The Deputy Prime Minister and supervisor of Egypt's sell-off of state enterprises, Ali Al-Selmi announced yesterday that Egypt's "unfair privatisation programme" will be cancelled, sparing the country's last 147 public companies.
The activities of the Ministry of Investment will also be discontinued.
"A new committee will be formed from different public sector leaders and specialists to review the sale contracts of all privatised companies during the former regime's time", El-Selmi told Al-Masry Al-Youm daily newspaper.
Hazem El-Beblawi, the newly appointed Deputy PM responsible for economic affairs, separately confirmed that Egypt's privatisation programme would not be resumed, indicating there would be no investment portfolio in the new cabinet reshuffle.
The General Authority for Investment (GAFI) will now be under the direct supervision of the PM.
It appears to represent a victory for workers, protesters and other members of the public who have long opposed privatisation for a host of reasons.
Three weeks ago the fledgling Democratic Workers Party started a campaign to collect 1 million signatures asking for privatised enterprises accused of corruption and suspicious behaviour to be returned to the public sector. The party has already gathered some 75,000 signatures.
But others will consider the Deputy PM's decision as a foregone conclusion given the gradual stagnation of privatisation initiatives over the last few years.
Another nail in the coffin was the division of the Ministry of Investment's portfolios among other government departments following the departure of Mahmoud Mohieldin, the only investment minister Egypt knew, who went on to become managing director at the World Bank.
In fact, Egypt's previous government had more or less admitted the privatisation was over.
"At the time, the minister had indicated that the programme had achieved its goals in terms of assets to be privatised and public sector banks debts repaid," said investment bank Beltone Financial in a note, adding that the reviewing of privatisation contracts is neither surprising nor new.
"The government had, since the revolution, been reviewing disputed land contracts and other deals. Setting up a committee to review the contracts will, nonetheless, create a formal and official framework charged with this task," added Beltone.
The privatisation programme was controversial ever since it was announced in 1991. The first actual privatisation took place in 1996 and its effect on Egyptian society is undeniable.
An early retirement scheme put in place to reduce the number of factory workers, aimed at facilitating the selling of overloaded public enterprises, was severly criticised when it affected around 500,000 people.
Employees under retirement age were given compensation of between LE30,000 and LE50,000 but very small monthly pensions.
The immediate consequence was a surge in unemployment -- some former workers were less than 40 years old -- and long-term poverty, as
compensation payments quickly ran out and pensions proved insufficient for daily costs.
The privatisation process was also mired in suspicions concerning the evaluation of sold enterprises. Some were estimated to be undervalued and many transactions were slammed as corrupt even if there may little evidence to back up the charges.
The privatisation of Omar Effendi, Egypt's iconic store chain, was accompanied by a storm of protest. After several governments failed to sell it, it was finally sold in 2007 to Anwal United Trading co., a Saudi clothing and apparel retailer.
The case ended with the resignation of the president of the holding company responsible for sales, followed by a member of the evaluation commity who revealed that the mode of assessment of Omar Effendi was inappropriate, given its activity. The ministry was accused of accepting too low a price.
Less than one year after the Omar Effendi sale, the former minister of investment Mahmoud Mohieldin, along with Gamal Mubarak, announced the initiation of the National Sukuk program.
According to the proposal, all Egyptians over 21 will receive free shares in public sector companies.
The idea was received with waves of public criticism. Many believed it would further increase the monopolisation of Egyptian markets as the free shares would eventually be sold to established investors in easily-attainable deals.
The initiative was folded two months later by the government.
The privatisation programme was also accused of creating monopolies and increasing prices. This happened mainly in the cement sector where many companies where sold to multinationaes who still control the market.