Lawmakers consider option to nationalize Motor Sich

A draft law on the nationalization of aviation engine
producer Motor Sich (MSICH UK) will be filed with the parliament next week, the
leader of People’s Servant, the biggest parliamentary faction, David Arakhmia
told Pryamiy TV channel on March 4. There is an unclear situation at the
enterprise, Arakhmaia stated, adding that tens of thousands of people working
there demand that lawmakers clarify Motor Sich’ status and its future.
Commenting to radiosvoboda.org news site the same day, the deputy head of the
same faction, Oleksandr Korniyenko, confirmed the plans to offer such a draft
bill, adding that the conditions for a possible nationalization are yet to be
decided. He stated that most likely Ukraine will have to return money to Motor
Sich investors.

Meanwhile, Ukraine’s PM Denys Shmyhal told
Interfax-Ukraine the same day that he heard nothing about the plan to
nationalize Motor Sich. He said the government’s focus is to work on preserving
the company’s integrity in order to not lose its technological and human
potential.

Recall, China’s Skyrizon and related individuals
accumulated at least 56% of the shares of Motor Sich in 2016-2017. In 2017,
Skyrizon filed a request to Ukraine’s Antimonopoly Committee asking to
officially take control over Motor Sich. The committee has refused to do so. Meanwhile,
Ukraine’s State Security Service arrested Motor Sich’s 56% stake and is
investigating a criminal case of state treason related to the company’s shares
sale. Skyrizon tried unsuccessfully to reach a cooperation agreement with state
machinery holding Ukroboronprom on joint control over Motor Sich. In August
2020, it partnered with DCH Group in its attempt to gain control. In January,
the U.S. Department of Commerceand Ukraine’s Security and Defense Councilintroduced sanctions against Skyrizon and related entities.

Alexander Paraschiy: A buyout of Motor Sich shares by the Ukrainian government, if it is
made in a civilized way, seems to be a good way out of the deadlock inflicted
by the recent sanctions against the company’s biggest shareholders. However,
there is always a risk that Ukraine will do the process in “its own way” which
could be painful for all Motor Sich shareholders. Moreover, the state as an
owner does not look optimal for Motor Sich as the Ukrainian government has poor
experience in managing such technological enterprises. However, for the
company’s survival, the current situation of no owner looks riskier than its
control by the government, even with all the related corruption risks.