The State Property Fund of Ukraine (SPF) this year plans to complete the full privatization of the alcohol industry, which will hold online auctions for the sale of 26 distilleries across the country.
As reported on the IGF Facebook page on Thursday, for the 2.5 years since the de-monopolization of the alcohol industry there have been 39 successful auctions for the sale of distilleries, which added more than 2 billion UAH to the country’s budget, allowed to attract private investment and reduce illegal production.
“Did you know that not long ago Ukraine had a monopoly on alcohol production? We were one of only two countries in the world that had such a practice. However, in the summer of 2020, the state decided to de-monopolize the industry and began privatizing distilleries. “, – reminded the department.
According to him, before the start of privatization Ukraine spent about 200 million UAH a year for the maintenance of unprofitable factories. An even bigger problem was shadow production, which amounted to 55% in 2019.
The fund specified that in the 39 completed privatization auctions participated 133 entrepreneurs, as a result, due to competition, the value of the proposed assets increased by an average of 2.4 times.
“Not only alcohol producers are interested in buying distilleries. Pharmaceutical companies, producers of motor fuel and agricultural companies interested in processing their own products also take part in the auctions,” emphasized the FGI in its report.
As reported, in September-December 2022 the SPF held 12 auctions for the sale of distilleries. The auction winners offered more than 849 million hryvnias for these facilities, which is three times more than their total starting price. Thus, distilleries became one of the most popular destinations for investment in state property last year.
In December 2022, “Averbud Ltd.” (Chystyliv village, Ternopil region.) won the right to privatize part of the property of the state enterprise “Myshkovitsy Distillery” (Terebovlyansky district, Ternopil region.), namely the distillery in Chortkiv (Ternopil region.).
At the beginning of January 2023, the Antimonopoly Committee of Ukraine allowed Timekol LLC (Kiev) to privatize Borschevsk distillery (Ternopil region), which is a part of the state enterprise Ukrspirt. The company won the right to buy the distillery for 17.7 million UAH at an online auction in October 2022.
In addition, on January 12, LLC “Es Oil” (Lviv) won the right to privatize Starobabskyi distillery with assets in five regions of Ukraine for 142 million UAH, and on February 6 LLC “Agroprompererobka” (Karbivka village, Vinnitsa region) won the auction for the privatization of Vashkovskiy distillery (Vashkivtsi Chernivtsi region) for 1.99 million UAH.
The Antimonopoly Committee of Ukraine (AMCU) allowed Aqua Solar Invest LLC (Bershad, Vinnytsia region) to purchase Kobylovoloki distillery (Kobylovoloki village, Ternopil region), which is part of Ukrspirt, and Vitagro Energy LLC (Gvardeyske village, Khmelnitsk region) was allowed to purchase the Marylivsky distillery (Nagirnyanka village, Ternopil region) from Ukrspirt.
The Committee approved the corresponding permits for the privatized assets at its meeting on December 1.
LLC “Aqua Solar Invest” won the right for privatization of Kobylivolokskyi distillery for UAH 70,25 mln on September 19, 2022.
According to the Unified State Register of Legal Entities and Individual Entrepreneurs, the ultimate beneficiaries of “Aqua Solar Invest” with a registered capital of 25 million UAH are Alexander Yaroshenko (25% in the share capital), Lilia Astapova (25%) and Elena Smirnova (25%), while until December 2020 the company was fully owned by Felix Lutsky. The legal entity is engaged in distillation, rectification and blending of alcoholic beverages, while before January 2021 its line of business was real estate trade.
This company already has experience in privatization of assets of state enterprise “Ukrspirt” – in October 2020 it won the online auction “Prozorro.Sells” the right to privatize Bershadskyi distillery for 19.81 million UAH, and in early February 2022 closed the deal to purchase it, having received permission of the AMCU.
The immovable property of the Kobylivolok distillery to be privatized with a total area of 11.5 thousand square meters is located on seven plots of land in Terebovlyansky district of Ternopil region with a total area of 36.95 hectares. The plant includes production buildings, granary, distillery, hangars, pumping stations, greenhouse, starch and malt shops, gas station, etc., as well as the technological equipment and the necessary communications.
The daily capacity of the distillery is 2.7 thousand dal of ethyl alcohol. The company was founded in 1905 and modernized in 2016. Production at the facility has been temporarily suspended.
In turn, Vitagro Energy won the right to privatize Marylivskyi distillery for UAH 150 mln on September 20, 2022.
According to the Unified State Register of Legal Entities and Individual Entrepreneurs, the ultimate beneficiary of Vitagro Energy LLC with a registered capital of 10 thousand UAH is Serhiy Labaziuk, a member of parliament (the Za Maybutne parliamentary faction). The main activity of the company is the production of electricity, but the legal entity may also engage in the cultivation of root crops and melons, as well as auxiliary activities in crop farming.
The company is part of the large Vitagro holding, which is engaged in the production and processing of crops, including fruits and vegetables, dairy farming and pig breeding. The Group cultivates about 85 thousand hectares of land in Khmelnytsky, Ternopil and Rivne regions and has a livestock of 110 thousand pigs.
According to Vitagro’s website, Vitagro Energy was founded in 2018 to develop renewable energy projects. The company has four solar power plants in the Khmelnitsky region on a total area of 29.5 hectares with a total capacity of 12.9 MW, and also works with other sources of renewable energy, such as wind and biomass.
The Marylivsky distillery is located in the village of Nagirnyanka, Chortkivsky district, Ternopil region. The list of assets includes 1518 items of buildings, equipment, movable and other property.
