The Cabinet of Ministers of Ukraine on July 4 approved new procedures intended to make it easier to privatize state property and defining which important state properties can’t be sold off.
The strategy includes two new resolutions. One sets out the procedure for assessing the strategic importance of a state-owned enterprise – only ones that are less important to the economy can be liquidated or sold.
The other stipulates a new, simplified procedure for selling off state property.
“This is such a great victory in state-owned enterprise reform,” Max Nefyodov, Ukraine’s deputy economic development and trade minister wrote on Facebook after the cabinet meeting approved the measures on July 4.
The introduction of the new procedures for privatizing state property meets one of Ukraine’s obligations to the International Monetary Fund, reads a statement published on the cabinet’s website on July 4.
“State-owned enterprises are risky for Ukraine. The financial problems of state companies in the end become problems for the state budget, and they suck money from it,” Nefyodov said during the cabinet meeting.
“That money could be spent on something more important than rescuing unprofitable businesses,” Nefyodov added.
The deputy minister said Ukraine’s government would have to cut the number of state-owned enterprises significantly.
According to the first resolution, the 15 most important enterprises and 363 items of important state property must remain under government control. They include state-owned monopolists in various spheres, such as state rail company Ukrzalyznytsia, oil and gas company Naftogaz Ukraine, or enterprises that are strategically important in the defense, health and social policy sectors.
More than 359 enterprises and objects (airports, roads and highways) are to be passed under concession or given into the temporary management of individuals. This will improve their financial performance, Nefyodov wrote on Facebook.
The first resolution also specifies that state-owned enterprise that do not meet modern standards must be liquidated, and lists more than 893 state-owned companies that are to be sold to private investors.
“This (document) is a hint that state enterprise sector is bleeding, and we need to save only strategically important companies,” Nefyodov said.
According to him, 3,444 enterprises and objects are still under the control of the Cabinet of Ministers.
The second privatization resolution divides state companies and property into two types: subjects of small and large privatization. It cuts the number of bureaucratic procedures from five to two – auctions and repurchases.
“The large privatization items can be repurchased only with the participation of investment advisors, who will study the market before suggesting a price. The small privatization objects can be sold only through the ProZorro online auction system, where the starting price would be the asset value, or one hryvnia if the enterprise’s asset value is zero,” Nefyodov wrote.
