Study on State asset management in the EU...Study on State asset management in the EU – Pillar 3...

Written by KPMG and Bocconi University February 2018

Study on State asset management in the EU

Final study report for Pillar 3 – Belgium

Contract: ECFIN/187/2016/740792

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EUROPEAN COMMISSION

Directorate-General for Economic and Financial Affairs Directorate Fiscal policy and policy mix and Directorate Investment, growth and structural reforms

European Commission B-1049 Brussels

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Belgium

This country fiche presents a qualitative overview of the mix of governance models

and investment strategies implemented by the Belgian general government to manage

its assets portfolio.

1. MAPPING OF THE GOVERNANCE OF THE PORTFOLIO OF ASSETS

The Belgian general government includes the following public entities:

the federal state, the communities and the regions, all of three of which equal

from the legal viewpoint but have powers and responsibilities for different

fields.

the provinces, which are supervised by all the higher government authorities,

in the context of the federal, community or regional powers;

the communes, which are under the supervision of the higher authorities.

Depending on the powers exercised, they are supervised by the federal state,

the community or the region. In general, they are financed and audited by the

Regions.

Throughout this country fiche, we re-cluster these public bodies into two categories,

i.e. the “central government”, which include the federal government, and the “local

governments”, which include both the communities, the regions, the provinces, the

communes.

The central government shares the responsibility for the strategic and operational

decisions with the local governments. However, depending on the asset, the central

government might have a full or partial ownership and decision power. The decision

process depends on the asset. For the assets managed by the central government

(e.g. railways and central government-owned Public Sector Holdings (PSHs)), a

compulsory and formal co-decision process is not in place. On the other hand, there

are also assets where the central government has no formal decision power (e.g.

roads and energy distribution).

Currently, there is not a consolidated National public data source of general

government–owned assets. Since 2003, the Belgian central government is

implementing a reform of public accounting, in order to move towards an accrual

accounting system. The reform is expected to be finalised by January 2020. Then, the

year-end financial statement of the central government1 will include publiv assets and

liabilities, according to IPSAS’ principles2.

1.1. Financial assets

The PSHs owned by the Belgian general government operate in a broad spectrum of

the domestic economy. This variety is reflected in the patterns of ownership and

governance. For example, some financial assets are owned by the central

government; others by the local governments.

1 Compte général de l’État. 2 Organisation for Economic Co-operation and Development (OECD) (2017). Accrual Practices and Reform Experiences in OECD Countries. Available at: http://www.oecd-ilibrary.org/governance/accrual-practices-and-reform-experiences-in-oecd-countries_9789264270572-en [Accessed 10th November 2017]

http://www.oecd-ilibrary.org/governance/accrual-practices-and-reform-experiences-in-oecd-countries_9789264270572-en

http://www.oecd-ilibrary.org/governance/accrual-practices-and-reform-experiences-in-oecd-countries_9789264270572-en

Study on State asset management in the EU – Pillar 3

Belgium

4

The Federal Holding and Investment Company (SFPI-FPIM) is the main body

responsible for the strategic and operational decisions related to the management of

Belgian central government PSHs. The competent sector ministers share part of the

responsibilities for the strategic and investment decisions with this company.

SFPI-FPIM is a holding company, fully owned by the central government. The core

business of the SFPI-FPIM (on one hand as an investment company and on the other

hand as a holding company) is as follows:

investing in companies with an attractive social value in one of the priority

sectors (i.e. aeronautical industry and airports, real estate, networks,

international investments, and innovations), which the SFPI-FPIM has set itself

as an objective;

acquiring equity in companies that are of strategic importance as far as central

government policy is concerned, either making use of their own funds or by

using funds that the state provides per project in which case the SFPI-FPIM

acts on a delegated assignment.

For the 2016 business year, the breakdown of SFPI-FPIM’s financial assets portfolio is

equivalent to 317 Mn Eur as investment companies; 1,090 Mn Eur as holding

company; 15.8 Mn Eur as delegated assignments3.

In terms of number of companies, SFPI-FPIM’s portfolio consists of:

76 companies on its own behalf (in 9 companies SFPI-FPIM retains a majority

stake);

9 companies on behalf of the central government.

Its portfolio, including companies owned on behalf of the central government,

accounts for more than 72% of the total assets owned by the PSHs within the Belgian

government’s portfolio4.

The SFPI-FPIM has the form of a public limited company to which corporate law is

applicable. The central government, as the only shareholder, has control over SFPI-

FPIM. It can influence the orientation of the company policy through its voting right in

the general meeting.

SFPI-FPIM is organized as a public entity by its own organic law (the SFPI-FPIM law).

On its grounds the directors, chairman, vice-chairman of the board of directors, and

the managing director are appointed by Royal decree. Two Ministers have the

responsibility to monitor SFPI-FPIM activities, the Minister of Finance and the Minister

of Economy.

