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restarting the plant's operations, which will demand further large volumes of gas.
Another reason for the failure of the privatisation is the conflict with the Nortima company, controlled by oligarch Ihor Kolomoisky. Nortima previously threatened to block the OPP privatisation, saying any sale deal would be regarded as a purchase of stolen assets following a 2009 tender in which it outbid two rivals with an offer of $600mn at the exchange rate at the time.
The good news is that the government has one big success under its belt after it nixed the 2004 privatisation of Ukraine’s most profitable steel mill Kryvorizhstal, which was bought by oligarchs Rinat Akhmetov and Viktor Pinchuk for $800mn and re-sold it to the Indian ArcelorMittal Group for $4bn in a second competitive privatisation auction a year later by the post-Orange revolution government of Viktor Yushchenko. The Ukrainian public watched the auction live on TV as two powerful international Indian mining concerns quickly drove up the price into the billions of dollars.
There is little chance of that spectacle being repeated today. Desperately short of money this year after the $5bn Stand By Agreement (SBA) from the International Monetary Fund (IMF) has been effectively frozen, the government was hoping to restart the privatisation programme, but the oligarchs are already working hard to derail the efforts to sell anything really valuable.
The SPF has an ambitious programme for 2021 and the most attractive asset on the list for this year is the sale of United Mining and Chemical Company (UMCC) in what should be the first large privatization auction at the end of the first or the beginning of the second quarter. The an initial asking price is between UAH3bn ($106.4mn) to UAH5bn ($117.4mn), Sennychenko said in an interview with Interfax-Ukraine.
Whittling away at Ukraine’s state property mountain, 1,899 privatization auctions were held in 2020, yielding $107mn for the budget, Sennychenko reported on January 13 and last year’s order to suspend the “big” privatizations expires in January.
Still, that is well down on last attempt to re-launch the privatisation programme in 2018 when €720mn of assets were placed on the list, but on a par with the 2017 receipts when the government raised €104mn from selling state-owned assets. Typically in previous years only one in eight assets are sold, and usually to the oligarch groups that already control related assets, such as in the power sector.
The SPF wants to put OPP back on the list for this year and six regional power companies. Through the end of 2023, investors have the right to contracts drawn up under English law.
But this week Sennychenko expressed concern that the oligarchs are already actively using the the law enforcement officials to scupper the privatisation plans. In particular Sennychenko pointed to concerns that the sale of UMCC is in danger.
Amongst its subsidiaries UMCC manages Vilnohirsk Mining and Metallurgical Plant (Dnipropetrovsk region) and Irshansk Mining and Processing Plant (Zhytomyr region).
11 UKRAINE Country Report February 2021 www.intellinews.com
