Coal Privatization Launched
Two major problems were high on the agenda of President Kuchma’s visit to Pavlohrad, the “capital” of Western Donbas. They included rocket fuel conversion and reforming the coal-mining industry. Leonid Kuchma visited, together with US ambassador to Ukraine Carlos Pascual, the local chemical plant. Later this year, the construction of an industrial facility to convert to commercial use the solid rocket propellant left behind after 46 SS-24 strategic missiles were scrapped is planned for the plant. These missiles, a USSR legacy, were subject to complete destruction under international agreements. The last of them were ceremonially cut to pieces just a year ago at the manufacturing enterprise, the Pavlohrad Mechanical Plant. Yet, the main remaining problem is deactivating the 5,000 tons of super-toxic and environmentally hazardous rocket fuel. Mr. Kuchma noted on this point that Ukraine, by contrast with Russia which faces the same problem, managed “to put the question pointblank” in good time. This country rejected burning the rocket propellant at test benches and insisted that US experts help apply the hydrodynamic extraction technique. Since then, the Pavlohrad Chemical Plant has been doing experimental work, with the aid of the US government, and put up a pilot installation. Now, Mr. Kuchma pointed out, the task is to build an industrial complex that will employ a closed technological cycle to convert the solid propellant into a “pollution-free” explosive. Ukraine stands to gain from this because its mining facilities use up to 100,000 tons of explosives a year, and Pavlohrad will be able to meet this requirement to a large extent.
While visiting Western Donbas, the Ukrainian President had to address another, not less “inflammable,” problem. The trade unions of the state-run Pavlohradvuhillia coal-mining holding company threaten that all ten mines may discontinue production in the near future because of wage arrears. The company itself, burdened with UAH 917-million-worth of accounts payable, is on the verge of bankruptcy. The current company situation surprised even the President himself who, for want of any plausible explanations from managers, instructed the regional prosecutor to conduct a thorough inquiry into the financial situation. What is more, the prosecutor has already been tracking the “goings- on” of not only the go-betweens and the commercial elements, but also the union leaders. In his words, prosecutors have opened five criminal cases over the “distribution of cut-price holidays.”
The President spoke out categorically against the fuel and energy ministry’s intention to convert Pavlohradvuhillia, now a holding company, into a state-run business. In his opinion, it would be “a step back.” Instead, Mr. Kuchma read out a draft instruction whereby all the Pavlohradvuhillia property should be shared out before the end of the year. Some shares, sold at a reduced price, will remain the work collective’s property, while the other part will be sold on a competitive basis to investors who will commit themselves to solving economic, social, and environmental problems. The President hopes that this plan, experimental as it is, will nevertheless “set the pace” of reforms and privatization in Ukraine’s whole coal-mining sector.
