Kyiv, July 9, 2015. Large-scale state property privatization is planned in Ukraine for 2015. “A list of 302 objects of state property that are to be privatized in 2015 has been approved at this stage. One hundred twenty-seven objects are managed by the State Property Fund, 67 more are managed by other central executive authorities, 42 by the Ministry of Energy and Coal Industry, 62 by the Ministry of Agricultural Policy and four by the State Agency of Fisheries,” said the Head of State Property Fund Ihor Bilous during a press briefing at Ukraine Crisis Media Center. The total privatization budget amounts to 17 billion hryvnia.
There are several strategic enterprises to be privatized including Central Energy Company (TsentrEnergo), Odessa Port Plant (OPP), six regional energy companies with controlling shares and about six combined heat and power plants. “These four blocks will form the core of our activity in 2015,” said Ihor Bilous.
According to Bilous, they expect major interest in the OPP, the first company up for privatization. “In my preliminary estimation, we expect to get no less than half a billion dollars for 100 percent of shares in the Odessa Portside Plant”, said Mr. Bilous, who also assured the press that the procedure would be transparent.
The public and the media will be informed on instructions to bidders, preparation on progress and interest to investors, bid submissions and the auction itself. Following privatization of the OPP, TsentrEnergo and regional energy companies will be privatized. “Small-scale companies will be sold at the end of the summer and at the beginning of the autumn, as new owners need time to prepare for the heating season,” added Bilous.
Two methods will be used to sell state property. “The first pattern is as follows: 25-50 percent of shares will be packaged for sale on the stock exchange, and all the control packets will be put up competitively. Strategic objects will be sold by competition with elements of an auction,” said Bilous. Certain limitations will be imposed on participation of legal entities registered in offshore zones or included in the Financial Action Taskforce List of Non-cooperative Countries and Territories. Limitations will also apply to legal entities directly or indirectly controlled by entities in the above categories as well as to persons or legal entities falling under sanctions.
Based on the set tasks, the State Property Fund made a number of proposals on changes to legislation, which would provide for transparency and competition in privatization. According to Bilous, it is necessary to increase the quality of the property, join land evaluation and real property evaluation into one category, resume activity of the Supervisory Council and create a unified electronic reports database for the fund. Involving advisors in the process of preparation for sale of strategic assets and prohibiting stock splits and sales of small share packages (less than five to 10 percent) on the stock exchange is also essential.
Bilous emphasized that all the changes aimed at improving property evaluation quality and simplification of land evaluation procedures will not be introduced solely for the purpose of privatization. The changes are linked to real estate markets and are deregulation measures that will boost economic development.