on the belief that the

private sector could generally operate commercial enterprises more

efficiently than the public sector. Within the overall goal of increasing

efficiency, officials in the United Kingdom said they valued entities for sale

to maximize the proceeds from that particular sale rather than to

determine if the entity should be sold. In contrast, officials in New Zealand

said they used valuation to compare what an entity would be worth if it

were sold to its worth if it were retained by the government because both

economic efficiency and debt reduction were their primary goals.

Generally, the government in New Zealand would only sell entities if the

return from the sale was greater than the value to the government if it

retained the entity.

Valuation and Preparation for Sale: The governments in this study used a

combination of valuation techniques. A few used “clawbacks” or other

types of warrants to help protect taxpayers against undervaluation.

Clawbacks are stipulations that under certain conditions, will require the

buyers to return a share of profits—or losses—to the government. They

have been used by these governments to protect against unanticipated

windfall profits accruing to the entity’s purchasers after privatization. The

use of clawbacks, however, decreases the sale price and may constrain the

entity’s commercial behavior.

All governments we contacted used private sector financial advisors to

assist Treasury or Ministry of Finance staff in the valuation process. In

some countries, the entity to be sold hired its own private sector financial

advisors as well.

As part of restructuring, most of the governments we studied attempted to

remove liabilities or obligations from entities to be privatized. Debt, in

particular, was usually restructured, with the government often retaining

at least some of these liabilities. Most of the governments also paid for

unfunded employee obligations in advance of the sale. Some of the

governments retained other liabilities, such as those relating to

environmental clean-up, to remove risks that would reduce the anticipated

sale price of the entity. Restructuring also included breaking up

monopolies prior to their sale.

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The Use and Display of Sale Proceeds for Budgetary Purposes: Most of the

governments in this study used any proceeds that resulted from

privatization primarily to reduce debt and interest costs and many did not

permit the cash received to be used to offset ongoing spending.4

 The New

Zealand and Mexican governments displayed annual budget deficits and

surpluses both with and without the proceeds from privatization. Despite

this general policy to use proceeds for debt reduction, various government

officials told us that some governments may have used sale proceeds to

offset ongoing spending in particular instances.

The ways in which the governments we studied implemented privatization

programs and the lessons policymakers learned could help the United

States in evaluating and, ultimately, carrying out divestitures currently

under consideration. The matters for consideration section of this report

discusses specific practices of other governments that could be

particularly relevant to issues the United States faces today.

Scope and

Methodology

To identify budgetary issues and concerns, we examined existing

divestiture proposals in the United States, reviewed earlier GAO reports5

and proposed legislation relating to asset divestiture in the United States,

and conducted a literature search of budgetary issues related to

privatization.

We selected industrialized countries for our study that had a history of

selling government-owned assets and for which we could gain access to

appropriate staff and written information. Based on these criteria, we

selected Canada, France, Mexico, New Zealand, and the United Kingdom.

To review the divestiture experiences of these countries, we conducted

telephone interviews with a wide range of government officials directly

involved with divestiture and with experts outside of government who

were responsible for specific aspects of divestiture, such as valuation. We

also reviewed literature on privatization in the five countries and official

government documents. We did not verify the accuracy of all of the

information provided to us nor did we evaluate the sales’ relative success

in achieving national goals.

4

A country cannot actually begin to reduce its nominal government debt unless it is in fiscal balance or

has a budget surplus. However, when a government sells assets, the sale proceeds will reduce the

country’s borrowing requirements from what they would have been, and as a result, the debt servicing

costs will also be reduced.

5

See the list of related GAO products at the end of the report.

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We concentrated our discussions on cross-cutting, rather than

industry-specific, issues we had identified that would be of interest to the

United States as it examines its own divestiture efforts.

We conducted this work in Washington, D.C., from June 1995 through

November 1995 in accordance with generally accepted government

auditing standards. Privatization experts in each of the countries reviewed

our material and we have incorporated their comments where appropriate.

The Privatization

Process

Privatization in the five countries we studied involves a number of

complex steps. The government selects candidates for sale and determines

which must be restructured prior to divestiture. The government may

choose to create a central unit to be responsible for coordinating and

implementing the transfer of ownership from the public to the private

sector. To assist it in the privatization process, the government usually

hires financial advisors. The advisors are expected to represent the

government’s and the taxpayers’ interests, as well as provide guidance on

how to value and sell the entity. The government’s overall objectives for

privatization heavily influence how these steps are carried out.

Clear Goals Are the

Cornerstone of the

Privatization Process

We found that the government’s goals, either for its overall privatization

agenda or for individual privatization initiatives, influenced what entities

would be privatized, how they would be valued, what type of sale would

be used, and who would be eligible to purchase the entity. All the

governments we contacted undertook privatization for a variety of reasons

but all stated that they used privatization primarily to increase economic

efficiency and reduce the size of the public sector. Most also stated that

they used privatization to assist in reducing their public debt. Some

governments clearly placed a higher priority on increasing economic

efficiency, while others gave a higher priority to debt reduction.

In the United Kingdom, privatization was grounded in the belief that,

generally, the private sector could operate commercial enterprises more

efficiently than the public sector. Because the decision to sell had already

been made, the entity’s present value under continued government

ownership was usually not estimated. The government was willing to sell

an entity even if it would generate more money for the government as a

public entity than the government would receive from its sale. The United

Kingdom has also tried to increase share ownership of stock among the

general public and has sold many entities through public offerings. The

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government has generally sold shares at a discount to employees and the

public and, as an incentive, offered installment plans to pay for the shares.

New Zealand undertook privatization to improve economic efficiency,

reduce the government’s exposure to commercial risk, and decrease

government debt. To help achieve these goals, sales were open to the

largest possible number of bidders and foreign ownership of privatized

assets was not restricted. We were told that privatization has greatly

enhanced the performance of certain inefficient sectors of the economy

such as the telephone industry, which in turn has helped to make

privatization more acceptable to the public.