With respect to financial assets in the government’s equity portfolio, the five most

important sectors in terms of Value Added (VA) generated by PSHs5 are:

1. J - Information and communication;

3 For more details, please see SFPI-FPIM. Available at: http://www.sfpi-fpim.be/en/profile [Accessed 10th December 2017]. 4 This share has been calculated taking into consideration the total weighted assets of shareholdings of SFPI-FPIM, and using data collected and elaborated in Pillar 1. 5 The five most important sectors in terms of VA generated by PSHs have been mapped in Pillar 1. For industry classification we rely on data provided by Bureau van Dijk (BvD) Orbis, which in turns gets its data from other service providers and bases industry classification on the NACE codes provided.

http://www.sfpi-fpim.be/en/profile


Belgium

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2. N - Administrative and support service activities;

3. H - Transportation and storage;

4. D - Electricity, gas, steam and air conditioning supply;

5. L - Real estate activities.

Table 1 Governance regimes: Financial assets, Belgium

Owners of the

asset

Both the central and the local governments participate

in the companies’ capital. However, many of the shares

are owned by the SFPI-FPIM.

C3

D1

Most important sectors in terms of VA:

1. Sector J – Information: the majority of the PSHs

are partially owned by local governments.

However, some PSHs (e.g. Belgian Mobile Wallet)

are directly owned by the central government

through SFPI-FPIM

2. Sector N – Administrative activities: the

majority of PSHs are owned by the local

governments

3. Sector H – Transportation: the majority of the

PSHs are owned by local governments. However,

some PSHs (e.g. Bpost, Infrabel, and SNCB) are

directly owned by the central government

4. Sector D – Electricity and gas: the majority of

the PSHs are owned by the relevant local

governments

5. Sector L – Real estate: the majority of the PSHs

are owned by the local governments, since the

central government’s buildings are managed by

the Belgian Buildings Agency6, which is a semi-

independent governmental organization

Bodies

responsible for

the strategic

and investment

decisions

The central government, through the SFPI-FPIM, is the

main body responsible for the strategic decisions

related to the management of the Belgian central

government’s PSHs. The ministers for the competent

sector share part of the responsibilities for the strategic

and investment decisions with the SFPI-FPIM.

C3

Most important sectors in terms of VA: the relevant

local governments and each relevant ministry are

responsible for the strategic decisions on PSHs

operating within their jurisdiction in compliance with

the strategic framework outlined by the central

government.

6 Regie der Gebouwen or Régie des Bâtiments


Belgium

6

Bodies

responsible for

the operational

decisions

Since operational decisions are taken by the owners of

the majority of stakes in the PSHs, the SFPI-FPIM is

mainly in charge of managing the majority of the

central government-owned financial assets.

In addition, local governments are responsible for the

decisions regarding the management of their own

financial assets.

C3

D1

Most important sectors in terms of VA: since the

majority of the PSHs operating in these sectors are

owned by local governments, the local governments

are responsible for operational decisions.

National public

data sources

The National Bank of Belgium and the SFPI-FPIM

publish information about the general government’s

financial assets.

C2

C3

Source: KPMG elaborations.

The network graphs in the table above highlight the main bodies involved for each role of the (a)responsibility chain (e.g. the bodies owning the assets, the bodies responsible for operational decisions), for each asset cluster in the government’s asset portfolio. These models may not apply to all the individual assets within the cluster.

For some clusters of assets the responsibility for some aspects of the governance regime is spread (b)between more bodies at different levels of centralisation. Therefore, we represent these cases using two

“network graphs” representing these bodies.

Legend

C3C1 C2= Central government

= Central public body

= Central company-typestructure

D1 = Local governments

D2 = Local public body

D3 = Local company-typestructure

= Private bodyPM


Belgium

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1.2. Non-financial assets

Airports

Table 2 Governance regimes: Airports, Belgium

Owners of the

asset

The property of airport infrastructures belongs to the

local governments, except for Brussels National Airport,

which is owned by the central government.

D1

Bodies

responsible for

the strategic

and investment

decisions

The relevant local governments are responsible for the

strategic and investment decisions on airports and

aerodromes located on their territory7. The central

government kept the responsibility for Brussels

National Airport. In detail, the Federal Public Service

Mobility and Transport8,9 is responsible for preparing,

implementing and supporting the airport policy for

Brussel airport.

C1

D1

Bodies

responsible for

the operational

decisions

The owners of the airports grant their management in

concession to private companies or PSHs, which in turn

are responsible for operational decisions. Currently,

40% of the airport operators in Belgium are privately

owned, while the remaining 60% are owned jointly by

the public sector and private investors10 (e.g. Brussels

Airport Company11: 25% owned by the State and 75%

owned by private-investors Ontario Teachers' Pension

Plan and the Australian Macquarie group).

D3

National public

data sources

The Federal Public Service Mobility and Transport12

collects and reports for each airport the key

information about the traffic (e.g. the air passenger

transport by main airports). With regard to the airport

infrastructures, there is currently no single, definitive,

public source of information.

