Will Turboatom Recover Under the Wing Of the State?

The Cabinet of Ministers has also instructed the ministries of finance, economics, industrial policy and power-engineering, as well as the State Tax Administration, to draw up a decision on settling the enterprise's indebtedness to the state budget and power-supplying organizations. Word has it that the general manager Anatoly Buhayets has long sought a decision to this effect.

The national power-supply market is all too attractive to this monopolist enterprise. Besides, 40% of Ukraine's thermal, 85% nuclear, and 95% hydroelectric stations are equipped with items the enterprise produced in the previous years. Many power units, installed after World War II, should have been replaced long ago. All Dnipro-chain hydroelectric stations have to be reconstructed. The enterprise management hopes, with good reason, that the state cannot afford to ignore the needs of the domestic power-engineering sector. For example, the State Innovation Fund has been instructed to draft the program Resource- Saving Equipment for Ukraine's Power-Engineering-and-Supply Complex. And since Turboatom is the general designer and supplier of all thermal and mechanical equipment, as well as automatic control systems for power units, it acquires prospects for long-term orders.

However, there is a weak spot, as factory people say, in Turboatom intentions. Blades, the most important parts of turbines, are still being supplied from Russia. For the enterprise to achieve complete self-sufficiency and not to depend on political or economic upheavals, it should launch its own production of blades.

Mr. Buhayets tried to solve this problem within the framework of the well-known Kharkiv Initiative, i.e., by suggesting to the US government that a joint venture be set up in Kharkiv. But the proposition found no enthusiasm among overseas investors. Now the problem is being handled by the National Agency for Development and European Integration.

Yet, the enterprise does not believe that the investor will take up all issues. Great plans demand great funds, which the state is known not to have. The factory has to search for money by itself. On the other hand, there still are some prospects for investment. In May, the joint Ukrainian- Andorran venture AMP acquired more than a 25% stake in Turboatom Plc for 52 million hryvnias at a noncommercial tender. Under the tender conditions, the joint venture was obliged to invest $55 million in plant modernization. But, as first deputy chairman of the Kharkiv Oblast Administration Vasyl Potapov said, this firm did not take part in the development of the enterprise; it bought the shares only to resell them later. As it failed to fulfill its commitments, the State Property Fund sued it. Mr. Potapov is convinced the suit will be won, which will also benefit Turboatom because the oblast will receive partial corporate rights in this state-owned block of shares. To do so, the oblast administration will conclude a contract with the ministry of industrial policies.

Thus Turboatom, an enterprise that suffered great losses due to the state's inflexible foreign policy, is seeking protection by that same state. Is this the choice?.. For some reason, I recall the destiny of First Vice- Premier Volodymyr Kuratchenko who was dismissed precisely because he intended to enhance the effectiveness of governmental authority.