Presidential elections already having effect on privatization
The parliamentary committee for fuel and energy resolved at an away session at Lysychansk to defer the decision on the privatization of Ukrnafta. Some opposition deputies proposed banning the sale of this state-run company’s controlling shares. Committee chairman Andriy Kliuyev announced this point would be discussed at a special session a week later.
It is President Leonid Kuchma who suggested that Ukrnafta be privatized. He said the state ran the company ineffectively. The President instructed the State Property Fund (SPF) to draft a Cabinet of Ministers resolution to this effect. SPF First Deputy Chairman Mykhailo Chechetov announced it was planned to sell the company’s controlling shares in the second half of 2003. The Fund expects this deal to fetch about 2 billion hryvnias.
Conversely, the Cabinet took a lukewarm attitude to the idea of privatizing Ukraine’s largest oil- production company. “We will assess if this will benefit the state and then put it to a Verkhovna Rada vote,” Prime Minister Viktor Yanukovych noted cautiously, making it clear that the idea to privatize Ukrnafta had not been, for some reason, discussed with him before. The premier’s intention is obvious: parliament will politicize as much as possible the privatization-related situation, which is most likely to foil the sale.
The people’s deputies “went into combat” without too much feet-dragging. Parliament supported the query of Oleksandr Hudyma (Our Ukraine faction), which urged the government to speak out on the necessity of Ukrnafta privatization. Addressing the Lysychansk session, Mr. Hudyma read out the answer to his query, which said that the government considers the privatization unnecessary. The deputy claimed the answer was signed by Vice Premier Vitaly Hayduk.
Deputy Hudyma himself attributed the current confusion in the official governmental attitude to privatizing the oil giants (the Cabinet is against, and the SPF and President in favor of it) to the struggle between different politico-financial groups. In his view, one of the groups wants to establish full control over Ukrnafta, whereas the others, fearful of a strong rival, are out to foil this process. The opposition representative did not hide it gave him great pleasure to watch a dispute in the camp of his political adversaries.
Deputy Oleh Salmin, honorary chairman of the Ukrnafta board of directors, also notes the impact of the forthcoming presidential elections on the privatization situation. In his words, it is extremely difficult to forecast further developments because of the utterly confused ways in which the “winds” of Ukrainian politics blow. At the same time, he noted that uncertainty in this matter has a negative effect on the mood of Ukrnafta shareholders. The company’s shares are being held by Naftohaz Ukrayiny Inc. (50% + 1), the Privatbank/ Ukrsibbank group (over 42%), and small shareholders (about 8%). Here, too, things are confused. Chairman of the Naftohaz Ukrayiny board of directors Yury Boiko made a rash statement that the Ministry for Fuel and Energy had already endorsed a draft Cabinet resolution on Ukrnafta privatization, but Minister Serhiy Yermilov promptly denied this information.
Mr. Salmin believes the company would most likely stand to gain from the privatization. He considers the Dnipropetrovsk- based Privatbank and Russian investors to be the main contenders for the controlling shares. The honorary chairman also points out that Privatbank controls about 600 filling stations, and the Russians are in a no worse situation. “If the oil-production company merges with a powerful fuel-selling network, this will greatly boost its capacity,” Mr. Salmin says. TNK-Ukraine president Oleksandr Horodetsky said, addressing the parliamentary Fuel and Energy Committee’s away session in Lysychansk, that his company was not considering the purchase of Ukrnafta. Yet, he is sure the privatization will only benefit the Ukrainian enterprise.
Still, as the very process of preparation for the privatization has reached a deadlock, political rather than economic factors come to the foreground. Obviously, those who oppose selling the company’s state-owned stake far outnumber those who favor this. It is only the President who can make a crucial decision in favor of the privatization, but he does not seem inclined to aggravate the already explosive situation in this matter. The main conclusion that can be drawn from this situation is that governmental regulation of the economy is unbalanced. Many strategically important decisions are conceived in diverse, or even warring, intellectual headquarters. They often come up as a sheer surprise for this country’s leadership, which is a flagrant violation of the principle of unitary governmental economic policy. Should the quality of governmental decision-making remain at this level, this will surely trigger an allergic reaction in the economy.
INCIDENTALLY
State Property Fund Chairman Oleksandr Bondar announced that if Ukrnafta was not privatized in 2003, this would thwart the national budget revenues plan. He did not rule out that the SPF might raise the question of selling, as compensation, the state-owned shares of Ukrtatnafta (Kremenchug oil refinery). So Ukrainian politicians stand a fair chance to get well tired of the oil-related scandals.