C1



7 Special Law on Institutional Reforms of 8 August 1980, and its subsequent modifications. 8 SPF Mobilité et Transports. 9 It is worth highlighting that as part of the most recent major reforms to Belgium’s federal administrative structure, called the “Copernic” reforms, which took place in 2000, what were formerly known as “ministries” were renamed “Federal Public Services”. 10 Airport Council International – ACI Europe (2016). The ownership of Europe’s Airports. Available at: http://newairportinsider.com/wp-

content/uploads/2016/04/ACIEUROPEReportTheOwnershipofEuropesAirports2016.pdf [Accessed 10th December 2017]. 11 For more details, please see Brussels airport. Available at: https://www.brusselsairport.be/en/corporate/our-company/ba [Accessed 10th December 2017]. 12 For more detail about the information reported by the SPF Mobilité et Transports, please see https://mobilit.belgium.be/fr/transport_aerien/aeroports_et_aerodromes/statistiques [Accessed 10th December 2017].

Legend







= Private bodyPM

http://newairportinsider.com/wp-content/uploads/2016/04/ACIEUROPEReportTheOwnershipofEuropesAirports2016.pdf

http://newairportinsider.com/wp-content/uploads/2016/04/ACIEUROPEReportTheOwnershipofEuropesAirports2016.pdf

https://www.brusselsairport.be/en/corporate/our-company/ba

https://mobilit.belgium.be/fr/transport_aerien/aeroports_et_aerodromes/statistiques


Belgium

8

For some clusters of assets the responsibility for some aspects of the governance regime is spread (b)between more bodies at different levels of centralisation. Therefore, we represent these cases using two “network graphs” representing these bodies.

Ports

Table 3 Governance regimes: Ports, Belgium

Owners of the

asset

The prevalent ownership/management model is the so-

called landlord model. Specifically, the port authority

owns and manages the sites in the port areas, and

makes them available to port companies for their

activities on the basis of concession agreements. In

Belgium, the Port Authorities are organised as

decentralised company-type structures (i.e. local

government-owned PSHs)13.

D3

Bodies

responsible for

the strategic

and investment

decisions

The Federal Public Service Mobility and Transport (SFP)

is responsible for preparing, implementing and

supporting the port policy in consultation with its

partners at local, central and international levels. C1

D1

Bodies

responsible for

the operational

decisions

As managers of the infrastructure, different Port

Authorities are responsible for operational decisions

regarding seaport infrastructures in Belgium.

D3

National public

data sources

Consolidated information about maritime port

infrastructure and traffic in Belgium is made publicly

available by River Information Services (RIS).

C2

Source: KPMG elaborations. (a) The network graphs in the table above highlight the main bodies involved for each role of the

responsibility chain (e.g. the bodies owning the assets, the bodies responsible for operational decisions), for each asset mcluster in the government’s asset portfolio. These models may not apply to all the individual assets within the cluster.

For some clusters of assets the responsibility for some aspects of the governance regime is spread (c)between more bodies at different levels of centralisation. Therefore, we represent these cases using two “network graphs” representing these bodies.

13 The legal framework concerning seaports is covered by the law of 2nd March 1999 and its subsequent modifications.

Legend







= Private bodyPM


Belgium

9

Roads

Table 4 Governance regimes: Roads, Belgium

Owners of the

asset

The Belgian road network is owned and managed by

the different local governments.

D1

Bodies

responsible for

the strategic

and investment

decisions

Each local government is responsible for the strategic

and investment decisions regarding the road network

under its jurisdiction.

D1

Bodies

responsible for

the operational

decisions

The relevant local public bodies are responsible for

operational decisions regarding the roads network

under their juridisction (e.g. the department Agency of

Roads and Traffic (AWV – Agentschap voor wegen en

verkeer) is responsible for the management and

maintenance of the roads in Flanders, Sofico is

responsible for the management and the maintenance

of the roads in Wallonia).

D2

National public

data sources

There is currently no single, definitive, centralised

public source of information about the Belgian road

infrastructures. Statistics Belgium14 (i.e. the Belgian

statistical office) collects and reports key information

about the road traffic in Belgium

C2




14 For more details, please see: https://www.statistik.at/web_de/statistiken/energie_umwelt_innovation_mobilitaet/verkehr/index.html [Accessed: 14th December 2017]

Legend







= Private bodyPM

https://www.statistik.at/web_de/statistiken/energie_umwelt_innovation_mobilitaet/verkehr/index.html


Belgium

10

Railways

Table 5 Governance regimes: Railways, Belgium

Owners of the

asset

Railways infrastructures are owned by Infrabel15.

Infrabel is a PSH that owns, develops, maintains and

exploits the Belgian railway infrastructure.

