Municipal budgets could lose up to 5 billion hryvnias

The privatization process of nonagricultural land in Ukraine is progressing faster and more effectively than in neighboring Russia. This statement was made at the press- conference in Dnipropetrovsk by Lou Faoro, the coordinator of the UKRels project funded by the US Agency for International Development (USAID). The project, aimed at promoting the privatization of nonagricultural land, is in its third year in Ukraine, and by its end on October 31 some 27 regional offices will switch to working independently on a commercial basis.

Speaking about the privatization prospects of nonagricultural lands in Ukraine, Mr. Faoro informed journalists that the sales may yield up to UAH 5 billion in revenues to budgets at various levels. As of today some 20% of enterprises have sufficient resources at their disposal to buy the land they have been built on. Total revenue from such sales would come to UAH 1.7 billion, which equals the 1998 budget deficit. In general, in the three years of the UKRels project’s work in Ukraine a network of regional offices has been created, and the sales procedure and typical documentation have been worked out. During that time Ukrainian enterprises privatized some 3000 land plots and their sale yielded UAH 100 million.

According to Mr. Ferro, noteworthy progress in the privatization of nonagricultural land was made last year. While formerly the sales of small plots and insignificant budget revenues predominated, now large enterprises started to privatize. Lviv’s Halka and Svitoch along with Torchyn Produkt in Volyn were given as examples by the coordinator of the UKRels project. And the highest sales, coming to UAH 5.6 million were recorded in Dnipropetrovsk at the privatization of the land of the sunflower oil plant which is known under the Oleina brand name. In general, some 70 sales were recorded in Dnipropetrovsk oblast, yielding UAH 7 million in revenue.

Strangely, the optimism of project representatives is not shared by Dnipropetrovsk local authorities. City Council Deputy Yevhen Bachev stated at a press conference that the money from the biggest sale, on the instructions of the Ministry of Finance, was transferred to the state budget via the treasury. The alleged reason for this is the ambiguity as to who owns the land up for sale, the city or the state. Meanwhile, the Dnipropetrovsk Mayor’s Office had great hopes for the revenue from the privatization and sale of land plots. The funds were intended to solve the locality’s most pressing problem, measures to prevent landslides. The territory of Dnipropetrovsk has in up to eighty danger zones, where the land virtually moves under your feet. Dismay at the Cabinet’s actions was so great that Mayor Ivan Kulychenko immediately departed for Kyiv to settle the issue with the Prime Minister Viktor Yushchenko. It is understood that all this will impact negatively on the privatization process not only in Dnipropetrovsk but also in the oblast, where the biggest enterprises and local banks are ready to buy land plots.