Desperate for additional revenues to fill budget coffers, President Viktor Yanukovych’s administration is shifting privatization into higher gear.
Plans envision that a handful of utilities, billion-dollar power generators, will be auctioned off in the next two years, starting this year with Dniproenergo and Zakhidenergo.
The electricity producers are in dire need of fresh investment and modernization. Putting them into private hands is the right move.
But judging how the administration privatized fixed-line telephone company Ukrtelecom earlier this year, there is cause for concern.
The fear is that these sales will also be non-competitive, that the tenders will be organized in a way that gives oligarchs backing
Yanukovych a chance to buy the assets with little competition and at below market prices.
Yanukovych is notorious for auctioning off prized assets to friends through inside deals.
It was, after all, back in 2003-2004, when he served as prime minister, that Ukraine’s government organized a series of rushed and allegedly rigged privatizations that put billions of dollars worth of assets into the hands of business backers at a fraction of their worth.
There should be no room or patience with struggling taxpayers for such scams this time around, given how dependent Ukraine is on International Monetary Fund bailouts, and how sharply the nation’s sovereign debt has surge in recent years.
All tenders must be transparent. Tender conditions must attract the maximum number of bidders from Ukraine and abroad.
Also troubling are conditions officials are talking about that will force new owners to preserve aging and environmentally unfriendly technologies. State Property Fund chief Oleksandr
Ryabchenko said this week that the generators’ new owners will be required to keep them dependent long-term on coal-burning technology.
Our suspicion is that the requirement for investors to secure coal supplies from Ukraine will rig the sale in favor of domestic oligarchs that own coal mines in Ukraine.
But officials claim the aim of this policy is to preserve jobs in Ukraine’s vast coal mining industry, which employs hundreds of thousands of citizens in Yanukovych’s eastern base of political support.
Whatever the aim, this policy is backwards. In a time when much of the world is working hard to decrease dependence on fossil fuels, such a policy would preserve dependence on dirty energy sources.
There are ways to stimulate new jobs for coal miners.
Here is one idea. Why not encourage the power generators’ new owners to invest into cleaner power factories producing cleaner energy technologies, such as solar power, wind mills or biogas?