C3

Bodies

responsible for

the strategic

and investment

decisions

The Federal Public Service Mobility and Transport is

responsible for preparing, implementing and supporting

the railway policy in consultation with its partners at

regional, central and international levels. C1

Bodies

responsible for

the operational

decisions

Infrabel acts as infrastructure manager; it is therefore

responsible for operational decisions related to the

Belgian railway network.

C3

National public

data sources

Infrabel annually publishes the “Network Statement”16,

which outlines the characteristics of the infrastructure

and contains information on the conditions of access to

it. Moreover, since Infrabel is a listed joint-stock

company, it therefore compiles its annual report based

on the IFRS. It follows that its balance sheet maps the

value of its railways in compliance with the accounting

principle of IFRS 12 (“Property, plants and

equipment”).

C3




15 In compliance with Arrêté Royal du 28 septembre 2008 publié le 02 octobre 2008 Art. 115 (Royal Decree of 28 September 2008 published on 02 October 2008 Art. 1). 16 For more detail about the information reported by the Network Statement, please see https://www.infrabel.be/en/professionals/rail-operators/network-statement [Accessed 9th November 2017].

Legend







= Private bodyPM

https://www.infrabel.be/en/professionals/rail-operators/network-statement


Belgium

11

Mineral and Energy reserves

Table 6 Governance regimes: Mineral and Energy reserves, Belgium

Owners of the

asset

The property of Mineral and Energy reserves in Belgium

belongs to the central government.

C1

Bodies

responsible for

the strategic

and investment

decisions

The authority of the mining policy and management

has been transferred to the local government (i.e. the

regions)17.

D1

Bodies

responsible for

the operational

decisions

Many companies are given the rights to exploit Belgian

mineral and energy resources in concession. Those

companies are responsible for the operational decisions

related to Mineral and Energy reserves.

C3

D3

National public

data sources

There is no information sources on Mineral and Energy

resources in the country

n.a.




17 Following the art. 6, §1, VI, 5° of the law of the reform of 1980.

Legend







= Private bodyPM


Belgium

12

Other natural resources

Table 7 Governance regimes: Other natural resources, Belgium

Owners of the

asset

Other natural resources in Belgium are owned by both

the central government and the local governments.

C1

D1

Bodies

responsible for

the strategic

and investment

decisions

The central government and the relevant local

governments are responsible for the strategic and

investment decisions on Other natural resources. More

in detail, through the Directorate-General for the

Environment, the central government works on matters

within its sole jurisdiction or coordinates the

preparation and some aspects of implementing matters

under shared jurisdiction in collaboration with the local

governments.

C1

D1

Bodies

responsible for

the operational

decisions

Through the Directorate-General for the Environment,

the central government has the operational

responsabilities on matters within the central

government’s sole jurisdiction, while the local

governments and authorities have the responsibility for

other operational decisions.

C2

D2

National public

data sources

Statistics Belgium annually publishes some information

about Other Natural resources (e.g. the public

expenditure on environmental protection).

C2




Legend







= Private bodyPM


Belgium

13

Dwellings, Buildings other than dwellings

Table 8 Governance regimes for Buildings cluster, Belgium

Owners of the

asset

Assets falling into this cluster can be owned either by

the central government or the local governments.

C1

D1

Bodies

responsible for

the strategic

and investment

decisions

The Belgian central government is the body responsible

for strategic and investment decisions regarding its

own real estate properties.

The local governments are responsible for the decisions

related to the management and disposal of real estate

properties within their jurisdiction.

C1

D1

Bodies

responsible for

the operational

decisions

The Belgian Buildings Agency is the real estate

manager of the central government’s assets. It is

responsible for purchasing the real estate of the public

authorities at their request; selling the real estate of

the public authorities at their request; managing the

central government real estate, either by renting it out

or by granting it as a concession or by selling it; and

selling the movable property out of service from the

government.

It is a semi-independent governmental organization,

and currently manages about 7.3 million m² in real

estate.

The local governments are responsible for the

operational decisions regarding the real estate

properties within their jurisdiction.

C2

D1

National public

data sources

The Statistics Belgium has to collect annually some

information about Dwellings and Buildings other than

dwellings18 (e.g. the building stock).

The Federal Public Service Finance is responsible for

updating the information about the location, boundaries

and extent of immovable property in the country.

C1

C2

Source: KPMG elaborations. The network graphs in the table above highlight the main bodies involved for each role of the (a)responsibility chain (e.g. the bodies owning the assets, the bodies responsible for operational decisions), for each asset cluster in the government’s asset portfolio. These models may not apply to all the individual assets within the cluster.

18 For more detail about the information on Buildings reported by the Statistics Belgium, please see http://statbel.fgov.be/en/statistics/figures/ [Accessed 13th September 2017].

