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in the Kherson region.”
6.1.4 Budget dynamics - privatization
Ukraine's parliament, the Verkhovna Rada, has adopted a bill, cancelling a law that lists over 1,500 assets state assets banned from privatisation. The cancelled law was adopted in 1999 and included, specifically, state-owned rail monopoly Ukrzaliznytsia, natural gas monopoly Naftogaz, the second largest lender Oschadbank, mail operator Ukrposhta,machinery holding Zorya- Mashproekt, and some large combines heat and power stations. The updated legislation still keeps in state ownership nuclear and hydro power generation companies, as well as gas and oil transit pipelines, considered to be strategic for national security. Alexander Paraschiy at Kyiv-based brokerage Concorde Capital believes that this legislation paves the way for large state companies to do share placements and attract money for their development. "It also creates the opportunity for really large privatisations. This is a solid start, and we will closely monitor how this process develops," he added in a note on October 3.
Work is starting to prepare Ukrazaliznytsia for an IPO, a 3-year process designed to yield $3bn investment capital for the state railroad. “Ukrzaliznytsyia is the first Ukrainian state-owned company to plan to enter a foreign stock market, thereby raising the country's investment image," Infrastructure Minister Vladislav Krikliy said ON OCTOBER 30 at a signing ceremony in Mariupol. The EBRD is to provide technical advice to prepare UZ for the IPO. UZ CEO Yevhen Kravtsov said: “Thanks to the IPO, we plan not only to raise severalbn dollars over the next 2-3 years but also to bring Ukrzaliznytsia to first place among the transport companies in the world.” Within two years, UZ is to be divided into three subsidiary companies: freight, passenger and infrastructure.
The office of the Ukrainian President urged the nation's parliament to consider a bill on de-monopolisation of the spirit sector, which would allow it to sell to private investors the country's monopolistic alcohol producer Ukrspyrt. According to deputy head of the office of the President Yulia Kovaliv, the company's possible privatisation could bring in UAH5bn ($199mn) to the state’s coffers. Last week, President Volodymyr Zelenskiy introduced a bill on the de-monopolization of alcohol production in the country to the Verkhovna Rada. "Now alcohol is produced by the state-owned enterprise Ukrspyrt, while in another law we stipulate that all licenses for the production of alcohol can be granted only to state-owned enterprises. Actually, in conditions of non-liberalised production of alcohol in Ukraine, Ukrspyrt can only be sold at the price of scrap metal," news agency Interfax quoted Kovaliv as saying on October 28. "We hope that next week this law on the de- monopolisation of the alcohol industry will be adopted and, together with this, preparations will be made for the privatisation of Ukrspyrt," Kovaliv said. State- owned enterprise Ukrspyrt is a major producer of alcohol and alcohol- containing products in Ukraine, which is under the control of the Ministry of Agricultural Policy and Food. The total production capacity of the SOE is more than 36mn decaliters per year.
More than 90% of Ukraine’s 3,643 state companies should be privatized,
Economy Minister Milovanov writes on Facebook. Of the total, only 200 to 300 should be kept under state control. Of the rest, one third should be declared bankrupt. The rest should be sold as potentially viable companies. Tomorrow morning, Milovanov speaks in Washington at the office of the BGR group at a
42 UKRAINE Country Report November 2019 www.intellinews.com