In about 20 minutes on Aug. 21 the State Property Fund managed to sell off a majority stake in one of the country’s top energy producing companies for less than 15 percent above its starting price – for Hr 718.92 million – to a relative unknown company that was registered just two months ago.
And it seems that once again, a lucrative asset goes to a friend – a former Party of Regions parliament member Ihor Humeniuk, who seems to be the majority owner of the buyer.
The company said in a statement that he is the majority owner, but in Ukraine you never know who is really hiding behind those ubiquitous offshores.
Insider deals are too common in Ukraine’s history of privatization. In fact it would be accurate to say that most of the nation’s best assets were grabbed by a bunch of insiders, now known as oligarchs of the nation.
Only one of those was reversed under the Orange government, the privatization of Kryvyi Rih Steelworks. It was originally sold in 2004 to Rinat Akhmetov and Viktor Pinchuk for $800 million, and fetched $4.8 billion from Mittal Steel a year later during the second, open privatization auction.
It seems that this case has not taught the Ukrainian government anything. Selling cheaply to a friend trumps making money for the budget.
And if there was any time when the budget needed the money badly, it is now. With foreign reserves dwindling, and tax collection lagging, the government is running double budget deficits and is tapping markets heavily.
At the same time, this year’s privatization revenue target of Hr 10.9 billion is very unlikely to be met – especially if privatization continues to be similar to this latest sale.