Legend







= Private bodyPM

http://statbel.fgov.be/en/statistics/figures/


Belgium

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Figure 1 Asset-responsibility chain and ownership matrix for the cluster of assets in

government’s portfolio, Belgium

Source: KPMG elaborations. n.a. = not available Central gov. = Central government; Local gov. = Local government; Local PB = Local public body; Central & Local PB = Central & Local public bodies

For more detail about the clusters of governance regimes, please see Methodological Notes. (a) The network graphs in the table above highlight the main bodies involved for each role of the (b)responsibility chain (e.g. the bodies owning the assets, the bodies responsible for operational decisions), for each asset cluster in the government’s asset portfolio. These models may not apply to all the individual assets within the cluster.

For some clusters of assets the responsibility for some aspects of the governance regime is spread (c)between more bodies at different levels of centralisation. Therefore, we represent these cases using two “network graphs” representing these bodies.

In light of the analysis presented earlier and summarised in Figure 1, the Belgian

government has a “federal” structure where the central and the local governments

share the decisions related to the assets.

Regarding non-financial assets, in general terms, the local government are responsible

for all assets regarding Airports - except for Brussels Airport - and Ports, Roads and

Mineral and energy reserves. Railways and PSHs are under the responsibility of the

central government.

Asset cluster

Role of the body

Responsible for the operational

decisions

Responsible for the strategic

decisions

Owner of the asset

Financial assets

Airports

Ports

Roads

Railways

Mineral and Energy

reserves

Other naturalresources

Dwellings, Buildings otherthan dwellings

Infrabel

C3

SFPI-FPIM

C3

Local gov.

D1

SFPI-FPIM

C3

Local gov.

D1

Central gov.

C1

Central Gov.

C1

Local Gov.

D1

ConcessionairePSHs

C3 D3

Central & Local PB

C2 D2

No

n –

finan

cia

lassets

Airport operators

C3 D3

SPF

C2

D2

Loc. PB

Local gov.

D1

National Bank

C2

SFPI-FPIM

C3

RIS

C2

Port Authorities

D3

Port Authorities

D3

Local gov.

D1

Local gov.

D1

Statistical Institute

C2

Infrabel

C3

Infrabel

C3

Central Gov.

C1

Local Gov.

D1


C2

Central Gov.

C1

Local Gov.

D1

Central Gov.

C1

Local Gov.

D1

Building Agency

C2

SFPI-FPIM

C3

SFP

C1

Local gov.

D1

SFP

C1

Local gov.

D1

SFP

C1

Legend







= Private bodyPM

n.a.Local gov.

D1

FPS Finance

C1


C2

Central Gov.

C1

Local Gov.

D1

National public data sources


Belgium

15

2. MAPPING OF THE INVESTMENT STRATEGY OF THE PORTFOLIO OF ASSETS

The Belgian government does not have a unique document outlining the investment

strategy for all the assets. In fact, the investment strategies are mainly defined at

regional level.

As it will be described in the following two sections, Belgium has not been promoting

many strategic initiatives regarding its public assets management in recent years.

Important reforms which gave more powers and responsibility to the regions were

carried out in the 1980s (e.g. the transfer of the responsibility for airports to the

regions, the constitutional reform which extended the powers of regions and

communities regarding Mineral and Energy reserves). Regarding the management of

the central assets, important reforms were implemented during the 2000s (e.g.

establishment of the SFPI-FPIM and of the railway infrastructure manager – Infrabel).

2.1. Financial assets

In 2006 the Belgian government established the SFPI-FPIM through the merger

between the Federal Participation Company19 and the Federal Investment company20.

The main aims were as follows: to boost the economic government initiative, to

support private companies, and to establish a company that could be an instrument

for the implementation of the state’s industrial policy.

The SFPI-FPIM was established with three relevant roles:

investment company: SFPI-FPIM invests in private companies with strategic

importance for the economy. SFPI-FPIM is willing to accept a lower financial

return on investment if it is in favour of certain social benefits;

public holding: SFPI-FPIM holds and manages shares in companies which

operate in sectors that are important as far as the central government’s policy

is concerned (i.e. aeronautical industry and airports, real estate, networks,

international investments, and innovation);

operational instrument: through Royal decree the government delegates

specific tasks to SFPI-FPIM. The majority of those tasks concerns the

management of the participations in financial institutions, following the

financial crisis in 2008.

However, in the last decades the presence of the Belgian government in the economy

has decreased. The privatisation process in Belgium properly began in the early

1990s, with the first operation being a private placement (40%) of Sabena Airlines

back in 1990. The privatisation process accelerated two years later when, in the

context of the privatisation program launched by the the central government in 1993,

the Belgian-Dutch insurance and banking group Fortis acquired a large stake in the

PSHs CGER Bank and CGER Insurance.

Looking at the past three decades, two periods can be considered as the most

important ones in terms of value of the deals:

1996–2000, when the privatisation process reached its first peak, mainly

thanks to the significant privatisations carried out in the telecommunications

sector (e.g. Belgacom, Distrigaz);

19 Federale Participatiemaatschappij (FPM). 20 Federale Investeringsmaatschappij (FIM).


Belgium

16

2011–2014, with the privatisation process driven by the dismissal of

government stakes in “Finance & Real Estate industry”, which were previously

bought by the Belgian government as a result of the financial crisis of 2008.

