The State Property Fund (SPF) is discussing the possibility of doubling the plan of privatization receipts in 2021, to UAH 12 billion, with the lawmakers and the government of Ukraine, Head of the SPF Dmytro Sennychenko has said.
“The plan, which has now been submitted in the government budget to the Verkhovna Rada for receipts from privatization in 2021, is set at [UAH] 6 billion. We are now communicating with members of parliament, the government and clarifying the budget indicators for next year. We will propose its increase … up to [UAH] 12 billion,” he said at a press conference at Interfax-Ukraine on Tuesday.
Sennychenko said that the SPF has drawn up a list of facilities for privatization for the next year, which includes regional gas supply companies, the Bilshovyk plant and the United Mining and Chemical Company (UMCC).
He said that at the start of the “coronavirus crisis” in March 2020, the Verkhovna Rada lowered the bar for budget receipts from privatization to UAH 500 million, specifying that in 2020 the SPF exceeded it. At the moment, proceeds from privatization are UAH 2 billion, and by the end of the year they are expected to reach UAH 3 billion, the head of the fund said.
“This [the amount of proceeds] will also depend on the necessary financing steps, because one hryvnia invested in the audit of the creation of technical documentation today gives us UAH 71 of budget receipts from privatization. The most important thing is not the funds received from the sale of a facility, the most important thing is the cumulative effect that a private investor gives after investing in the subsequent development of this facility,” he said.
According to Sennychenko, this year the SPF has held more than 1,400 auctions and prepared an “investment menu” for the next year “for every taste.”
President of Ukraine Volodymyr Zelensky expects that Austrian companies will participate in tenders for the concession of Ukrainian seaports and the privatization of state-owned banks, and also invites them to introduce their experience, technologies and invest in large projects in Ukraine.
“I will be glad to welcome the participation of Austria in tenders for the concession of seaports and the privatization of state-owned banks in Ukraine,” he said at a joint briefing with Austrian President Alexander Van der Bellen in Vienna on Tuesday.
Zelensky also said that as part of his visit, he would invite Austrian companies to introduce experience, technologies and investments in large projects in Ukraine: the construction of new highways, tunnels, ski infrastructure, energy, waste processing and many other areas.
In addition, he invited the Austrians to visit the tourist places of attraction of Ukraine and join the process of restoring cultural heritage sites.
The president said that Austria is the sixth largest investor in the Ukrainian economy. “Austrian capital is represented in our banking and insurance sector, woodworking industry, sports goods,” he said.
The Cabinet of Ministers on Wednesday intends to consider a bill on the list of 188 companies prohibited from privatization, according to the agenda of the government meeting. According to the text of the bill, the government allows the privatization of up to 50% of the shares of Naftogaz, Ukrzaliznytsia and Ukrposhta, but proposes to retain the state’s 100% share of corporate rights in National Nuclear Generating Company Energoatom, PrJSC Ukrhydroenergo, NEC Ukrenergo , Skhidny Ore Mining and Processing Plant (VostGOK), and Ukrainian Sea Ports Authority (USPA).
It is also proposed to include the SE Market Operator and the SE Guaranteed Buyer, created by the Cabinet of Ministers in 2019 in order to ensure the operation of the new electricity market, in the list of objects completely prohibited for privatization.
In addition, it is proposed to include in the specified list the state-owned enterprise Document, Ukraina Printing Plant for the production of securities, Kyiv offset factory, and Pivdenne (Yuzhne) Design Bureau.
Head of the State Property Fund (SPF) Dmytro Sennychenko has announced the Fund’s readiness to begin the process of privatization of objects of the State Enterprise Ukrspyrt, the department has already received 12 proposals for privatization.
According to the Fund’s press release posted on Tuesday, the privatization of the alcohol industry at the first stage provides for the placement of Ukrspyrt facilities for transparent auctions. The total number of objects ready for the privatization process is 41.
The Chairman of the State Property Fund also drew attention to the fact that the key condition for the successful privatization of assets in the alcohol industry is the prompt approval by the government of the Program for the Reform and Development of the Alcohol Industry, which will provide for the procedure and conditions for the sale.
“Potential investors in the alcohol production industry are not only food alcohol producers, but also pharmaceutical companies, automotive fuel producers and agricultural companies that are interested in processing their own products,” the SPF’s press service quoted Sennychenko as saying.
According to him, until recently Ukraine, together with Belarus, were the only countries in the world with a state monopoly on alcohol production.
“This has led to the fact that over the past decade, the production of legal potable alcohol in Ukraine has decreased four times, and the share of its shadow turnover has increased from 10% of total consumption in 2007 to 55% in 2019,” said the head of the SPF.
Privatization of large-sized enterprises in Ukraine could bring $1 billion to the national budget in the coming years, Ukrainian Prime Minister Denys Shmyhal has said.
“We also have high expectations from large-scale privatization, which should bring about $1 billion to the budget in the coming years,” the prime minister said during a government meeting on Wednesday.
The big privatization will be launched as soon as the coronavirus crisis is over, and the Dnipro Hotel will become its pilot project, President of Ukraine Volodymyr Zelensky has said.
“As to medium-sized and big privatization, everything is ready. It will be launched after COVID-19. The first target – the Dnipro Hotel – is ready. As we promised, we started with public administration agency,” he said at a press conference in Kyiv on Wednesday.
The president also said the rest of hotels on balance of the public administration agency will be handed over to the State Property Fund.
The privatization targets have been “cleared off” legal cases, Zelensky said.