The enterprise is located on three land plots with a total area of 26.6 hectares and consists of an administration building, seven production shops, a bard storage facility, a starch workshop, greenhouses, hangars, warehouses for grain, finished products and alcohol, as well as other constructions and infrastructure facilities.
The distillery was founded in 1928, the maximum production capacity in 2009 was 7300 thousand dal per day.
Thus, the privatization of these two assets of Ukrspirt will allow the State Property Fund of Ukraine to transfer 220.25m dollars to the state budget.
Prime Minister Denys Shmyhal says that from September 1, privatization should start massively in Ukraine.
“The President of Ukraine has set the task of launching privatization from September. To this end, the Verkhovna Rada adopted the relevant legislation, the government has developed all the by-laws. We must make this process as fast as possible,” the press service of the government quoted Shmygal as saying after a conference call with regional leaders.
At the same time, according to the prime minister, the state is launching grant programs to motivate businesses and people to create jobs as much as possible.
“Small-scale privatization, especially in regions where people in villages and towns know objects that have been standing for years and inefficiently used, is designed to make it possible to buy these premises at a fair price and start work,” he added.
According to Shmyhal, privatization will also allow expanding production for farmers.
“The Ministry of Economy said that in early September, according to the schedule, auctions for elevator capacities and grain factories will be announced. Market operators, seeing a shortage of capacities, will be able to take part in these tenders,” the prime minister said.
The Verkhovna Rada on Thursday adopted an updated law on privatization (No. 7451), which will transfer large privatization to Prozorro auctions without advisers, speed up small privatization and remove a number of problematic issues.
233 deputies voted “for” with the required minimum of 226, according to information on the parliament’s website.
“Regarding large privatization. The main thing that has changed is that we are transferring all large privatization to Prozorro. All procedures have been prescribed as it is in small privatization,” one of the main innovations was named earlier in an interview with Interfax-Ukraine and. about. Head of the State Property Fund Olga Batova.
According to her, large-scale privatization, in the form in which it was and in which it is now, has shown the inefficiency of advisers. Among the claims against them, the head of the Fund singled out the lengthy preparation of the object for privatization; duplication of transactions with potential buyers, in particular on audit; potential corruption risks of engagement by one of the potential buyers.
“The draft law proposes that the Foundation will make a virtual folder (data room) with all the information about the enterprise: all valid contracts, court cases, financial statements – we fully set out and give each potential buyer three months to do an audit on their own,” she described the proposed new procedure, the head of the SPF.
With regard to small-scale privatization, she pointed out that the law further simplifies procedures, for example, introduces an online signature of the auction protocol, shortens the entire process from the moment the auction is announced to the signing of the contract to two months, introduces the possibility in some cases to do without the AMCU, cancels the requirement to publish in newspaper “Vedomosti Privatization”.
“In addition, we have provided for a very important change that will always be in effect: so that payment for the object is made before the signing of the contract – after the auction and the signing of the protocol, but before the signing of the contract,” the head of the SPF stressed. According to her, there are several cases, especially in the auctions held at the end of February, that buyers do not want to pay, arguing that it was force majeure.
Another important norm, she called the possibility of selling objects with arrests, which will allow creditors to finally receive their funds. “We propose to re-register the ownership of the winner of Prozorro, but all arrests will remain until the new owner repays the debt,” she explained.
“The list for privatization today includes a little more than 115 enterprises. There are many more objects,” Batova said.
The Antimonopoly Committee of Ukraine (AMCU) may permit Gorky Agrofirm (Kyiv), part of the agricultural holding Ristone Holdings, to purchase Kosari distillery (the village of Kosari and the town of Smila, Cherkasy region), the right to which the company won at a privatization auction in November for UAH 162.88 million.
The state regulator considered the relevant issue at a meeting on December 30.
According to the website of the State Property Fund of Ukraine (SPF), the privatized asset consists of 1,360 names of buildings, structures, movable and other property, including an industrial building, a fermentation department, a granary and a distillery, a company store, a pig farm, warehouses, hangars, etc. The facility is equipped with basic technological equipment, as well as the necessary communications.
The enterprise is located on nine land plots with a total area of 75.74 hectares the village of Kosari and the town of Smila.
Ristone Holdings is an agricultural vertically integrated holding.
Ristone Holdings cultivates 65,800 hectares on the territory of Dnipropetrovsk, Kharkiv and Zaporizhia regions. It is engaged in the cultivation of grain and industrial crops, animal husbandry, production and wholesale and retail trade in agricultural products, in particular, flour, bread, bakery products, etc.
Privatization of the alcohol industry involves the sale by the State Property Fund of 41 distilleries of the state-owned enterprise Ukrspyrt and another 37 factories united in the Ukrspyrt concern. In total, it is expected to attract about UAH 2 billion. At the same time, in 2020, the amount of assets sold at 20 auctions amounted to UAH 1.26 billion.
If the government makes a final decision on privatization of PrivatBank, it can be sold in 2024 for a very large sum, the NV newspaper reports, citing Chairman of PrivatBank’s Board Gerhard Boesch.
“We plan to carry out privatization if the shareholder finally decides to do so in 2024. It is not far off. Time is running very fast. Regarding the price, I think it would be too early and unprofessional to give a public assessment right now,” Boesch said at the Ukraine and World 2022 gala event organized by the NV media holding on Thursday evening.
In his opinion, given the bank’s performance in recent years, as well as a plan for the next three years, “this is an asset that will have a very high selling price.”
