Ukraine includes 16 firms in 2019 "big privatization" list

Ukraine’s Cabinet approved at its Jan. 16 meeting its
revised “big privatization” list of state companies slated to be sold
in 2019, Interfax-Ukraine reported the same day. The list,
which has been reduced to 16 from 23 last year, still includes power GenCo
Centrenergo (CEEN UK), whose tender failed to occur in December.
The government decided it will make another attempt to sell it at the same
starting price of UAH 5.98 bln for a 78.3% stake.

Other carryovers from 2018, for which the government has
already selected privatization advisers, include titanium ore producer United
Mining & Chemical Company, coal mine Krasnolymanska, producer of power
generators ElektroVazhMash, fertilizer producer Odesa Portside Plant,
pharmaceutical company Indar and the President Hotel. Other companies are
financial company UkrAgroLeasing, chemical company SumyKhimProm, the remaining
assets of machinery giant Azovmash and the remaining assets of chemical giant
Oriana.

Also, the government is planning to sell its controlling
stakes in five power DisCos: Ternopiloblenergo (TOEN UK), Zaporizhiaoblenergo
(ZAON UK), Kharkivoblenergo (HAON UK), Mykolayivoblenergo (MYON UZ) and
Khmelnytskoblenergo (HMON UK). The government excluded from the privatization
list four small heat & power plants.

Alexander Paraschiy: Ukraine’s
planned proceeds from its privatization in 2019, as foreseen by the state
budget, are UAH 17.1 bln (about USD 0.6 bln), while the IMF estimates the
proceeds will be UAH 10.5 bln (USD 0.36 bln), according to its recent
memorandum.

The smoothness of privatization will depend on the
political will to privatize, which is not exceptional. Currently, only three
firms are close to completion: Centrenergo, Azovmash and the President Hotel,
while the process of preparing for the sale of United Mining & Chemical
Company, Krasnolymanska, ElektroVazhMash, Odesa Portside Plant and Indar has
been blocked in the courts. It’s possible that a court will unblock the
privatization of these companies next week, on the appeal of the State Property
Fund. The preparation of other assets should begin with the selection of
financial advisers, a process that has yet to start.

Given that the privatization process is already
well underway for several companies, we expect the “big
privatization” will indeed start in 2019. We see a good chance that this
year’s privatization proceeds will exceed last year’s result of about UAH 0.4
bln.