During the 1980s and early 1990s, the Progressive Conservative

government in Canada privatized government corporations to increase

economic efficiency, reduce the demands that public enterprises exerted

on government management and financial resources, and reduce

government intervention in the economy. The size of the public debt has

become a growing concern in Canada and, according to a public debt

expert, the current Liberal government has begun to portray privatization

as a way to alleviate the deficit and debt situation in Canada, particularly

through two public offerings, the Canadian National Railroad and Petro

Canada. In the past, Canada has limited foreign participation in asset sales,

but the most recent public offering of Canadian National placed no

restrictions on foreign ownership.

According to documents provided by the French Treasury, the French

government sought to develop the Paris financial market through its

privatization program. The use of public offerings has enabled

privatization to play a decisive role in shifting personal savings into the

equity market. While preferential treatment is provided to French

residents at the time of sale, there are few legal limits on share ownership

in public offerings. Except for companies operating in the health, safety,

and defense sectors, the only legal limit is that non-European Union

investors may not acquire securities representing more than 20 percent of

the company’s equity at the time of the initial sale. In subsequent sales,

there are no limits on foreign purchases.

Privatization in Mexico was part of a larger strategy to increase the

efficiency and competitiveness of the economy and increase its credibility

on the international markets. Debt reduction has been essential for

Mexico, particularly to reestablish credibility with its creditors.6

 To help

6

Deficit Reduction: Experiences of Other Nations (GAO/AIMD-95-30, December 13, 1994).

Page 6 GAO/AIMD-96-23 Privatization and Divestiture Practices
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meet its goals of increased economic efficiency and debt reduction, the

Mexican government closed, merged, or sold 1,008 out of 1,155 public

enterprises between 1982 and 1992. The government deposited most of the

proceeds from privatization in a separate Contingency Fund and used the

funds to retire government debt. While some of the entities that were

privatized in Mexico were very profitable, many of the entities the

government sold or shut down were money losers. The subsequent

discontinuation of subsidies also helped to improve the government’s

fiscal position.

Mexico’s constitution identifies strategic areas that must remain within the

domain of the federal government. The constitution has been amended

over time, however, to permit certain strategic areas to be privatized. For

example, railroads were strategic at one time and can now be privatized.

And, while Petroleos Mexicanos (PEMEX)—the national oil

company—remains a strategic firm, an official told us that the basic

petrochemical operations of PEMEX are now being offered for sale.

The Mexican government restricts the level of foreign capital that can be

invested in the country, although foreign investment regulations were

liberalized at the end of the 1980s and majority foreign ownership is

allowed in most sectors. We were told that the level of foreign investment

that should be allowed in each industry is currently being debated by the

government.

Centralized Approach to

Privatization Is Common

A central agency or commission holds primary responsibility for the

management or oversight of the privatization process in all of the

countries in this study. This structure has enabled a stable core of staff to

develop expertise in managing the privatization process. It has also

allowed the governments to implement a governmentwide approach to

privatization. Table 2 shows the entities controlling the privatization

process in each of the governments we studied.

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Table 2: Responsibility for Control of

Privatization Process Country Entity controlling privatization process

Canada The Crown Corporation and Privatization Sector group,

jointly managed by the Treasury Board and the Ministry of

Finance, manages the sale.

France Treasury manages the sale.

Privatization Commission manages valuation.

Mexico Interministerial Commission determines how an entity

should be privatized. 

Privatization offices within the Ministries of Finance and

Communications, and Transport administer the sale.

New Zealand Treasury manages the sale.

United Kingdom Treasury oversees and assists responsible ministry with

the sale.

In the United Kingdom, a privatization unit within the Treasury oversees

and assists the responsible ministry with the sale of public enterprises.

The Treasury plays a coordinating role to ensure consistent decisions

across individual privatizations. According to a Treasury official in the

United Kingdom, the government’s privatization efforts have led it to

recognize the value of having a group of dedicated officials oversee most

divestitures.

Canada had no central authority for the privatization process prior to the

late 1980s; each ministry was responsible for developing its own

privatization proposals. Because of dissatisfaction with the management

and pace of privatization, a central authority, the Office of Privatization

and Regulatory Affairs, was established in 1986. The current Crown

Corporations and Privatization Sector group, which reports to both the

Treasury Board and the Ministry of Finance, was created in 1991 to

oversee the management and disposal of Crown corporations, which are

wholly owned government corporations. The Treasury Board monitors the

management of the budget and serves as a budget scorekeeper.

Corporatization Frequently

Precedes Privatization

The countries we studied generally converted (1) government agencies or

functions into a corporate form prior to privatization or (2) primarily

privatized entities already in a corporate form. The definition of a

government corporation or enterprise varies from country to country.

Government corporations are generally commercial in character,

self-sustaining or potentially self-sustaining, and may be exempt from a

variety of personnel and regulatory restrictions applicable to government

entities. In some countries, government corporations pay taxes.

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New Zealand has used corporatization as a way to increase the efficiency

and competitiveness of an entity while it remains within the government

and as a stepping stone for privatization. We were told that New Zealand

state-owned enterprises (SOE), which are entities that have been

commercialized and corporatized, are very similar to their private sector

counterparts. They pay taxes to the government, are not subject to

government budget and personnel rules, must borrow from the private

sector, and have private sector boards. The government, however, remains

the sole shareholder. While the government does not guarantee the debt of

SOEs, we were told that there is some concern that offshore debt holders

may assume that some form of implicit guarantee exists.

New Zealand primarily has privatized entities that have already been

transformed into SOEs. The government in New Zealand has used

corporatization as an opportunity to clean up an entity’s outstanding

obligations prior to privatization. Experts stated that the performance of

entities that were corporatized and then sold has been better than those

that were not corporatized prior to privatization. These experts also said

that the government learned it was much more difficult to privatize a

department without the restructuring and debt reduction that

corporatization engenders. The existing obligations and liabilities of a

department complicate the sale and, as the entity has no track record as a

commercial enterprise, it can be difficult to value.

The United Kingdom has primarily sold nationalized industries, which are

already in a corporate form. Canada has primarily divested Crown

corporations. The governments in the United Kingdom and Canada have

also begun to divest departmental activities. France has almost exclusively

sold public enterprises, and the Mexican government sold either SOEs or

their fixed assets.

