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state companies. The fund will appeal this ruling, said Head Vitaliy Trubarov in the January 28 statement.
The fund completed tenders to select privatization advisers for six state companies in July 2018. Later on, the selection of the advisers of five of these companies was appealed in the courts by one of the tender’s losers, prompting the courts to forbid the fund and Cabinet to sign contracts with the four winning firms.
Trubarov has characterized the litigation as an attempt to wreck the Big Privatization under the new progressive legislation approved in January 2018. This law requires the selection of advisers under the fund's tender procedure. The only company whose majority stake is being privatized under the old legislation is power GenCo Centrenergo, for whom the process started before the new law was adopted.
So far only one asset -- the President Hotel -- is being actively prepared for privatization with the involvement of its adviser, Concorde Capital.
“The hotel is among the smallest of assets on the privatisation list. If the courts continue to block the government from signing contracts with its advisers, the chances that Ukraine will reach its UAH17.1bn privatization target for 2019 (or even the IMF’s expected level of UAH10.5bn) will fade,” Alexander Paraschiy of Concorde Capital said in a note.
“The last time Ukraine met its budgeted privatization plan was in 2011, so the possible underperformance this year won’t be surprising. At the same time, the failure to launch the Big Privatization campaign, as had been promised by the government in its recent memorandum with the IMF, may weaken the government’s negotiating leverage with IFIs,” Paraschiy added.
Ukraine's battered Odesa Port Plant (OPP) could be transferred to the management or lease to the nation's state-owned natural gas monopoly Naftogaz or the Agrarian Fund, head of Odesa regional state administration Maksym Stepanov believes. According to the official, such measures will contribute to the launch of the plant "not for a month or two, but for a long time", Interfax news agency reported on February 22. Stepanov added that possible transfer of the plant to the management or lease to the Agrarian Fund was discussed with the government in Kyiv earlier this month. Ukrainian and foreign investors have no interest in privatisation of OPP due to its disastrous financial conditions. In 2018, the starting price in the privatisation of OPP has been cut by 10-times to $54mn, however, even now there are serious doubts that the government will be able to sell its 99.567% stake in OPP. In December, Kyiv failed to sell the stake via a second privatisation tender.
43 UKRAINE Country Report March 2019 www.intellinews.com