Tyumen Oil, a subsidiary of Russian conglomerate Alfa Group, is apparently stepping up its bid for two Ukrainian strategic enterprises: troubled Lysychansk-based oil refinery LyNOS, and Oriana, a struggling chemicals maker (see Kyiv Post Business front page, Feb. 10).
Tyumen representatives were in town in mid-February for talks with Prime Minister Viktor Yushchenko over possible acquisition of the two companies.
‘The Russian side is prepared to buy through a tender or to take over management of the state stakes in Oriana and LyNOS,’ a government statement issued after the talks said.
Ukraine is now preparing to announce a tender for a 67 percent stake in LyNOS, Ukraine’s second largest refinery with an annual capacity of 16 million tons.
Oriana is Ukraine’s leading producer of fertilizers and products made from petrochemicals.
Several additional foreign companies have so far expressed interest in purchasing stakes in the two companies. SPF chief Oleksandr Bondar has said he won’t play favorites in the privatization battle.
The winner of the tenders for either giant will face stiff investment conditions, including strict oil-supply quotas and repayment of large debts.
LyNOS refined some 528,000 tons of crude last year, a 69 percent decrease on 1998. In fact, the plant stood idle for most of last year.
Meanwhile, in a rare piece of good news, the European Bank for Reconstruction and Development has said it may increase financial aid to Ukraine to help the country privatize its energy sector.
New projects could include a micro-financing bank and continued efforts to help fund micro-, small- and medium-sized businesses. However, Ukraine’s energy sector, along with the telecommunications and infrastructure, will be the bank’s priorities, the EBRD said. Kyiv city is also negotiating a $150 million loan with the EBRD to improve energy efficiency in the industrial sector.
Ukraine’s energy industry is considered to be among the most attractive for privatization. Sales stalled last year, however, following disputes between various government agencies over the conditions of privatization.
Tender announcements
The State Property Fund (SPF) has announced it will sell another big stake in Ukraine’s largest truck maker, 50 percent of which passed into foreign hands last year.
The SPF said it will offer a 27.32 percent stake in Kremenchuk-based AvtoKrAZ on the stock exchange on March 16. Located in Poltava region, AvtoKrAZ employs some 9,400 people, and posted a pre-tax loss of Hr 45.5 million in the first nine months of last year.
Last year the government sold a 50 percent stake in AvtoKrAZ to Ukrainian-German joint venture Megamotors via a non-commercial tender at a fixed price of Hr 19.93 million. Megamotors promised at the time to pump Hr 93.1 million into modernizing the plant.
The SPF also announced it will offer a 25 percent stake in the Odessa oil refinery via the stock exchange in March. It did not specify the date of the sale.
The Odessa oil refinery, the third largest in Ukraine, has a charter capital of Hr 2.2 million.
Seventy-five percent of the refinery’s shares are already in private hands. Luk Sintez Oil, a subsidiary of Russia’s Lukoil, acquired a 50 percent stake in the refinery last year. Luk Sintez Oil pledged to annually provide the Odessa refinery with 2.4 million tons of crude oil.
The SPF also officially announced a commercial tender for a 30 percent stake in Mykolayiv Alumina Plant. The plant, one of the largest of its kind in Europe, has a statutory capital of Hr 378,263,360, according to the SPF. The minimum starting price listed by the SPF for the stake is Hr 115 million. The deadline for the submission of bids is March 10.
Privatization Results
In an event verging on farce, the SPF failed for the fourth straight time to sell stakes in jewelry-maker Tsentralny and Poltava ore-enrichment plants via a regional stock exchange.
The fund said that no bids were submitted for either the 12.43 percent in the Tsentralny plant, or the 6.59 percent stake in the Poltava plant.
An analyst at the PFTS said the fund could not further lower the starting price of the shares. The fund had already cut the price by some 30 percent, he said.
The nominal value of a share in the Poltava plant is Hr 0.25, while a share in Tsentralny costs Hr 0.01 only.