Valuation and

Preparation for Sale

The valuation process is complex—it involves not only the mechanics of

valuing the entity, but also determining the appropriate type of sale and

the best financial and/or organizational structure for the entity at the time

of divestiture. All of this occurs within the overriding context of the

country’s privatization goals.

Valuation is not an exact science. It requires a great deal of experience and

depends to some extent on the professional judgment of those conducting

the valuation. Different valuation methods may result in different ranges of

expected values depending on, for example, the assumptions about the

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future performance of the entity, the expectation of future earnings, and

the level of investor interest.

Officials in most of the countries told us that because of this complexity,

the centralized agencies responsible for the management of privatization

hired financial advisors to assist with the valuation process. In the United

Kingdom and France, the entity being sold often hired its own financial

advisors to represent the entity’s interests, such as the desire for a

generous capital structure. Neither the entity nor its advisors, however,

took the lead in managing the sale process.

Government Goals for

Privatization Affect Use of

Valuation

All the governments we studied employed a combination of valuation

techniques to estimate the value of the entity being sold and to forecast

the proceeds. Most used present value analysis, but other approaches were

also used to develop an overall valuation.

In the governments we studied, the valuation process served a variety of

goals. For example, valuation entered into some governments’ decisions

about whether to sell an entity. Valuation was also used to determine the

appropriate financial and organizational structure to maximize proceeds.

The United Kingdom used valuation primarily to maximize proceeds

because the decision to sell had already been made. In New Zealand, the

government relied on valuation to determine whether to sell the entity to

meet its goals of improved economic efficiency and debt reduction. Many

of the countries also used valuation to determine a minimum acceptable

price or a price range. We were told that, in general, none of the

governments in this study included estimated future tax revenues from the

entities sold in their estimate of future returns to the government because

many of the entities already paid taxes and it is generally difficult to

forecast tax revenues.

France primarily uses valuation to gauge the market, minimize market

risk, and maximize the proceeds from a sale. The French privatization law

of 1993 specifies what will be privatized; the government, therefore, does

not use valuation to compare the return to the government of retaining as

opposed to selling the entity. Valuation is done using a variety of analyses,

including net present value analysis.

In determining whether to privatize an entity, New Zealand conducts

studies to estimate the market value of the entity if it were sold compared

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to the returns accruing to the government from retaining the entity. The

government’s advisors conduct a cash flow analysis to determine if the

entity is worth more under government ownership or private ownership.

When valuing the entity both under continued government ownership and

as a private sector concern, the government uses a commercial discount

rate appropriate for the industry in which the entity is located. If the

returns from selling the entity do not exceed the returns from government

ownership, then the entity generally is not sold.

In Canada, the government uses valuation to assist in pricing rather than

to determine whether or not to privatize an entity. Valuation is used to

develop a range of expected proceeds and not a minimum acceptable

price. The government has not generally sold entities where the sale would

have been uneconomical, although money losing entities brought low

returns. According to a privatization expert, the government has reduced

the number of people who know the details of the privatization

transactions during their final stages to help maintain the integrity of the

process.

In Mexico the government first determined whether an entity was

indispensable; if the entity was not, the government closed, merged, or

sold it. In cases where the entity was to be sold, the government used

valuation to maximize the proceeds from the sale. We were told that the

government often uses the current value of future cash flows to value an

entity. The advisors develop a minimum reference point for the price the

government should expect to receive for the entity. The majority of

transactions have been at a price equal to or greater than the

recommended minimum amount.

Clawbacks Used to Protect

Against Undervaluation

Both the United Kingdom and New Zealand use “clawbacks” to address

uncertainty in specific valuation situations, for example, where

assumptions crucial to the valuation may change. Clawbacks in the United

Kingdom have been used to protect the government (that is, the taxpayers)

from new owners realizing unanticipated windfall profits7

 after

privatization from the sale of surplus property. A typical clawback may

specify that if the entity sells a certain property over a period of 10 years

for values at a specified amount greater than the original value, a portion

of the proceeds will go to the government. The United Kingdom’s

7

Such protections are not unprecedented in the United States. In the 1980s, warrants were issued to

give the government a share in Chrysler’s future profits in return for the risks the government incurred

in offering guaranteed loans as part of the Chrysler “bailout.” Warrants represent options to purchase

stock for a specified time and price.

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experience underscores the importance of identifying and valuing land

owned by public entities which are to be sold. In some instances, such

land has far less value to government than to the private sector, which may

develop it.

We were told that the United Kingdom takes a cautious approach when

using clawbacks because it recognizes that their use can decrease the sale

price as well as constrain the entity’s commercial behavior. For example,

if the government “claws back” certain gains, it may reduce a firm’s

incentive to find and use new productive resources. According to a

government official, clawbacks have been used when the value of the

property has increased after privatization, not when operating profits were

higher than expected.

In New Zealand clawbacks have been used in a broader range of

situations. For example, according to documents from the New Zealand

Treasury, the Petroleum Mining Licenses contract includes clauses

whereby the government receives more money if oil prices rise above the

benchmark levels used in the valuation or if reserves prove to be in excess

of the present expected reserves estimate. New Zealand also used a

clawback in the sale of the gas reticulation system. An official told us that

the provision specified that if the share price increased to a specified

amount by a certain date, then the company would pay the government a

certain amount, but if the price decreased, then the government would buy

back shares. The price did in fact decrease and the government had to buy

back a percentage of the shares.

Economic Factors and

Privatization Goals Helped

Determine Method of Sale

The governments we studied used several of types of sales in their

privatization efforts, including public offerings, private sales to companies

or individual investors, and management/employee8

 buyouts. The type of

sale can be linked to the size of the entity being sold and the country’s

financial markets. Public offerings are generally used in fairly well

developed financial markets and for the sale of large assets with

established financial track records. Significant administrative costs are

typically associated with a public offering, such as developing the

prospectus and marketing the sale. In situations where the entities to be

sold are relatively small or lack a financial track record, or where the

country’s financial markets are less developed, private sales are used.

