Interference of the International Monetary Fund and pleas from a Russian metals trading giant are threatening to undo the tender of a 30 percent stake in one of Ukraine's most attractive and controversial properties, the Mykolaiv Alumina Plant.
Ukraine was widely accused of rigging the tender in favor of Russia's Siberian Aluminum Group when it officially put the stake up at a price of Hr 115 million in mid-February.
The State Property Fund declared that the buyer would have to build an aluminum plant in Ukraine with an annual capacity of at least 100,000 tons. The newly erected factory was supposed to use a considerable portion of alumina – the raw material for making aluminum – made by MAP.
In another condition attached to the deal, the winner of the tender was to halt tolling practices at the plant and introduce direct import-export operations within two years.
Close observers cried foul as soon as the terms were released by the SPF, saying the SPF's terms matched those desired by Siberian Aluminum. Officials at Siberian Aluminum, which already claims to control 36 percent of the plant, spelled out its plans to participate in the tender several times in the months preceding the official announcement.
Enter the IMF. The fund weighed in last week with a request that Ukraine increase the size of the stake being sold in MAP from 30 percent to 55 percent – the latter figure representing the entire government share. The IMF also suggested Ukraine cancel the condition that the winner has to build an aluminum plant.
That led cronies of Siberian Aluminum to speculate that the IMF was favoring Siberian Aluminum's fierce competitor, Trans World Group, in the tender.
An unnamed Ukrainian government official, quoted by the Russian newspaper Kommersant, said that 'the IMF's suggestions strangely coincide with the way the privatization is being viewed by [Russian tycoons] Roman Abramovich, Boris Berezovsky, Lev Chorny and Trans World Group: The stake must be bigger and the number of obligations must be smaller.'
SPF deputy head Leonid Kalnichenko, in an interview with the Moscow Times on March 3, denied that the IMF had been influenced by the views of Russian oligarchs.
Kalnichenko said the IMF had merely pointed out that by selling only a 30 percent stake in MAP, Ukraine was not following its own declared strategy of selling majority stakes to create effective proprietors.
Senior SPF officials have made it clear in recent interviews that they disagree with the IMF view, but said they would consider the issue again later this week.
Meanwhile, as the IMF was lobbying for Ukraine to increase the size of the stake, Siberian Aluminum was asking Ukraine's government to extend the deadline for bid submission for the tender.
Siberian Aluminum said it can't complete the calculations needed for the tender on time. The government said it will consider the company's request. According to the original terms announced by the SPF, the tender for a 30 percent stake in MAP is to be held by March 16 this year.
MAP is Europe's largest alumina producer and a key provider of alumina for Russia's aluminum industry. Since the break-up of the Soviet Union, Russia has lacked sufficient alumina production capacity to supply its aluminum smelters.
Tender Announcements
The SPF continued its Blue Chip selloff drive last week, announcing a tender for a 25.22 percent stake in major Kharkiv-based turbine maker Turboatom. The starting price for the stake is Hr 56.8 million.
The factory found itself in the middle of an international row in 1998 over its plans to supply turbines to a nuclear plant in Iran, and Ukraine later gave up the lucrative contract under pressure from the United States.
Last year, Andorran-Ukrainian joint venture AMP won a non-commercial tender to buy a 25.22 percent stake in the plant for Hr 52.096 million. AMP pledged to invest another Hr 55 million within five years. The SPF later sued the company for failing to meet its investment requirements, but lost the suit. The latest tender will be decided by April 2.
Also last week, the fund announced it will soon be selling a 89.47 percent stake in Krymsky Soda plant at a starting price Hr 161.9 million.
With an annual capacity of 700,000 tons, Krymsky Soda is one of Ukraine's biggest soda makers. An international consortium headed by Germany's Commmerzbank will advise on the sale. Tender applicants must have experience in managing soda-producing enterprises, and must also have a background in handling investment projects. Bids are to submitted by May 30.
The fund has also set a starting price of Hr 361.5 million for a 45.56 percent stake in Mariupol-based Azovstal, one of Ukraine's metallurgical giants. The fund is expected to announce a tender for the stake in Azovstal on March 9. Several previous attempts to sell stakes in Azovstal have failed.
