Does the State as a shareholder still have a future? – EconomyMorning


The case is heard, the State is heavily in debt, and even more for nearly a year and its attempts to rescue the economy with tens of billions of euros. But this indebtedness, he also owes it to a very bad management of his assets and the companies of which he is a shareholder, and this for many years. More rational management is needed and this may require the use of more public-private partnerships.

The state shareholder, a recent thwarted story?

At first glance, the question seems politically incorrect, but, on closer inspection, it is not without meaning, far from it, especially since the criticisms against the State as a shareholder are not news. Already in 2003, the Douste-Blazy / Diefenbacher report an overwhelming observation of the role of the State as shareholder: limited coordination and monitoring, finicky but faulty control, unsuitable procedures, inadequate resources, etc. the list of dysfunctions was long and the report denounced ” an omnipresent state, but without strategy “. Despite substantial resources devoted to the monitoring, control and management of public enterprises, the State was already appearing ” as being both very present and too often ineffective “.

It must be recognized that with 1,751 companies controlled directly or indirectly, including 89 over which he exercises direct control as a majority shareholder according to the most recent data from INSEE, the portfolio of companies with public participation constitutes ” a vast and heterogeneous whole »As indicated by the Court of Auditors in its report on the State as a shareholder in January 2017. Energy, health, digital, transport, audiovisual … the State is present in many sectors of the economy and, under these conditions, it is difficult for it to issue a clear and well-argued expert opinion in each of them, resulting in sometimes hazardous decisions as evidenced by the recent quack in the Véolia-Engie-Suez case.

On October 5, Engie’s board of directors accepted the offer to buy back 29.9% of Suez’s capital by its historical competitor Véolia. A serious setback for the State, Engie’s largest shareholder with 22% of the capital, which had nevertheless voted against this sale proposal, as reported by the Ministry of the Economy in a press release. Especially since the position of the State was fought and then outvoted by the Board of Directors of Engie led by Jean-Pierre Clamadieu, however appointed to this place in 2018 with the agreement of the State. This transaction concluded against his opinion illustrates how the State shareholder is sometimes powerless to impose its vision and its economic choices.

A need for a managerial state?

In addition to being an inefficient shareholder, the state sometimes takes on the role of poor manager. According to a report by the Court of Auditors published three years ago, the accounting results of companies in the portfolio of the State Participation Agency (APE), which represents the State shareholder, deteriorate sharply, in particular in majority state-owned companies. Worse, while in 2016, CAC 40 companies posted growth of 6.17%, state-owned companies recorded a drop in their performance of -11.5% ! The reasons for this worrying financial situation? According to the Court of Auditors, it is the combination of several factors, in particular very average financial results, poor performance on the stock market, but also excessively high deductions of dividends affecting the investment capacity of certain companies or even unfortunate strategic and economic choices, for example in the management of EDF and Areva. And it is not the current results that will fix the situation of the State since the health crisis caused it to lose 28 billion euros on the stock market : indeed, while its portfolio was valued at 112.5 billion in December 2019, it was only worth 84.5 billion six months later.

Another sector where the State turns out to be a very poor manager: real estate. According to a report by the Senate Finance Committee, the State is a billionaire owner at the head of real estate assets which amount to 75.6 million m², valued at 66 billion euros. Admittedly, the state regularly sells its real estate, but if the most beautiful buildings find easily a taker, the more modest buildings do not sell. I have to say that state property policy is not centralized at all, with each ministry managing its own assets, sometimes against common sense. A judged situation ” not efficient »By the Finance Committee.

Towards delegated and supervised management?

Criticized as a shareholder, sometimes not exempt from reproach as a manager, the state may have found the right balance on certain projects by adopting the concession. Many local authorities have chosen to concede the distribution of water, electricity or the treatment of household waste and, with a few rare exceptions, they are satisfied with this. Why should the State not take their example from them, especially since, when it itself resorts to concessions, as has been the case with highways since 2006, it seems to derive serious benefits from them? Indeed, even if it has been widely criticized, this operation, which many have wrongly called a “privatization” (in reality, the State has only delegated the management of its highways to highway concession companies ( SCA)), is ultimately very beneficial for him in many ways.

Already, at the time of privatization, not only the SCAs paid 22.5 billion euros to the State, but they also took over a debt of 20 billion euros, corresponding to the amount of network constructions which had not yet been reimbursed at that date. “A successful financial operation” for the State according to Bruno Le Maire, Minister of the Economy and Finance, heard before the Senate in July 2020. In addition, as part of the concession contracts, it is the SCAs that assume all the risks, in particular the traffic risk. Thus, according to the report of the Transport Regulatory Authority (ART) of July 30, the first containment resulted in an 80% drop in motorway traffic and a loss of around 2 billion euros for SCAs. Let us imagine that the privatization of the Aéroports de Paris group could have been completed before the crisis, it would then have been the concessionary companies that would have suffered the heavy losses, estimated at 2.5 billion euros, linked to the drop in air traffic, and not the State, still a majority shareholder at 50.6%. Finally, the concession has the enormous advantage for the State of placing the burden of investments on concessionary companies, with the assurance of recovering infrastructure in good condition at the end of the concession contract.

This system is therefore a real win-win which allows the State to reduce its debt, to transfer the risks and the burden of investments, while not giving up the capacity to control the good management of infrastructures. Lighten the burden while gaining in efficiency: the solution deserves to be considered …

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