8

According to the World Bank, a management/employee buyout is a technique whereby the managers

and employees acquire a controlling interest in the company. The buyout may involve the use of credit

to finance the acquisition, with the assets of the acquired company generally used as security.

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The United Kingdom and France used public offerings to increase share

ownership and develop financial markets, respectively. Mexico has

primarily used private sales because of the limited size of its financial

markets; New Zealand has typically used private sales rather than public

offerings, which, according to government officials in New Zealand, are

more costly to administer and involve greater risk. Canada has relied on

both public offerings and private sales, based primarily on the size of the

entities being sold. According to officials in each of the five countries we

spoke with, the governments used advisors for assistance in determining

the most appropriate type of sale.

The United Kingdom’s major privatizations have been through public

offerings. According to the government’s financial advisors, public

offerings develop the greatest price competition and thus allow the

government to obtain the most value for the entity being sold. Initial public

offerings were carried out with traditional methods, involving

underwriters and fixed price offers. However, the United Kingdom has

moved away from using underwriters and now uses “book building.” Book

building involves establishing a syndicate to ask institutional buyers how

many shares, and at what price, they will purchase. This establishes a

range of prices and enables the offering to be more accurately priced, in

contrast to a fixed price offer in which the share price is determined prior

to the actual offering.

The United Kingdom has used private sales for entities where it would not

have been appropriate or cost effective to use public offerings. In addition,

the United Kingdom used management/employee buyouts to increase

employee share ownership. In private sales, the government’s financial

advisors typically conduct a discounted cash flow analysis to establish an

internal benchmark for acceptable bids, which is not disclosed. An official

told us that the government may accept a price that is below the

benchmark because the government’s main objective is to increase

economic efficiency through privatization, and maximizing the return to

the taxpayer is secondary. The final price is determined by a competitive

bidding process, in which the highest bid is usually accepted. The

government encourages management/employee buyouts, and price

preferences have been offered to management to assist with buy-out costs.

Both the National Freight Corporation and Vickers Ship Building and

Engineering were sold to their former employees. In addition, provisions

are made to encourage employee participation in share offerings. For

example, the government may issue free shares or offer discounts to

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employees. Shares were purchased by 99 percent of British Gas employees

and 96 percent of British Telecom employees.

According to a government official, New Zealand has conducted its

divestitures mainly through private sales, rather than through public stock

offerings, because such sales are less expensive to administer, require

fewer warranties and indemnities, result in a maximized return and

minimize the risk of over- or under-pricing. In order to maximize returns,

New Zealand sold entities to the highest bidder and was willing to sell to

foreign owners. Management/employee buyouts are permitted, but only as

part of the competitive bidding process. We were told that buyout bids are

rarely the highest bids and are therefore usually unsuccessful.

In Canada, the government uses both public offerings and private sales,

depending on the size and type of entity being sold. The government uses

underwriters for public offerings and large offerings have been completed

in several stages. According to a privatization consultant, the Canadian

government always tries to pay attention to employee interests because if

this is not done, employee concerns can potentially derail the sale. We

were told that management/employee buyouts had not been used at the

time of our review.

Mexico has primarily used private sales for its privatizations because it has

not yet had the capital markets to support public offerings. The sales are

conducted through a competitive bidding process with a sealed bid. Since

the price is the most important consideration in the assessment, the

highest bid generally wins.

France generally uses public offerings to sell public enterprises, but it has

also used negotiated sales (private sales on an auction basis). Financial

advisors provide the Privatization Commission with a range of expected

prices, from which the Commission determines a minimum acceptable

value. The government then uses book building to gauge the market,

facilitate placement of the offering, and reduce market risk. The sale price

the government will accept cannot be below the minimum value.

In France, the government is required to include employees in public

offerings. A 10-percent quota of the shares sold on the open market was

reserved for employees of the privatizing entity. Price rebates, up to a

maximum of 20 percent, could be granted. However, if the price rebate

exceeded 5 percent, the employees had to retain the shares for a specified

period, which was generally 2 years.

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Restructuring for Sale Public entities were often restructured to improve their salability or to

engender competition. Financial restructuring might be needed to mitigate

the entity’s debt and/or existing liabilities, such as pension obligations and

environmental liabilities. Organizational restructuring might also be

necessary to break up a monopoly and introduce competition.

Determining both the current and future status of an entity’s existing

obligations was therefore often considered a necessary step in the

valuation process. For these five countries, such obligations included

underfunded pension commitments, post-retirement health benefits,

environmental cleanup costs, and debt. Governments decided whether to

retain responsibility for the remaining liabilities or to sell them with the

entity. The market price can be expected to increase for an entity sold

with fewer liabilities, particularly liabilities with uncertain costs.

Organizational restructuring may also be necessary. If the entity is a

monopoly, it may need to be broken up prior to the sale or regulations may

need to be put in place to protect the consumer. Whether or not an entity

is sold as a monopoly may also affect the price the government receives

from the sale.

Restructuring of Debt and

Liabilities Usually Occurs

Prior to Corporatization or

Sale

Governments determine, either on a case-by-case basis or as an overall

policy, how an entity to be privatized will be structured for sale. The

market price of an entity is reduced by the liabilities that come with it; the

price may be reduced further by the risk premium associated with any

uncertain liabilities. All governments in this study retained some amount

of debt associated with entities to be sold, and generally paid the balance

on under-funded or unfunded employee obligations.

All of the governments used public resources to restructure entities in an

attempt to make them viable competitive firms. Officials in all of the

countries, however, stated that the government does not generally put a

significant amount of new investment in an entity prior to sale and many

stated that this was because the private sector is believed to be better able

to make investment decisions.

The United Kingdom has undertaken substantial restructuring of debt and

liabilities to make the entities economically attractive to investors.

According to an official in the United Kingdom, the government may retain

a portion of the entity’s debt. In addition, the government ensures that

pension programs are properly funded prior to the sale of the entity. For

example, prior to the sale of the National Freight Company, the

government paid 47 million pounds into the pension fund; the government

Page 15 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

also retained 1,250 million pounds of British Telecom’s underfunded

pension liability.

