Ukrainian parliament gives green light for privatization

The Ukrainian parliament, the Rada, approved on Feb. 16 a law that makes the privatization process in Ukraine more efficient. The draft law was filed by the State Property Fund (SPF) back in summer 2015. The SPF explained the absence of any privatization efforts in 2015 by parliament’s failure to approve this law.

The law cancels the demand to sale 5-10% stake in privatizing companies (via stock exchanges) before offering a control stake, and prohibits participation in the privatization of companies from aggressor-states. It also allows the involvement of private advisors in the privatization process and permits their compensation from the budget or funds of international organizations. The law also allows the SPF to choose an international court to resolve issues with a potential buyer.

According to the advisor to the Economy Minister, Adomas Audickas, the new law allows Ukraine to start “an exemplary privatization” as soon as in 1H16, as cited by Intertfax-Ukraine.  

Alexander Paraschiy: We are still not sure this law will actually lead to large privatization in Ukraine, but at least now the SPF will have no excuse for the failure of its privatization efforts. The law’s approval makes it more likely that the UAH 17 bln in privatization proceeds plan for the year 2016 will be fulfilled, though it does not guarantee it. The reality, so far, is that Ukraine has only fulfilled its privatization plans three times in its history.

Among the most promising assets that the SPF could offer for sale this year are chemical giants Odessa Portside Plant  and Sumy-Khimpom, power GenCo Centrenergo (CEEN UK), power DisCos Zaporizhiaoblenergo (ZAON UK) and Kharkivoblenergo (HAON UK), and power engineering firm Turboatom (TATM UK).