The scandal brewing over the privatization of Ukraine's energy distributors should come as a surprise to no one.
The State Property Fund's effort to launch wide-scale sell-offs of those distributors was half-baked from the minute the plan was concocted in 1997. What that plan proposed, essentially, was to sell minority stakes in all 27 distributors for ridiculously high prices, and throw in ridiculously burdensome investment requirements to boot.
Strategic investors were bound to be turned off by the plan. And crooks with close ties to the government were bound to be attracted.
The state was able to sell off only nine of the 27 distributors, the others failing due to lack of interest. Of those sales that went off, only one, Odessaoblenergo, went to an investor with a proven track record in the energy sector, the international consortium Overcon. Alas, that result was overturned several months later by a court and the stake was awarded to a nebulous offshore company known as FS Trading.
A glance at the chart on page four of this issue proves our point. It is known that three of the investors on that list are controlled by wealthy oligarch Hryhory Surkis - not someone known for transparent business dealings. With the exception of Pryvatbank - definitely not a strategic energy investor - we know virtually nothing about any of the other investors on the list, despite our best efforts to find out. Industry insiders whom we've contacted, for the most part, also know nothing. Those who do know something have warned us that one or more of those companies are run by 'dangerous' individuals, and we'd be better off not asking too many questions.
It is clear now what happened when these oblenergos were originally privatized. In the absence of interest from real investors, officials in the government and/or the SPF rigged the tenders so that holding companies run by their criminal friends would win the tenders. For all we know, those companies didn't even pay for their stakes. The SPF keeps the whole process so opaque that it's impossible to know for sure.
Now those criminal deals are finally coming to light. President Leonid Kuchma, trying to fend off yet another scandal involving high-ranking government officials, is responding by firing officials right and left and demanding the renationalization of the privatized oblenergo stakes in question.
Perhaps Kuchma is right to take the stakes back. But if he's going to do that, he should take personal responsibility that they are quickly reprivatized, and that they fall into the right hands the next time around. Fat chance.
The Kyiv Post is disabling its online comment section due to an increase in trolls, violent comments and other personal attacks. Other news organizations worldwide have taken similar steps for the same reasons. The Kyiv Post regrets having to take this action. The newspaper believes in a robust public debate, but the discussion must be constructive and intelligent. For the time being, the Kyiv Post will allow comments on its moderated Facebook group https://www.facebook.com/groups/kyivpost/.
The newspaper will consider hosting online comments again when circumstances allow.
Thank you from the Kyiv Post.
Web links to Kyiv Post material are allowed provided that they contain a URL hyperlink to the
www.kyivpost.com material and a maximum 500-character extract of the story. Otherwise, all materials
contained on this site are protected by copyright law and may not be reproduced without the prior
written permission of Public Media at firstname.lastname@example.org
All information of the Interfax-Ukraine news agency placed on this web site is designed for internal
use only. Its reproduction or distribution in any form is prohibited without a written permission of