New Zealand generally restructures entities when they are converted into

a corporate form (that is, into a state-owned enterprise). Since the

government usually corporatizes before selling an entity, it addresses

issues pertaining to outstanding obligations and liabilities during the

corporatization process rather than during sale preparation. The

government decides whether to retain or transfer these obligations and

liabilities to the newly created SOE on a case-by-case basis. According to a

privatization expert, pensions in New Zealand are not underfunded, but

the personnel and liability issues that remain, such as the transfer of the

pension plans to the private sector, are sorted out during the

corporatization process.

We were told that in France public enterprises are under commercial law

and public enterprise employees do not generally have civil service status;

thus, there are few changes for the employees as the result of a sale. A

government official told us that France, with a few exceptions, only sells

entities that are in good financial condition and that most of the

enterprises that have undergone privatization have not required major

financial restructuring.

The Canadian government tries to ensure that the entity to be sold is

commercially viable. In preparing Crown corporations for sale, the

government usually retained some of the debt and other liabilities, but this

varied depending on the entity being sold. The goal of the government is to

reduce liabilities to the point where the corporation is able to operate

viably in the private sector. We were also told that the Canadian

government provides generous severance payments and that their cost can

be significant.

In Mexico, the government identifies the entity’s unfunded obligations

prior to the sale of the entity. We were told, however, that this does not

mean the government will necessarily retain the liability or pay off the

unfunded costs. The government quantifies the existing liabilities so that

the bidder knows the status of the entity that is for sale. In some

privatizations, the government may retain all of the debt or liabilities,

while in other instances the government clearly identifies the liabilities

and/or debt and the prospective owner agrees to pay the costs. In some

cases, the entity would not have been saleable if the government had not

retained its large debt.

Page 16 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

An official in Mexico told us that any employee layoffs usually occurred

after a firm was privatized. An employee who is dismissed is entitled to a

minimum of 3 months pay plus a seniority bonus, which is equal to as

much as 20 days per year of service. When a firm with staff having above

average seniority is sold, the potential for the seniority bonus is disclosed

in the sales transaction.

Existing and future environmental liabilities can also represent a large

cost. We were told that in Mexico the government performs an audit to

document existing environmental liabilities and provides the written

report to the bidders. In some instances, the government will assume

responsibility for the clean-up, and in other cases the bidder will buy the

entity with certain liabilities intact. In either case, uncertainty about these

liabilities has been reduced.

Governments Try to

Ensure Competition

Officials we interviewed said that the presence or absence of competition

is very important in determining how and what to privatize. Some of the

governments that sold monopolies either (1) tried to create competition by

eliminating the monopoly statutes that had prevented competitors from

entering the market or (2) broke up monopolies, thereby injecting

competition. Governments in France and New Zealand will not privatize

monopolies. New Zealand will not sell natural monopolies9

 because they

are economically inefficient. France does not sell monopolies because the

government believes that certain public functions, such as the provision of

public utilities, require a monopolistic structure to ensure equal access to

high quality service. As a result, France has not privatized certain entities

that other countries have privatized.

The United Kingdom has sold natural monopolies, but in each case it

established a regulatory body with the responsibility of preventing the

abuse of monopoly powers. An official stated that during the early stages

of the United Kingdom’s privatization program, the government sold

natural monopolies along with the monopolies’ related business units. For

example, the gas industry was sold as one company, meaning that the pipe

network (the natural monopoly) was sold with its business units, such as

those that bought gas or those that distributed gas. Thus, the natural

monopoly was in a strong position to abuse its power because of the

vertical and horizontal integration. The United Kingdom has learned from

9

A natural monopoly arises when the entire output of an industry can be most efficiently produced by a

single firm, for example, when the firm has significant economies of scale. For this reason natural

monopolies are often regulated or government run. Statutory monopolies are monopolies where an

exclusive right to sell is granted by law, and may include natural monopolies.

Page 17 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

this experience and now tries not to privatize natural monopolies with

their related business units. The government tries to break up the

monopoly so that the portions that could be competitive are separated,

thus leaving only the natural monopoly to be regulated.

A privatization expert in Mexico stated that the government has learned

important lessons from the sale of intact monopolies. The telephone

company in Mexico (TELMEX) was sold intact. The government received

significant revenues from the sale of the monopoly, and therefore, initially

considered the sale a success. However, the taxpayer benefitted little in

terms of prices or service. The government’s policy is now to attempt to

update the regulations and the structure of the industry or entity prior to

its sale.

We were told that the New Zealand government has a policy not to sell

natural monopolies. It will, however, sell statutory monopolies once the

legislation that created the monopoly has been removed and the entity has

been restructured to allow competition in the industry. We were also told

that even though entities with monopoly rights generate a higher price,

New Zealand has decided not to sell monopolies because they would not

enhance economic efficiency if transferred to the private sector.

For example, New Zealand Telecom was de-monopolized and new firms

were encouraged to enter the market prior to its privatization. Also, an

official told us that New Zealand sold its railroad, but only after repealing

the law requiring rail freight transport for distances exceeding 100 miles.

This, in effect, permitted other forms of transport to compete. In contrast,

the air traffic control system, which is a natural monopoly, has been

corporatized, but there are currently no discussions of privatizing it.

France has not included monopolies in its privatization program.

According to Treasury documents, this decision stems from the premise

that certain activities must be strictly regulated if overall effectiveness is

to be reconciled with consumer protection. For this reason, France’s

major public services, including electricity, gas, telecommunications, and

rail transport, have not been privatized. The monopoly statutes of some of

these services, however, are due to expire in the near future. A Treasury

official in France told us that the government is considering the

privatization of some of these entities, including France Telecom, whose

monopoly statute will expire in 1998.

Page 18 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

Competition is a factor in Canada in determining whether or not to

privatize, but the government has in some cases privatized where no

competition exists. In these cases, the government established a

regulatory regime prior to the sale. This is discussed in greater detail in the

next section.

