Mayor Enrique Peñalosa asked Bogota’s city council for permission to sell the government’s stock in telecommunication company ETB, just weeks after the privatization of an energy company caused major protests.
According to Peñalosa, the sale of ETB will allow the financing of projects such as 30 new schools, four hospitals, better roads, and more security cameras throughout Colombia’s capital.
The company’s executives hope the sale will generate $2.2 billion for Bogota’s treasury.
ETB suffered losses of over $36 million in 2015 and $38 million in 2014, earning only 6% of the earnings of the four largest telecommunication companies which dominate the industry in Colombia, reported newspaper La Opinion.
From 2011 to mid 2015, ETB dropped from maintaining 73% of landlines in Bogota to only 55% due to increased competition by private company’s like Telmex, owned by one of the world’s richest men, Carlos Slim.
“In spite having invested significant amounts since 2013 (more than 2.1 billion pesos or $730,000, equivalent to 92% of its assets today)…the company was not able to connect the new expected customers…, nor sustain its market share,” justified the mayor for the sale.
Peñalosa promised the “utmost transparency” throughout the process.
The president of ETB, Jorge Castellanos, told media he hopes that the sale can be finalized as soon as May.
However, for Bogota’s government to pass over their 84.4% ownership of the business would be yet another shift from its usage of private-public partnerships for public services and infrastructure development to full privatization.
Several congressmen urged the mayor to disclose ETB’s financial statements to the public, and after thorough examination of its financial state, look for a strategic partner to help preserve the company as part of Bogota’s economic heritage.
The move is particularly controversial coming mere months after Colombia’s government sold its 57% stake in energy company Isagen to Canadian hedge fund Brookfields for $2 billion, despite fierce opposition by Congress.
The sale of the company that provided 17% of the country’s energy was Colombia’s largest privatization in nearly a decade.
The move infuriated Colombians, and was particularly suspicious as five of the original six bidders retreated, enabling Brookfields to acquire the share for the minimal bidding price.
The administration of President Juan Manuel Santos claimed the sale would finance highways, bridges and tunnels across the country.
Both the Comptroller General’s Office and the Inspector General’s Office, however, claimed that the sale of Isagen to finance infrastructure projects would eventually lead to a $700 million loss for the treasury.
In February, Colombia’s Prosecutor General opened preliminary investigations into the country’s finance minister after he was accused of illegally selling Isagen and shirking his duties as a public servant.
News website Las 2 Orillas reported that the law firm representing Brookfield during the Isagen purchase was partly owned by Juan Manual Prieto, a personal friend of Santos and the president’s first appointed ambassador in Italy.
Prieto died shortly after the sale.