Government Endorses New Privatization Guidelines
The government committee for economic policies approved in the third attempt the privatization plan for 2003-2008. The rules regulating sales of state-run companies are causing heated debate. It is understandable since all state holdings and industrial giants will be privatized in the next six years. The matter concerns major political and financial groups. Chairman of the State Property Fund Oleksandr Bondar believes that by February 19 the Cabinet will endorse the privatization plan and will submit it to the parliament for consideration. Next week the government will try to resolve the disagreement between the SPF and the Ministry of Justice regarding the sales of assets of state-run companies for debts, said Mr. Bondar at a press conference. The Ministry insists the Ukrainian Special Justice Committee, Ukrspetsyust, should do the auctioning, while the SPF claims its right to broker the deals. Mr. Bondar shows an uncompromising attitude.
“We plan to sell the assets to repay debts and secure revenues for the budget. I do not see anything wrong with this proposal. If the Ministry of Justice can prove that Ukrspetsyust is a better trader than the SPF and that it inserted money into the budget at least once without a court order, I will throw in the towel and let the Ministry be in charge. Ukrspetsyust never put proceeds in the budget.”
“Is it true that the privatization plan in its current wording eliminates the notion of industrial investor?”
“The Ministry of Economy proposed to eliminate the notion of industrial investor, and it was done. We made this concession, since there is a type of sale, a tender with a limited number of bidders, that makes up for it. The government, though, may issue proper decrees specifying the category of investors that can enter their bids.”
“Are you implying that offshore companies will be banned from privatization?”
“The President and Cabinet have issued decrees banning offshore companies from buying strategic enterprises. The latest decisions by the NBU demonstrate that offshore companies have certain limitations in the stock market. This applies only to strategic enterprises and companies in which the state holds majority stakes. No limitations have been imposed on operations at stock exchanges and on other kinds of sales.”
“Some parliamentary majority factions have stated that they will press for elimination of closed tenders from the privatization plan, because they oppose any limitations on the categories of bidders. Do you ever consult these factions?”
“During our roundtables many critical remarks were voiced in this matter. I think this issue will be brought up time and again. We will explain our position. The notion of industrial investor was criticized before. Likewise, closed tenders will not be eliminated from the privatization plan. Otherwise, it will be difficult to explain to the leadership why certain enterprises are controlled by offshore companies with mysterious owners. The decision on selecting the categories of bidders will be made by the Cabinet of Ministers. I do not see anything wrong about that. Deputies will be also involved in this process.”
“How is the presidential decree on the transfer of control of all state-run enterprises to the SPF implemented?”
“The list of all enterprises is to be reviewed by the Cabinet. It will consider them all and will make decisions with the president’s approval. According to our estimates, there are 1,572 state-run enterprises. Of these, 1,200 are enterprises in which the state does not hold a majority stake any more. The SPF believes these enterprises should be sold immediately. We will try to employ special procedures to reduce their price. After that there will be 300 enterprises left, awaiting the government decision as to who will control them. The SPF does not intend to get control of everything. We are merely implementing the presidential decree. Should there remain a little more than 300 such enterprises in Ukraine, I don’t think it will matter much who will control them. Personally, I would not want to take all the power-generating companies from the Fuel and Energy Ministry, since it is a very complex sector. I think the Ministry would do a better job managing it. As for Ukrtelecom, I question the efficiency of the State Committee on Communications controlling the company, because we have not seen the money from the sale of UMC and that dividends are not paid. Let us wait and see how the events will unfold.”