Regulation Continues to

Play a Role in Privatized

Industries

Many of the countries we spoke with continued to regulate their former

monopolies, even after breaking them up. These governments expressed

the view that some degree of continued control of rates and services in

what were previously public functions was necessary to protect the

interests of the consumer and ensure economic efficiency.

As discussed above, the United Kingdom establishes a regulatory body

with responsibility for regulating natural monopolies and promoting

competition. For example, price formulas are used that in most cases limit

the annual price increases to no more—and usually less—than the rate of

inflation. In addition, competition is encouraged by breaking out the

potentially competitive segments of the monopoly and restricting their

activities, thus allowing other firms to enter into the market.

The New Zealand government has used “Kiwi Shares” to protect

consumers. According to a government official, a Kiwi Share is a single

share of the privatized entity that is held by the government and provides

the government with regulatory authority to enforce conditions of the sale.

However, the Kiwi Share has no voting or income distribution rights. For

example, in the privatization of New Zealand Telecom, a Kiwi Share was

used to protect rural telephone service. It was feared that once New

Zealand Telecom was sold, rural service would either decrease or its price

would increase significantly. The Kiwi Share limited future price increases

for rural service to no more than the annual rate of overall price inflation.

The sale of Teleglobe Canada, a Crown corporation with a monopoly on

international communications, is an example of Canada’s sale of an intact

monopoly. The corporation was not subject to regulation prior to its sale,

and the privatization process was long and complex, particularly because

of unresolved issues, including questions relating to regulatory policy. The

government knew that higher rates would raise the value to the bidder and

the government. Higher rates, however, were unpopular with the Canadian

public. The final regulatory agreements allowed Teleglobe to retain its

monopoly status for at least 5 years, but required it to reduce its rates.

Page 19 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

Budget Display and

Use of Sale Proceeds

Most of the governments in this study use any cash proceeds that result

from privatization to reduce debt and interest costs and do not permit

proceeds to be used to offset ongoing spending. However, according to

various government officials, proceeds have sometimes been used to

finance ongoing spending. Many of the governments display proceeds

from privatization both within and distinct from their government’s annual

budget deficit or surplus numbers. How a government incorporates

privatization proceeds into its budget has important implications for

deficit reduction. If the proceeds are included within the budget, the

government’s deficit for that year will be reduced by the nonrecurring

privatization proceeds. In concept, this could lessen the pressure to

identify spending reductions in ongoing operations. Decreasing the

spending levels of ongoing operations can result in long-term budgetary

savings, while the proceeds from privatization provide only a one-time

offset to the deficit.

Although governments talk of using privatization proceeds to reduce debt,

technically, a country cannot actually begin to reduce its nominal

government debt unless it is in fiscal balance or has a budget surplus.

Nevertheless, when a government sells assets, the sale proceeds will

reduce the country’s borrowing requirements from what they would have

been and, as a result, the debt servicing costs will also be reduced.

Privatization Proceeds

Reserved to Reduce Public

Debt but May Finance

Ongoing Spending

Mexico has earmarked most of the proceeds from privatization for debt

reduction. Government officials in Mexico told us that they strongly

believe that nonrecurring revenues from privatization should not be used

for ongoing operations. The government created a Contingency Fund in

which the revenues from privatization have been set aside as reserves to

deal with external shocks or to cancel public debt. Government officials

told us that most of the proceeds from privatization have been placed in

this fund and used to retire government debt. According to a budget

official, the government presents its budget and deficit numbers with and

without the proceeds from privatization in order to discourage using the

proceeds for ongoing operations.

New Zealand has also used proceeds from privatization primarily for debt

reduction. The government displayed the sale proceeds on-budget but

drew a line to signify that they were not included in what the government

called the “adjusted deficit.” The proceeds were used to reduce the

government’s borrowing requirements when the government was in

deficit, thus reducing debt servicing costs; when the government reached

Page 20 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

budget surplus, the proceeds were used to buy down debt. The proceeds

were not used to offset expenditures and the deficit reduction that results

from privatization appears in addition to planned spending reductions.

France has generally used the proceeds from privatization to reduce its

borrowing requirements. According to documents provided by the

Treasury, between 1986 and 1988, about two-thirds of any proceeds from

privatization were earmarked for debt reduction. More recently, however,

these same documents state that the proceeds have been used for general

budget appropriations and to sustain the economy through a period of

reduced growth. A substantial portion of the proceeds from the current

privatizations is being used to retain programs designed to cushion the

impact of a recession by assisting the unemployed in finding new jobs.

In Canada, the impact of privatization on the reported budget deficit is the

difference between the realized proceeds of the sale and the recorded

value. For example, according to a government official, if an entity is

recorded in the public accounts at Can$1 billion and the proceeds from the

sale equal Can$1 billion, the sale will have no on-budget effect on the

reported deficit. If the proceeds exceed the recorded value, for example, if

they equal Can$1.2 billion, the reported deficit will be reduced by the

amount that is greater than the recorded value, that is, by Can$0.2 billion.

This Can$0.2 billion must, by law, be deposited in the Debt Servicing and

Reduction account. The funds in this account are to be applied to the

annual interest costs on government borrowing and ultimately to buying

down debt. The proceeds are used to reduce the government’s borrowing

requirements.

In the United Kingdom, privatization proceeds are considered negative

expenditures. The proceeds are not earmarked for specific purposes,

however, but are generally deposited in the Consolidated Fund along with

other government receipts. Government officials stated that the proceeds

are used to decrease the public sector borrowing requirement, which in

the United Kingdom is defined as all receipts and expenditures at all levels

of government, including borrowing by nationalized industries, debt

interest, and privatization proceeds. The Treasury does not use the

proceeds to make room for additional expenditures in programs that have

a cash limit, but one official stated that he believed that the privatization

proceeds have weakened the downward pressure on expenditures that

Treasury tries to apply.

