The National Circus of Ukraine and six regional circuses along with Dovzhenko Film Studios, Ukrainian Documentary Film Studios, Ukrtelefilm Studio were included into the list of 890 state-owned companies that are to be privatized in 2017-2020.
Ukraine’s Ministry of Economic Development and Trade has published the list on its website.
“We’ve never brought profit to the state. But I don’t think that businessmen would be interested in buying the National Circus Company or a circus as a possible business,” Oleksandr Salnikov, the lawyer of the National Circus Company of Ukraine told the Kyiv Post on Aug. 1.
Salnikov said that the investors would be more interested to purchase the circuses for a land plot and destroy the entertainment enterprises.
There are 3,460 state-owned enterprises in Ukraine, the Economy Ministry said.
The state has proved itself as ineffective owner and manager of the companies that operate in competitive markets, the economy ministry press service told the Kyiv Post on July 28.
In 2016, the ministry said, more than 1,600 state-owned enterprises were simply not working, in increase from 2012’s figure of 1,367 non-functional companies.
“We also counted 1,186 state-owned loss-making companies only in 2016. The additional funding of those enterprises damages the state budget and creates corruption risks,” the ministry said.
In 2017, more than Hr 537 million was allocated for financial support of state owned companies of cultural sector only.
Only strategically important state-owned companies for Ukraine’s economy would stay under government control. Others would be passed in concessions, liquidated or sold to private investors.
Aside from movie studios and circuses to be put on the sales block by 2020, there are several dozens of road agencies, fish and food factories, state chemical and steel producers, state concern UkrSpirt, Oshchadbank, Odessa Port Side Plant, joint stock company Turboatom, sea and river ports, jewelry factories and many others.
The Ukrainian government has broadened the list of enterprises to be sold to private investors by the end of August, as part of the memorandum with the International Monetary Fund signed in April.
IMF has disbursed about half of the $17.5 billion credit package that expires at the end of 2018, but stalled reforms have stalled the lending.
The IMF insisted Odesa Port Side Plant must be privatized until the end of 2017.
According to the State Property Fund website, Odessa Port Side Plant, UkrSpirt, oblenergos (state energy suppliers), public joint-stock corporation Turboatom and others must be sold only through an auction or a transparent competition.
“Privatization of major enterprises is impossible without the joint efforts of all branches of government. The State Property Fund will do its best to fasten the privatization and increase the flow of funds in the state budget,” the message reads.
Slow and hard
The Ministry of Economic Development and Trade monitoring said Dovzhenko Film Studios lost Hr 3 million for the state in 2015-2016. Ukrtelefilm Studio lost more than Hr 2.5 million in the same period.
The Lviv State Circus loss Hr 1.6 million and the Zaporizhzhia Circus Hr 1.4 million in 2015-2016. The ministry has no data about National Circus of Ukraine financial performance.
“Those enterprises can be sold to private investors or passed in the communal ownership,” the ministry said.
However, the ministry press service added, that circuses and cinema studios were included in the privatization list as “recommended.”
Current Ukrainian legislation doesn’t allow to sell the objects with the “national” status to the private investors.
The Cabinet of Ministers ordered the Ministry of Economic Development and Trade and State Property Fund to broaden the list of state owned enterprises and represent the new privatization addition (2017-2020) to the Cabinet for approval,” said the ministry’s press service.
Nina Yavorska, State Property Fund spokesperson, told the Kyiv Post on July 29 that Ukrainian ministries are managing almost every state-owned company in Ukraine.
“The Culture Ministry is responsible for circuses, cinema studios and other state-owned entertainment enterprises,” Yavorska said. “The State Property Fund sells the companies for private investors, but ministries must prepare the enterprises first and pass it under the fund’s control after the Cabinet’s approval of course.”
Yavorska said “it is great that the government had included even cinema studios and circuses in the new privatization list. The more enterprises would be passed into the private sector, the better performance will Ukraine’s economy show,” she added.
Odesa Portside Plant, a fertilizer plant in Odessa Oblast that the government tried to sell twice in 2016 and failed. Ihor Bilous, head of Ukraine’s State Property Fund, announced on Dec. 7 that there were not enough bidders for the privatization of the plant to go ahead.(Volodymyr Petrov)
Privatization-related scandals in Ukraine
- No one interested in Odesa Port Side Plant?
Odesa Portside Chemical Plant is one of the largest state producers of ammonia, urea, methanol and other chemicals, is located on 250 hectares of land near the city of Yuzhny in Odesa Oblast.
In December the plant officially stopped its work due to the lack of finances and announced it was going to lease its entire complex for rent.
The enterprise was mostly export-oriented (85 percent) and sells its products to 30 countries of the world. The plant was meant to be the first big privatization since 2015, with a minimum bid of $500 million.
In July 2016, the government brought down the price to $250 million, but the privatization failed again due to the lack of bids from the potential investors, State Property Fund has reported.
Although about 10 potential investors showed interest.
In the latest memorandum signed in April, IMF insisted that Odesa Port Side Plant must be privatized by the end of 2017. The next auction will take place in December. State Property Fund head Ihor Bilous told the journalists that the new price would be about $150 million.
- Loud arrest
In July 2016, the National Anti-Corruption Bureau of Ukraine detained the head of the Odesa Portside Plant Supervisory Council Sergei Pereloma and his deputy Mykola Shchurikov.
Both were suspected of Hr 250 million embezzlement during the illegal procurement of natural gas for the plant.
Three days later both were sentenced to 60 days in prison. However, on Aug 1, 2016, the Court of Appeal of Kyiv canceled the sentence.
Pereloma still works as a deputy head of the joint stock company Naftogaz Ukraine.
Shchurikov won the case against “NABU’s illegal arrest” in court and has since returned to his job in Odesa Port Side plant supervisory council.
- Assassination of UkrSpirt deputy head
Viktor Pankov, ex-deputy head of the state-owned alcoholic beverage producer UkrSpirt, was shot dead in one of the districts of Kyiv on May 30. The assassin shot four times in his back.
The police tied his murder with Pankov’s professional activity. Interior Ministry advisor Anton Gerashchenko told Interfax news agency, Pankov was assassinated because of his work in UkrSpirt.
“For the last 10-15 years Pankov was deeply connected with this challenging state enterprise, that was meant to work profitably for Ukrainian people, but instead constantly works in the shade,” Gerashchenko said.
The investigation into Pankov’s murder has not let to any arrest. In 2012, the Anti-Monopoly Committee of Ukraine fined UkrSpirt Hr 200 million for intentional and illegal overpricing of ethanol.