Regarding the actual investment strategy, the government remains committed to

complete the restructuring and privatisation of the state-owned banks, which were

nationalised as a consequence of the financial crisis of 2008, with the aim of further

strengthening the stability of the banking sector21.

Figure 2 Privatisations across markets by value and by number, 1980–2014,

Belgium

Sources: KPMG elaborations on data from the Fondazione Eni Enrico Mattei (FEEM) database, 1980-2014.

The value of privatisations refers to the sum of the values of the transactions agreed between a public (a)body (seller) and a private entity (bidder) for that period.

The number of privatisations refers to the total number of transactions for that period. (b) Sectors that are below the 5% threshold in terms of both total value of the transactions and number of (c)deals have been included in the aggregate cluster “Other”.

21 Please note that, as already outlined in Section 3.2 of Methodological Notes, public investments into the banking sector following the financial crisis of 2008 were always temporary and the government intentionally did not take any operational control over the “nationalised” banks.

50.5%

2.4%0.1%

22.6%

16.9%

7.2%0.3%

Manufacturing

Finance & Real Estate Industry

Services Industry

Telecommunications

Transportation Industry

Utilities

Other

7.1%

32.1%

10.7%

3.6%

10.7%

25.0%

10.7%

By value By number

11.5Eur Bn

28Deals

17

Figure 3 Privatisations across markets by value over time, 1980 – 2014, Belgium

Sources: KPMG elaborations on data from the Fondazione Eni Enrico Mattei (FEEM) database, 1980-2014.

The value of privatisations refers to the sum of the values of the transactions agreed between a public body (seller) and a private entity (bidder) for that period. (a) According to data retrieved from the FEEM database, there were no privatisations during the years 1980 – 1985.(b)

600

0

2,200

1,800

2,800

3,200

3,800

3,600

4,000

2,600

4,200

2,000

2,400

3,400

200

400

1,400

800

1,600

3,000

1,000

1,200

0.0%

0.0%

0.0%

1.5%

26.4%

98.5%

1986 - 1990

72.6%

1.2%

0.0%

3.2%

26.9%

19.0%

4.4%

1991 - 1995

0.0% 21.2%

2001 - 20051996 - 2000

71.7%

16.4%

2006 - 2010

33.0%

76.7%

18.5%

2011 - 2014

7.2%

0.0%

70.2%

24.6%

1.6%

0.0%

0.3%

1980 - 1985

2.9%

Eur Mn

Construction

Finance & Real Estate Industry

Manufacturing

Public Administration

Natural Resources

Agriculture Industry

Petroleum Industry

Services Industry

Telecommunications

Trade Industry

Transportation Industry

Utilities


Belgium

18

2.2. Non-financial assets

The Belgian central government has not adopted a plan which can establish a long-

term framework for strategic decisions related to non-financial assets or a broader

category of them.

In fact, related to the non-financial assets, investment strategies are mainly adopted

by the local governments.

Airports

The Special Law on Institutional Reforms of 8th August 1980, and its subsequent

modifications, gave the local governments the responsibility for airports and

aerodromes located in their territory. The central government kept the responsibility

for Brussels National Airport.

Therefore, there is not an overall investment strategy for airports in Belgium, but each

relevant local government defines the investment strategy regarding airports in its

jurisdiction. The Federal Public Service Mobility and Transport22 is responsible for

preparing, implementing and supporting the airport policy for Brussel airport.

The Walloon Government has established in 2001 the Walloon Airports Company

(Sowaer)23 to perform the following tasks:

the management, on behalf of the Walloon Government, of holdings held in the

management companies of airports and aerodromes;

investments in airport infrastructures development in Liège and Charleroi;

the assumption of expenses related to security and safety missions entrusted

to airport management companies.

The Flemish government established the public airport development companies

(Luchthaven Ontwikkelings Maatschappij - LOM) for development and maintenance of

its airport infrastructures.

In more detail, private operators (Airport Exploitation Company – LEM) are responsible

for the day-to-day management and operation of the platforms and for the upkeep of

part of their facilities. The maintenance and development of the so-called “basic”

infrastructures (runways, taxiways, airport access roads, etc.) is carried out by the

region via public airport development companies24.

In conclusion, the bulk of investment regarding airport infrastructures are still in the

hands of public bodies.

Ports

The prevalent ownership/management model is the so-called landlord model.

Specifically, the Port Authority owns and manages the sites in the port areas, and

makes them available to port companies for their activities on the basis of concession

agreements.