Page 21 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

Matters for

Congressional

Consideration

The ways in which governments we studied implemented privatization

programs and the lessons those policymakers learned could help the

United States in evaluating and, ultimately, carrying out divestitures

currently under consideration. As the debate over such proposals

suggests, there are issues in the United States regarding how best to

evaluate a proposal to sell, who should manage the valuation and sale

processes, how to estimate future proceeds, how the sale should be

structured, and how the proceeds should be treated in the budget.

The experiences in the governments we examined suggest that often no

single answer is widely applicable to all governments in all situations.

Nonetheless, the information these governments provided may help the

United States smooth the transfer of viable operations from the public to

the private sector. Further, some specific elements of other governments’

practices may have particular relevance to issues the United States faces

today.

Consistent Management All the countries we studied kept management or oversight of the

privatization process in their Treasury or central financial ministry. A

government representative in one country told us that doing so allowed

the government to build upon early divestiture experiences. The

representative also noted that because the management of the entity to be

sold had different and sometimes conflicting interests than those of the

central financial agency, the latter maintained responsibility for most

aspects of sale structuring.

External financial advice was also necessary. The governments we

consulted rely heavily on private sector expertise in estimating market

values and structuring sales. These advisors generally reported to the

finance ministry charged with managing the divestiture, not to the entity

being sold.

The U.S. government has embarked on only two large divestitures in the

recent past and, therefore, has had little reason to create a centralized

process for managing such sales. The Department of Transportation was

responsible for managing the sale of Conrail and the Department of

Energy oversaw the Great Plains Coal Gasification sale. More recently, the

Department of the Treasury has played an active role in concurring with

key decisions in the sale of the United States Enrichment Corporation

Page 22 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

(USEC); however, as we observed in our report on these preparations,10 the

privatization plan USEC prepared clearly states that USEC and its board of

directors will play the lead role in determining how and when the key

decisions will be made.

Although the U.S. government cannot privatize as many operations as

other countries such as the United Kingdom and New Zealand have, more

such proposals are under serious consideration in the United States. This

suggests that considering a consistent management process would prove

beneficial. Assigning responsibility for all divestitures to a single agency

could take advantage of the “learning curve,” as these other governments

did, by applying expertise gained from earlier privatizations to subsequent

sales. Doing so unambiguously could also help clarify who represents the

government in the sales transactions and remove any appearance of

conflict. This continuity of experience could also provide the expertise

required to identify situations in which the use of special techniques such

as clawbacks or warrants on windfall profits would be appropriate. In our

report on USEC’s privatization plan, we stated that the Treasury should

have the lead role since Treasury officials, unlike USEC’s managers and its

board, will not be directly affected by the privatization and will therefore

be better able to protect taxpayer interests. The experience of other

governments also suggests that the U.S. government might usefully

consider assigning the lead role in all divestiture preparations and

management to a central financial agency, such as the Treasury

Department.

Budget Incentives According to officials, the stated policies of most of the governments we

studied do not permit the proceeds from asset sales to offset ongoing

spending; however, such offsets have apparently occurred from time to

time. These policies exist for the same reason that current U.S. budget

rules do not permit proceeds from asset sales to be scored: using one-time

revenues to finance new spending allows the appearance of balance in the

short run while creating greater imbalance in the long run.

A major issue under current U.S. budget law pertains to the fact that

congressional committees that have jurisdiction over entities being

privatized are not permitted to “score” the proceeds from asset sales for

budget enforcement purposes; this means that they cannot use the

10Uranium Enrichment: Process to Privatize the U.S. Enrichment Corporation Needs to Be

Strengthened (GAO/RCED-95-245, September 14, 1995).

Page 23 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

proceeds to offset additional expenditures within their budget allocation.11

The privatization proceeds reduce the government’s current borrowing

requirements from what they might otherwise have been, but do not,

however, “count” towards the deficit reduction goals specified under the

Budget Enforcement Act of 1990, as amended. These scoring rules may

result in a non-neutral budget situation. While the proceeds are not scored,

any outlays—such as those necessary to fund underwriters for the

sale—or revenue losses associated with the sale of a revenue-generating

entity are scored.

Therefore, concerns that U.S. budget rules carry disincentives to privatize

have merit. Because the costs of divestiture—including the loss of the

entity’s stream of future net revenues—are counted while sale proceeds

are not, in this budgetary environment, it is difficult to sell money-making

operations unless an offsetting change in receipts or mandatory spending

can be found. Current budget rules favor retaining profit-making

operations—the very entities most likely to appeal to potential buyers and

least likely to require government subsidies—regardless of the economic

or even fiscal arguments for moving these businesses to the private sector.

We found that budget rules that prevent the use of one-time proceeds to

finance ongoing spending are widely used. However, budget rules should

not dominate the divestiture decision; the decision to privatize should be

made on other grounds. Therefore, the Congress may wish to consider

ways to neutralize the scoring. It would be possible to alter budget rules to

permit the use of sale proceeds only to offset any costs associated with

implementing the sale plus any loss of net revenues now and in the future.

Remaining proceeds could be used to reduce the government’s current

borrowing requirements.

We are sending copies of this report to the President of the Senate, the

Speaker of the House of Representatives, and the Chairmen and Ranking

Members of the House and Senate Budget Committees. We are also

sending copies to the Director of the Congressional Budget Office, the

Secretary of the Treasury, and the Director of the Office of Management

and Budget. Copies will be made available to others upon request.

This work was performed under the direction of Barbara Bovbjerg,

Assistant Director. Other major contributors were Hannah Laufe,

11In the United States, liabilities held by the government are not generally recognized in the budget, nor

are they recognized if retained as a condition of the sale.

Page 24 GAO/AIMD-96-23 Privatization and Divestiture Practices
B-262042 

Evaluator-in-Charge, and Sheri Powner, Evaluator. Please contact me at

(202) 512-9142 if you or your staff have any questions.

