Ukraine's parliament approved on May 18 the government's three-year privatization program, ending a months-long standoff between the two branches of power.
The program is expected to attract foreign investment and ease Ukraine's foreign debt burden.
After months of delay, 242 lawmakers supported the program, with 100 deputies voting against it. Unlike the government's previous year-long privatization plan, the longer-term program will allow for better planning, analysts say.
The program clears the way for the government to sell about 600 large and strategic enterprises and raise between Hr 5 billion ($1 billion) to Hr 7.5 billion ($1.5 billion) over the next two years.
So far this year, the government has raised Hr 457 million from the sell-off of state property out of Hr 2.5 billion planned for this year. However, some of the most valuable companies are slated for sale later this year.
The privatization program also bars offshore registered companies from participating in sales of Ukraine's strategic companies and bans buyers from paying in barter. The decision will filter out many obscure companies with little experience in relevant areas that have dominated Ukraine's privatization scene.
Under the plan, the State Property Fund, the government's privatization agency, will review the value of each large company on the block before sale.
Selling off Ukraine's industrial assets have been one of the key conditions for international financial donors to resume aid to Ukraine. Privatization proceeds are also projected as one of the government's major financing sources to pay off Ukraine's massive foreign debt.
Just days after the program was approved, however, parliament again failed to allow the government to sell Ukraine's phone monopoly Ukrtelecom and has tabled consideration of the bill. Parliament was scheduled to vote on the sale on May 22 but withdrew the issue from the agenda amid dissent within the legislature.
“This issue was not prepared well,” deputy speaker Stepan Havrysh said. “There were different points of view on the issue among deputies and groups.”
Lawmakers have repeatedly shot down the government's hopes of selling a 25 percent stake in Ukrtelecom, which would have raised an estimated $548 million. Ukrtelecom is on the list of Ukraine's strategic companies that require a special parliamentary approval for sale.
Analysts described parliament's privatization policy as inconsistent and said it was unfortunate the lawmakers adopted the government's privatization plan, yet sent the Ukrtelecom bill back.
“It would have been much better if they decided vise versa,” said Valery Antonov, an analyst with Alfa Capital brokerage.
Meanwhile, Kazakhstan's oil monopoly, Kazakhoil, has announced that it is interested in acquiring a 63 percent stake in Kherson Oil Refinery. Kazakhoil's president, Nurlan Balgimbayev, was in Kyiv on May 18 for talks with some of Ukraine's senior government officials.
Balgimbayev said his company was wary of making a major investment at the refinery that it doesn't own. Kazakhoil has been managing the government's 50 percent plus 1 share stake in Kherson refinery since October last year. The company has provided the refinery with some 800,000 tons of crude oil and is planning to deliver another 1.2 million tons by the end of this year. Kazakhoil also intends to pump $60 million in reconstruction of the aging refinery.
Deputy Prime Minister Yury Yekhanurov announced after negotiations that President Leonid Kuchma had ordered the Kherson refinery to be auctioned off later this year.
Balgimbayev said Kazakhoil also is seeking to buy the Feodosiya port and oil terminal on Ukraine's Crimean peninsula. Feodosiya oil terminal is Ukraine's second largest.
Russian holding company Alliance Group, Kazakhoil's manager for the stake in the Kherson refinery, also has said it was planning to buy a minority stake in the refinery on the stock market. Alliance's former president and Kherson refinery's manager Ziya Bazhayev was killed in a plane crash in Russia earlier this year. Russian police are investigating whether the plane was sabotaged. The refinery's supervisory council has elected Ziya Bazhyev's brother, Musa, as the company's new head.
SPF ANNOUNCEMENTS
The SPF is expected to announce May 25 a tender for selecting advisers for the sale of large and controlling stakes in Ukraine's seven regional electricity distributors, known as oblenergos, according to the Energy Minister Serhy Tulub.
The second tender for consulting the government on the sales of five other obleneregos is to be announced on August 23 this year, Tulub said.
SPF RESULTS
Russian brokerage house Aton has acquired large stakes in Ukraine's two industrial giants on the stock market. Aton said it bought the shares on behalf of another company but wouldn't disclose the new owner.
Aton on May 17 paid Hr 19 million for a 25 percent stake in Alchevsk metallurgical plant and another Hr 13 million for a 25 percent stake in Alchevskkoks coke plant. Aton bought the stakes in the metallurgical and coke plant for Hr 0.1 and Hr 0.25 per share, respectively.
Alchevsk metallurgical plant produces steel, cast iron and rolled ferrous metals.
With 11 percent of Ukraine's total coke output, Alchevskoks plant is one of the country's largest coke producers.
The European Bank for Reconstruction and Development has purchased an unidentified minority stake in Kyiv oblast-based Boryspil food plant. Boryspil food plant produces various kinds of breakfast cereals. Sweden's Vargarda Kvarn food company had earlier this year bought a controlling stake in the plant.
