ST. PETERSBURG -- The stack of tender applications for small enterprises lying on Alexander Fishkov's desk in the St. Petersburg Property Fund is dwindling, but not necessarily for lack of bidders. The city is simply running out of non-privatized small businesses.
"We can say that small-enterprise privatization in St. Petersburg will be completely settled this year in terms of the sale of enterprises," said Fishkov, director of the fund's department of privatization and sales.
A new round of 25 small businesses, including several dairy stores, a bookstore, cafeterias and other small retailers, was auctioned off Thursday in what is likely to be one of the last such auctions in the city. Only about 150 small businesses slated for privatization remain in the city's hands. Of these, several may simply be turned over to employee collectives.
Since privatization began in 1992, the city has sold off more than 3,000 of its small enterprises. The peak of small-scale privatization came in 1993, when 406 small enterprises were sold outright and another 948 were acquired through rental agreements with intention to buy.
"The city has taken a very professional and committed approach," said William Simons, an attorney with the law firm of Pepper, Hamilton and Scheets. "It's been gratifying to see after working in other cities where the process hasn't been as complete."
In Moscow, small privatization was halted for nearly a year as Mayor Yury Luzhkov sparred with then-privatization tsar Anatoly Chubais over the city's sell-off process. Nizhny Novgorod, with its generally reform-minded administration, also faced conflicts along the way, Fishkov said.
St. Petersburg's progress with privatization hasn't stopped with the sale of businesses. In 1994, the city instituted a process by which owners could in turn buy the physical premises housing the business, an option of which more than 2,000 enterprises have already taken advantage. Several months ago, the city began to accept applications for the purchase of the actual land on which the business stands. For most small businesses, this means receiving a share of the total land value under the entire building.
Not that privatization in St. Petersburg has been completely without problems. In September 1994, small enterprise auctions were halted while new regulations were developed to raise minimal opening bids and security pledges. Previous appraisals had been so low that the corresponding security pledge required of the highest bidder was not an effective penalty if the bidder failed to come up with the promised payment. According to Fishkov, 10 percent to 15 percent of the businesses auctioned off through each round remained unclaimed, forcing the city to re-auction them.
The new regulations raised the pledge and included the provision that, should the high bidder fail to pay in 30 days, the business would be awarded to the tender's second-highest bidder.
Security was also a concern. Several large companies were accused along the way of squeezing out potential competitors for specific sites, often with threats. In response, the city decided to conduct only closed auctions.
Small privatization auctions resumed in April.
In some cases, Fishkov said, privatization led to legal conflicts over ownership or rental terms. But, he said, "We really faced no explosive situation or scandals as a result of the privatization process."
The enterprises that remain in state hands are those for which there are already some legal questions.
The major exception to the city's success in small privatization has been with pharmacies. Although some pharmacies were privatized early on, the city later reclaimed them, fearing a drastic effect on the availability and price of medication.
"The city didn't have the spirit to privatize its pharmacies," said Alexander Dunayevsky, a consultant with the Federal Property Fund. "Nothing tragic happened to those stores that were privatized. The same would have been true of the pharmacies."
Administration of the city's more than 100 pharmacies was handed over to the city's health committee.
Similar fears among local residents over privatization of the stores they relied on every day have since subsided. "All those negative prognoses were simply not justified," said Dunayevsky.
"Privatization has presented businesses with the resource most necessary to the development of small and medium businesses," he said.
"We can say that small-enterprise privatization in St. Petersburg will be completely settled this year in terms of the sale of enterprises," said Fishkov, director of the fund's department of privatization and sales.
A new round of 25 small businesses, including several dairy stores, a bookstore, cafeterias and other small retailers, was auctioned off Thursday in what is likely to be one of the last such auctions in the city. Only about 150 small businesses slated for privatization remain in the city's hands. Of these, several may simply be turned over to employee collectives.
Since privatization began in 1992, the city has sold off more than 3,000 of its small enterprises. The peak of small-scale privatization came in 1993, when 406 small enterprises were sold outright and another 948 were acquired through rental agreements with intention to buy.
"The city has taken a very professional and committed approach," said William Simons, an attorney with the law firm of Pepper, Hamilton and Scheets. "It's been gratifying to see after working in other cities where the process hasn't been as complete."
In Moscow, small privatization was halted for nearly a year as Mayor Yury Luzhkov sparred with then-privatization tsar Anatoly Chubais over the city's sell-off process. Nizhny Novgorod, with its generally reform-minded administration, also faced conflicts along the way, Fishkov said.
St. Petersburg's progress with privatization hasn't stopped with the sale of businesses. In 1994, the city instituted a process by which owners could in turn buy the physical premises housing the business, an option of which more than 2,000 enterprises have already taken advantage. Several months ago, the city began to accept applications for the purchase of the actual land on which the business stands. For most small businesses, this means receiving a share of the total land value under the entire building.
Not that privatization in St. Petersburg has been completely without problems. In September 1994, small enterprise auctions were halted while new regulations were developed to raise minimal opening bids and security pledges. Previous appraisals had been so low that the corresponding security pledge required of the highest bidder was not an effective penalty if the bidder failed to come up with the promised payment. According to Fishkov, 10 percent to 15 percent of the businesses auctioned off through each round remained unclaimed, forcing the city to re-auction them.
The new regulations raised the pledge and included the provision that, should the high bidder fail to pay in 30 days, the business would be awarded to the tender's second-highest bidder.
Security was also a concern. Several large companies were accused along the way of squeezing out potential competitors for specific sites, often with threats. In response, the city decided to conduct only closed auctions.
Small privatization auctions resumed in April.
In some cases, Fishkov said, privatization led to legal conflicts over ownership or rental terms. But, he said, "We really faced no explosive situation or scandals as a result of the privatization process."
The enterprises that remain in state hands are those for which there are already some legal questions.
The major exception to the city's success in small privatization has been with pharmacies. Although some pharmacies were privatized early on, the city later reclaimed them, fearing a drastic effect on the availability and price of medication.
"The city didn't have the spirit to privatize its pharmacies," said Alexander Dunayevsky, a consultant with the Federal Property Fund. "Nothing tragic happened to those stores that were privatized. The same would have been true of the pharmacies."
Administration of the city's more than 100 pharmacies was handed over to the city's health committee.
Similar fears among local residents over privatization of the stores they relied on every day have since subsided. "All those negative prognoses were simply not justified," said Dunayevsky.
"Privatization has presented businesses with the resource most necessary to the development of small and medium businesses," he said.