Ukraine prepares grounds to postpone large privatization for 2016

The Ukrainian government adopted a resolution that allows for extending until next year the privatization of companies selected for sale this year, the State Property Fund reported in its Oct. 9 press release. The resolution was initiated by the fund, which stated that the preparation for sale of large companies is being stalled by some state institutions. In particular, the state stakes of some companies on the privatization list have not been submitted to the fund. (Most likely, here the fund is referring to the failure of the Energy Ministry to transfer a 78% stake in power GenCo Centrenergo). On top of that, parliament has yet to approve new legislation to “significantly improve” the efficiency and transparency of the privatization process, according to the fund.

Alexander Paraschiy: With such a resolution adopted, the government and the fund have signaled the postponement of the sale of all the large companies planned for this year. Recall, according to the initial plan, the fund was going to sell controlling stakes in the Odesa Portside Plant, Sumy Khimprom, Centrenergo, five large power distribution companies and six small heat and power plants. The probability that any of these companies will be sold this year, having been low even without this resolution, now looks miserable. That means the government’s plan to draw UAH 17 bln from sale of state property in 2015 will be fulfilled by less than 5%. Fortunately, for this fiscal year, such a delay won’t be a problem for Ukraine’s budget as its revenues are growing faster than initially planned due to higher-than-expected inflation.