Revenue from privatization in 2016 might go up to 20-30 billions of hryvnas – Head of the State Property Fund of Ukraine

Revenue from privatization in 2016 might go up to 20-30 billions of hryvnas – Head of the State Property Fund of Ukraine
September 07, 2015.

Kyiv, September 7, 2015. The income from privatization in 2016 might go up to thirty billions of hryvnas. Ihor Bilous, Head of the State Property Fund of Ukraine (SPFU) surmises at the press briefing at Ukrainian Crisis Media Center in the framework of the project Ukraine Reforms Communication Taskforce.”We want to focus on preparing big objects that are ready for privatization already next year, given that the internal revenues from this privatization should be around 20-30 billions of hryvnas. This money should become a compensatory element in tax reform, it will allow to balance the budget while lowering rates on certain taxes», – points out Ihor Bilous.

These plans will become reality granted they are supported by the Verkhovna Rada. In particular it entails approval of the bill №2319а (of 07.09.2015), which improves the mechanism of state property sale. Ihor Bilous expects this to happen in the nearest weeks.

Bill №2319а consolidates the innovations aimed at ensuring transparency and openness in the process of state property sale. This process encompasses attracting advisers both to the process of privatization preparation and to the sales process; issuing bans for certain persons or institutions that cannot take part in tenders because they are registered in countries recognized by the Verkhovna Rada as aggressors, or in off-shore zones or which are under sanctions.

Introducing positions of privatization advisors will allow raising effectiveness of preparing the objects for privatization, which in the end would contribute to both: search for the most effective owner and an increase of cash flows. “We have already negotiated with USAID, European Commission, and the European Bank for Reconstruction and Development regarding support. In particular USAID already agreed to allocate five-seven million dollars for a planned qualitative preparation of objects for privatization. What is meant here is a high quality analysis of information, data presentation in English, creation of the so-called data-rooms, as well as coordination of work with all the potential buyers. In other words we will have three to five hundred thousand dollars for preparing objects for privatization. In case of Odessa Port Plant or with Centrenergo, it is possible that the amount goes up to 1 million dollar. As a result we will obtain a new quality of privatization and investors’ awareness will significantly increase», – comments the Head of SPFU.

Generally till the end of this year the State Property Fund of Ukraine will focus on the so-called small-scale sector privatization, which will allow receiving almost one billion hryvnas, estimates Ihor Bilous. In particular, he hints at the sale of ‘President-hotel’ (Kyiv). Also the SPFU Head did not exclude possible sale of public energy service objects, however that happens only provided the Verkhovna Rada promptly adopts the bill №2319а. “All TTP – thermal power plants – have buyers for them. According to the new tariffs the small-scale energy generation enterprises are profitable. At present we have five to six such investors. It all depends whether we manage to get the changes to the law in the nearest time (meaning adoption of the bill №2319а, note by Ukrainian Crisis Media Center),” points out the Head of SPFU.

Big objects are out for sale next year. In particular, by the end of the current week SPFU will define a financial consultant for the sale of Odessa Port Plant. As for the company ‘Centerenergo’ and six oblenergos (regional power distribution companies), whose shares the Cabinet of ministers intended to sell in 2015, their sale will happen after the heating season ends.

Ihor Bilous reminded that the Cabinet of ministers of Ukraine finalized the decree №271 (of 05.12.2015) that defined a list of 302 objects for privatization. Of them, 174 objects the SPFU had to transfer under management of ministries and government agencies. But as of now only 7 objects have been transferred.  As opposed to this approach Ihor Bilous cites the data about the first hundred days work of the new SPFU team  under his management. Notably, the SPFU made a complete inventory of objects that are under its rule, conducted restructuring of its own governing structure. Future plans of the Fund include optimization of the cadre personnel, which implies a cut in human resources

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