Ukraine debuted a new form of privatization auction last week, part of the cash-strapped government's ongoing drive to raise income from the sale of state property.
Until July 10, the State Property Fund will accept applications to purchase shares in 102 companies, including two from the investor-attractive energy sector – Kirovohradoblenergo and Sevastopoloblenergo. Five percent of Kirovohradoblenergo and 5.1 percent of Sevastopoloblenergo are on the block, with the SPF accepting bids as low as Hr 10 to attract the small investor. The format of the new auctions was created jointly by the SPF and PFTS Association.
'This type of sale is designed to replace certificate trading, which is no longer bringing in revenues,' said Oleg Arestarkhov, an expert in securities trading from the PFTS over the counter stock trading association. 'Those who wanted to invest their privatization certificates have already done so.'
Ukraine's privatization program has faltered lately, with revenues from the sale of state property markedly down and some companies failing to attract even a single bid at auction. Investors have complained that share prices are set at unrealistically high levels, a problem which the new auction format aims to address.
'The share prices at the new auctions will be regulated by the market, not set by the government as before,' said Arestarkhov. 'Nothing sets a more realistic price than the market itself.'
Ukraine's privatization program has so far transferred about 58,000 businesses from the state sector into private hands. According to SPF spokeswoman Natalia Tkachenko, Hr 230 million in revenues from privatization have gone to the budget this year. However, the government remains desperately short of cash to cover the persistent budget deficit.
