Blue Chips on Sale
The Chairman of the State Property Fund received an official warning, saying he is showing a less than adequate performance. For as long as his seat remains virtually vacant — perhaps coveted for what would best be described as the situation — some of his functions have been taken over by others. Yury Boiko, CEO of Naftohaz Ukrayiny, made a sensational statement last Tuesday saying that Ukraine was selling the Ukrnafta controlling interest.
In fact, Naftohaz Ukrayiny holds an interest of 50% +1 share of it, meaning that the state cannot order the company how to dispose of its stock, considering that the said interest was provided by the state only to form the statutory fund. According to Mr. Boiko, however, the sales are the initiative of President Leonid Kuchma. His decision is officially explained by the fact that Ukrnafta stockholders have long been unable to come to terms, and that this misunderstanding is telling badly on the company’s performance (Interfax Ukraine says that Ukrnafta net income fell by 58.7% in January-September, compared to the year before). Mr. Boiko says the draft cabinet enactment authorizing the sales of Ukrnafta’s controlling interest has been initialed at Naftohaz Ukrayiny and forwarded to the State Property Fund. Naftohaz people say that Ukrnafta has turned into a suitcase without a handle — i.e., too heavy to carry and too important to dump — and that they intend to resume the privatization proceedings.
Ukrnafta showed no special enthusiasm about the prospect of selling the government controlling interest. Its Honorary President Oleh Salmin said that any such statements on the part of Naftohaz executives are premature without having the required official documents. He added that there is only the SPF proposal to date, concerning the deletion of the controlling interest from the statutory fund and its subsequent sale. Mr. Salmin believes that stock market people, company stockholders, and prospective investors could show their dissatisfaction with such incomplete information concerning the government’s controlling interest.
The State Property Fund insists that the draft cabinet enactment has not been submitted, saying that Naftohaz Ukrayiny has repeatedly proposed to withdraw the controlling interest from Ukrnafta’s statutory fund and sell it afterward.
The Ukrainian stock market, barely on its feet, somehow showed little interest in this sensational news. Andriy Kolomyets, head of the press center of the First Stock Trade System, said that Ukrnafta stocks showed a heightened market demand at the last bidding, although not much — from UAH 23.8 to UAH 23.85, while the bid price remained the same. He added that the market had long waited for that small government interest (0.3%) to be put up for sale on the Ukrainian Interbank Money [Foreign Exchange] Market: “People have long been fed stories concerning that miserable commodity, now they simply don’t understand whether this 50%+1 is another such story or the truth.”
Naftohaz Ukrayiny, meanwhile, remains determined to destroy Ukrnafta, which is strange at first sight. It is generally known that this company (being Ukraine’s number one supplier of raw hydrocarbons) is showing a poorer performance precisely because the parent company, representing the state, can use Ukrnafta-extracted gas practically free of charge. Without this source, Naftohaz will certainly worsen its relations with the state budget (the Naftohaz press service feels sure that all debts will have been paid to Ukrnafta by the end of the year).
A source close to the Ministry of Fuel and Energy of Ukraine told The Day that resuming Ukrnafta privatization could be regarded only as a positive development, for under a market economy and trade globalization Ukraine would not run any risks; for oil and the attendant products are there to buy, anywhere. However, the Ukrainian government has shown its inability to have a positive impact on its businesses, including those exploring this country’s natural wealth, a thriving business anywhere else.
The said source also claimed that deleting the controlling interest from Ukrnafta’s statutory fund could be warranted by the formation of an international gas transport consortium; prospective customers may have simply overlooked the oil component of the assets because of its miserable amount, while for Ukraine this would mean significant capacities, and that parting with them would make no sense under the circumstances.