22 SPF Mobilité et Transports

23 For more details about the Walloon Airports Company please see: http://www.sowaer.be/ [Accessed 10th December 2017]. 24 For more details, please see: http://www.vlaamseluchthavencommissie.be/vlc/thema/regionale-luchthavens [Accessed 10th December 2017].

http://www.sowaer.be/

http://www.vlaamseluchthavencommissie.be/vlc/thema/regionale-luchthavens

http://www.vlaamseluchthavencommissie.be/vlc/thema/regionale-luchthavens


Belgium

19

The local governments have the responsibility for ports located on their territory.

Belgium has 4 seaports, all located in the Flemish region.

The Flemish government, according to its port policy, supports the ports:

via Flanders Port Area, which stimulates cooperation between the four Flemish

ports;

through investments in maritime access and locks;

by financial support to port authorities for harbor master services that are

directly related to traffic flow, safety and environmental protection.

Roads

Each local government is responsible for the strategic and investment decisions

regarding the road network under its jurisdiction. Therefore, there is no overall

investment strategy for roads in Belgium.

All three regions reformed the method for financing road infrastructures and facilities

by introducing a charge based on distance covered, aimed more at the use than the

ownership of a lorry. In details, on 1st April 2016, the Kilometer Charge for heavy

goods vehicles (HGV) of over 3.5 tonnes entered into force in the three Belgian

regions. The reform aimed at enhancing investments in the road network.

The bulk of investments regarding the road network are still in the hands of public

bodies, despite the use of Public-Private Partnerships (PPPs) in recent years.

Railways

The current governance regime adopted by the Belgian government was established in

2005 incorporating the principles established at European level in the directives of the

first and second railway packages:

the separation of the management of the railway infrastructures, within the

PSH Infrabel – i.e. the manager of railway infrastructures - and of the

operation of the services, carried out by the Société Nationale des Chemins de

fer Belges (SNCB);

the progressive opening of rail transportation to competition.

Rail investments are planned and budgeted through a multi-annual investment plan25.

The multi-annual investment plan is proposed by Infrabel and SNCB and has to be

approved by the central government. The current plan was adopted in 2013 and

defines the investments (type, amount and maturity) and budget requirements until

2025.

Investments concern the acquisition and renovation of rolling stock, the reception of

passengers, the extension and maintenance of the rail network capacity, and the

network security system. According to the estimates included in the multi-annual

investment plan, the Federal Planning Bureau26 has estimated a total investment of 30

25 Plan pluriannuel d’investissements (PPI). 26 Bureau federal du plan.


Belgium

20

Eur Bn by 2030, based on an average annual investment of 1.5 Eur Bn for Infrabel

and SNCB.

The guidelines for investment policy in the railway sector are the efficient use of

resources and the consistency of choices between infrastructure projects and those

aimed at the use of infrastructure.

The central government is currently reducing its subsidies to the railway

infrastructures. The Royal Decree of 25 December 2016 implied a 33% cut on the

total amount of subsidies intended for Infrabel, compared to the 2014 management

contract and the 2013-2025 multi-annual investment plan27.

Dwellings, Buildings other than dwellings

In 1971 the central government established a real estate manager of the central

state’s assets (i.e. the Belgian Buildings Agency), with the aim of improving efficiency

and transparency of the management of central government’s buildings.

The local governments are responsible for the decisions, management and disposal of

real estate properties within their jurisdiction. Therefore, there is no overall

investment strategy for buildings in Belgium; by contrast, each local government

defines the investment strategies regarding buildings in its jurisdiction.

Regarding the Belgian Buildings Agency, the current, main pipeline projects are as

follows:

establishment of interfederal satellite offices (i.e. federal office buildings where

work stations are available for employees of all central government);

construction and renovation of the central government’s buildings (e.g.

construction of an extension to the State Archives building in Arlon, renovation

of the Royal Institute of Artistic Heritage, replacement of the current Antwerp

prison).

Mineral and Energy reserves

In 1980, a constitutional reform extended the powers of the local governments. Some

powers over energy now belong to the local governments and others to the central

government28. This division of competences on energy matters necessitates

cooperation between the local government and the central government, as well as

consultation on the investment strategy.

This consultation has been formalised in the cooperation agreement on the

coordination of energy-related activities between the central government, the Walloon

region, the Flemish region and the Brussels-Capital region, resulting in the creation of

Enover/Concere. It is a consultative group that strengthens energy cooperation

between central and regional governments and brings together delegates from the

four energy administrations and the four cabinets responsible for energy, the

27 Infrabel Group (2017). Consolidated Annual Report 2016. Available at: https://www.infrabel.be/sites/default/files/documents/annual_report_2016_en_def.pdf [Accessed 10th December 2017]. 28 For more details about the cooperation between federal and regional government on energy http://economie.fgov.be/nl/consument/Energie/Politique_energetique/Contexte_Belge [Accessed 22th December 2017].

https://www.infrabel.be/sites/default/files/documents/annual_report_2016_en_def.pdf

http://economie.fgov.be/nl/consument/Energie/Politique_energetique/Contexte_Belge/Het_energieoverleg_tussen_staat_en_gewesten/#.Wj2LZN-nFPY


Belgium

21

Permanent Representation of Belgium to the European Union and the Directorate-

General for European Affairs and Coordination of the FPS Foreign Affairs.