Sincerely yours,

Susan J. Irving

Associate Director, Budget Issues

Page 25 GAO/AIMD-96-23 Privatization and Divestiture Practices
Appendix I 

Previous Divestitures of U.S. Government

Assets

Conrail In 1987, the Department of Transportation (DOT) sold Conrail through a

public offering, which resulted in net proceeds to the government of

$1.575 billion. The government’s goals for privatizing Conrail included

providing for the long-term viability and continuation of rail service in the

Northeast and Midwest, protecting the public interest in a sound rail

transportation system, and, to the extent not inconsistent with these

purposes, securing the maximum proceeds possible from the sale. The

government met its primary goals for the sale of Conrail, in that it ensured

the continuation of viable rail service, but only after spending about

$8 billion creating, subsidizing, and preparing Conrail for sale.

Conrail was created in 1976 as a for-profit government corporation

resulting from the consolidation of seven bankrupt railroads. The

government was given an 85-percent common stock interest in the

company. The other 15 percent of Conrail’s common stock was held

through an employee stock ownership plan. The Congress, however, spent

over $7 billion on Conrail-related activities through 1988. This included

funds to purchase the properties of the bankrupt railroads, operating

subsidies and capital improvements, and employee buyouts.

By the end of 1980, however, Conrail had accumulated substantial

operating losses. In 1980, the Congress passed the Staggers Rail Act which

authorized substantial deregulation of rail transportation. In 1981, the

Congress passed the Northeast Rail Service Act (NERSA) to help Conrail

reach profitability. NERSA enabled Conrail to expedite abandonment of

unprofitable lines and transfer commuter services to other operators,

established a government-funded severance program, provided funding for

certain supplemental unemployment benefit payments, and exempted

Conrail from state taxes. After these measures were enacted, Conrail

began reporting operating profits.

NERSA also authorized DOT to hire an investment advisor and, if Conrail was

found to be operating profitably, to sell Conrail. DOT favored a sale to a

single buyer whose financial strength would ensure Conrail’s future in the

private sector. However, Conrail management and some Members of the

Congress favored a public stock offering. On October 21, 1986, the

Congress provided authority for the public offering through its passage of

the Conrail Privatization Act, which required DOT to select six investment

banks to manage the sale of the government’s interests in Conrail. On

March 26, 1987, DOT made a public offering of Conrail’s stock.

Page 26 GAO/AIMD-96-23 Privatization and Divestiture Practices
Appendix I 

Previous Divestitures of U.S. Government

Assets

The Great Plains Coal

Gasification Project

The Great Plains Coal Gasification Project was designed to produce

pipeline quality synthetic natural gas from coal. In 1982, the Department of

Energy (DOE) awarded a loan guarantee to a partnership of five energy

companies for the plant’s construction and start-up. In 1985, the

partnership defaulted on its DOE guaranteed $1.5 billion loan from the

Federal Financing Bank, and DOE acquired control of and then title to the

project. Operation of the plant continued under the original plant operator

for the next 3 years. During this time, the plant was profitable, and project

revenues exceeded expenses by about $110.3 million.

In 1986, DOE announced it would sell the Great Plains project and

subsequently hired Shearson Lehman Hutton, Inc., to assist it in doing so.

In 1988, DOE selected the Basin Electric Power Cooperative as the

preferred purchaser for the Great Plains project. Basin was one of nine

prospective purchasers that submitted firm offers. According to DOE, Basin

provided the highest offer and the strongest commitment to the project.

DOE received $85 million at the sale closing and a commitment for DOE to

share in future revenues from plant operations.

Page 27 GAO/AIMD-96-23 Privatization and Divestiture Practices
Appendix I 

Previous Divestitures of U.S. Government

Assets

Page 28 GAO/AIMD-96-23 Privatization and Divestiture Practices
Appendix I 

Previous Divestitures of U.S. Government

Assets

Page 29 GAO/AIMD-96-23 Privatization and Divestiture Practices
Appendix I 

Previous Divestitures of U.S. Government

Assets

Page 30 GAO/AIMD-96-23 Privatization and Divestiture Practices
Related GAO Products

Sale of NPRs and Oil Shale Reserves (GAO/RCED-96-28R, October 17, 1995).

Federal Electric Power: Operating and Financial Status of DOE’s Power

Marketing Administrations (GAO/RCED/AIMD-96-9FS, October 13, 1995).

Uranium Enrichment: Process to Privatize the U.S. Enrichment

Corporation Needs to Be Strengthened (GAO/RCED-95-245, September 14,

1995).

Terminating Federal Helium Refining (GAO/RCED-95-252R, August 28, 1995).

Tennessee Valley Authority: Financial Problems Raise Questions About

Long-term Viability (GAO/AIMD/RCED-95-134, August 17, 1995).

Sale of NPR-1 (GAO/RCED-95-255R, August 1, 1995).

Naval Petroleum Reserves (GAO/RCED-95-141R, March 17, 1995).

Uranium Enrichment: Observations on the Privatization of the United

States Enrichment Corporation (GAO/T-RCED-95-116, February 24, 1995).

Letter to Honorable William V. Roth, Jr. Discussing Privatization

Experiences in Other Countries (B-260308, February 6, 1995).

Naval Petroleum Reserve: Opportunities Exist to Enhance its Profitability

(GAO/RCED-95-65, January 12, 1995).

Mineral Resources: H.R. 3967 - A Bill to Change How Federal Needs for

Refined Helium Are Met (GAO/T-RCED-94-183, April 19, 1994).

Federal Electric Power: Views on the Sale of Alaska Power Administration

Hydropower Assets (GAO/RCED-90-93, February 22, 1990).

Lessons Learned About Evaluation of Federal Asset Sale Proposals

(GAO/T-RCED-89-70, September 26, 1989).

Synthetic Fuels: An Overview of DOE’s Ownership and Divestiture of the

Great Plains Project (GAO/RCED-89-153, July 14, 1989).

Federal Assets: Information on Completed and Proposed Sales

(GAO/RCED-88-214FS, September 21, 1988).

Page 31 GAO/AIMD-96-23 Privatization and Divestiture Practices
Related GAO Products

Conrail Sale: DOT’s Selection of Investment Banks to Underwrite the Sale

of Conrail (GAO/RCED-87-88, February 17, 1987).

(935165) Page 32 GAO/AIMD-96-23 Privatization and Divestiture Practices
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