President Volodymyr Zelensky signed a law abolishing the monopoly on alcohol of state-owned enterprise Ukrspyrt. the website of the Verkhovna Rada announced on Dec. 11.
In parliament, 293 out of the 422 members voted in favor of the law on Nov. 15, which provides for the abolition of state monopoly in production of alcohol as of Jan. 1, 2020, the possibility for businesses to produce alcohol subject to the receipt of a license and the full liberalization of alcohol exports from Ukraine.
The bill also stipulates that only state enterprises authorized by the Cabinet of Ministers will be able to import alcohol before Jan. 1, 2022 to protect domestic producers.
According to Yulia Kovaliv, deputy head of the President’s Office, the privatization of UkrSpyrt could bring up to Hr Hr 5 billion ($200 million) to Ukraine.
It is yet another step towards large-scale privatization launched by Zelensky on Oct. 28, when he signed a law abolishing a 20-year-old list of over 1,000 state-run enterprises that were not allowed to be privatized in the past.
UkrSpyrt has had issues with corruption for years and has long been seen as one of the least efficient companies in Ukraine, with tax problems, outdated equipment and poor quality.
Back in December 2018, Ukraine’s Anti-Monopoly Committee fined the alcohol producer Hr 33 million ($1.2 million) for abusing its position after the monopoly set up discriminatory selling conditions and established different prices for different buyers, disconnected from the volumes of alcohol being purchased or other legitimate pricing criteria.
In December 2016, Yevhen Chernyak, the CEO of Ukraine’s Global Spirits company, accused Ukrspyrt of flooding half of Ukraine’s alcohol market with dangerous and illegal “shadow alcohol.”
For the past five years, Ukrspyrt has not had a true director, making due with a series of temporary acting directors.
In 2017, one of Ukrspyrt’s former acting directors was assassinated in Kyiv, and in 2018 his predecessor was detained in Romania and accused of involvement in the killing.
Built after World War II, most of Ukrspyrt’s factories are also outdated and ill-suited to meet demand, making its products shoddy and overpriced.
“The price of Ukrainian pure alcohol is the highest in the world,” said Yuri Sorochynsky, CEO of Ukraine’s Nemiroff Vodka Company to the KyivPost in April 2018.