In April 2017, the relevant energy ministers in Belgium (at central and local level)

decided to draw up an Inter-federal Energy Pact for 2030 and 2050. According to the

Paris climate agreement and the European objectives, the policy drawn up mainly

aims to develop the renewable energy production.

Other natural resources

The current legislative framework on the Belgian government’s Other natural

resources makes very difficult to infer the general investment strategy for Other

natural resources within government’s portfolio.

3. PERSPECTIVE ON THE EXECUTION OF THE INVESTMENT STRATEGY

From the mapping of the governance regime (Section 1) and the investment

strategies (Section 2) for the state-owned asset portfolio, some key insights about the

perspectives on the execution of the investment strategies can be drawn as follows:

the Belgian government has a “federal” structure where the central and the

local governments share the decisions related to the assets. In more detail,

with regard to non-financial assets many strategic decisions are under the

responsibility of the relevant regional governments;

currently there is no adopted overall strategy for all non-financial assets; by

contrast, the policy responsibility is mainly transferred to the relevant local

governments;

non-financial assets investments are mainly in the hands of the public sector;

the central government, through the significant portfolio of PSHs owned by the

SFPI-FPIM, mantains a strong presence in almost all sectors that are important

as far as the central government’s policy is concerned (i.e. aeronautical

industry and airports, real estate, networks, international investments, and

innovation).

Currently, there is no publicly available document that defines the destination of the

proceeds from forecasted privatisations.


Belgium

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Figure 4 Matrix of Governance regimes vs Investment strategy by clusters of assets,

broad features, Belgium

Source: KPMG elaborations, based on governance regimes and recent observed strategies.

The position of each asset cluster with respect to the “investment strategy” dimension (x-axis) reflects (a)the general investment strategy adopted by the government for the cluster. The general investment strategy might not apply to every single asset within the cluster (e.g. the position of the cluster indicates that the government currently plans to invest/divest, and this does not imply that this applies to all assets within the cluster).

As Figure 4 shows the governance regime is mainly “de-centralised” for nodal

infrastructures (i.e. airports and ports). On the other hand, the central government

has mainly “centralised” those assets for which the government is responsible for the

bulk of the investment (e.g. the railway network through Infrabel and the buildings

through the Belgian Building Agency) (first two quadrants on the left of Figure 4).

Figure 4 also shows that overall investments in non-financial assets are mainly

realised by the public sector. However, the de-centralised model adopted for airport

and nodal infrastructures have allowed private operators to have a role in managing

the infrastructures.

4. SYNTHESIS OF STRENGTHS, WEAKNESSES, OPPORTUNITIES AND RISKS

Financial assets

Strengths/Opportunities:

o the central government has transferred the ownership and the

responsibility for operational decisions on a significant portion of its

PSHs in the hands of a unique PSH fully owned by the central

government, i.e. SFPI-FPIM. It is seen as an instrument to boost the

economic government initiative and to support private companies;

Weaknesses/Risks:

Decentralised

InvestmentInvestment with private investors

involvement

Divestment/Fullyprivate investment

Governanceregime

Investmentstrategy

Centralised

Legend

= Financial assets = Airports

Not clearinvestment

strategy pattern

= Ports = Roads = Railways= Mineral and Energy reserves

= Other naturalresources

= Buildings


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o lack of an explicit asset management plan on Financial assets in the

Belgian general government’s portfolio;

o as mapped in Section 1, SFPI-FPIM is a fully state-owned company that

constitutes a strategic tool for applying the policy designed by the

government for its portfolio of Financial assets. The mandate of SFPI-

FPIM and its objectives are set by the central government and therefore

are strictly depending on political discretionary decisions.

Non-Financial assets

Strengths/Opportunities:

o the central government transferred the responsibility for many strategic

and investment decisions for non-financial assets to the local

governments which could be better placed to serve people’s real

interests;

o for some Non-financial assets in the central government’s portfolio, the

government has transferred the ownership and the responsibility for the

operational decisions in the hands of a few public bodies that are

organised as PSHs or agencies (i.e. the railway network is owned and

operated by Infrabel, the majority of the central government’s buildings

are managed by the Belgian Buildings Agency);

Weaknesses/Risks:

o the local governments have many responsibilities regarding the decision

making for non-financial assets. This model could have significant

advantages but requires a clear overall strategy and well pre-defined

program of roles and responsibilities to ensure that all parties are

handling their responsibilities through the correct entity. In light of the

efforts made to improve transparency and accountability, the roles and

responsibilities regarding strategic or investment decisions should be

further redefined to ensure consistent transparency;

o there is no unique, specific document defining the state asset

management strategy for non-financial assets within the general

government’s portfolio;

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