You're reading: Yatsenyuk wants change in state privatization law

Ukrainian Prime Minister Arseniy Yatsenyuk during a weekly government meeting on Aug. 19 ordered to cancel the sale of a 5 percent stake in the most valued asset that is slated for privatization this year.

A stock
exchange auction was scheduled for Aug. 26 in state-owned Odesa Portside Plant,
a huge producer of chemical fertilizers that exports up to 90 percent of its
output.

The measure
allows the government to conduct the plant’s privatization “in the most
transparent way” and “for the maximum benefit of the state,” wrote State
Property Fund head Ihor Bilous in a blog on Aug. 19.

It appears
the government wants to wait for parliament to pass a new bill on privatization
when it reconvenes in September that would cancel the requirement to sell 5-10
percent stakes before the state can offer a controlling stake in an asset.

The
starting price for the 5 percent stake in Odesa Portside Plant was Hr 450
million, implying a market capitalization of $408 million, according to
investment house Concorde Capital. The remaining controlling stake was scheduled
to be sold in November.

“The plant
is being privatized for more than seven years, which is more than enough time
to prepare a transparent tender, in our view,” Alexander Paraschiy, head of
research at Concorde, wrote in an emailed message on Aug. 20. “At the same
time, the postponement of the Odesa Portside tender until new rules are adopted
is a logical step.”

Ukraine has
set the ambitious goal of raising $17 billion from the sale of state assets
this year.

Based on
the government’s current privatization schedule that was updated in June,
virtually all remaining attractive assets are in energy. They include regional
energy distribution companies known as oblenergos, combined heat and power
plants where controlling stakes are available, as well as minority stakes in
already privatized thermal generation companies that are only of potential
interest to current majority owners.

“But more
attractive than these and not formally approved for sale yet are the (13) sea
ports and thermal generation company Centrenergo,” Viktor Luhovyk of Dragon
Capital said in an emailed message.

The State
Property Fund in 2009 declared a holding company controlled by billionaire Igor
Kolomoisky the winner in a bid for a 99.7-percent stake in the plant, according
to Concorde Capital. Offering the equivalent of $630 million based on the
exchange rate then, the company’s bid was annulled after the government agency
cancelled the bid outcome claiming the price was too low.

Kyiv Post
editor Mark Rachkevych can be reached at [email protected].