АЛЕРТ: В ожидании начала «массовой приватизации»

On the 13th September 2019 the Parliament of Ukraine adopted the draft law No.1054-1 “On Abolition of Law of Ukraine on List of Objects of State Ownership that cannot be Privatised” on its first reading.

Initially, there was another draft law No.1054 that was identified by the President of Ukraine as urgent.

However, in September the same MPs who composed the draft law No.1054 made changes and introduced the new draft law No.1054-1 to the public. Finally on the 2nd October the Bill No.1054-1 was adopted by the Parliament.

The law provides amendments to the following laws of Ukraine: On Privatisation of State and Communal Property and On List of Objects of State Ownership that cannot be Privatised.

Although the proposed amendments are very narrow compared to other current draft laws in the Ukrainian Parliament, this particular law is expected to be supportive to investment activity in Ukraine. Furthermore, it shows a clear shift from inherited aspects of the Soviet-era planned economy and a purposeful step closer to a free market economy in Ukraine.

Background

The main change introduced by this draft law will occur in the Law of Ukraine On List of Objects of State Ownership that cannot be Privatised (the “List”). The List, which will be abolished by this draft law, includes precise names and locations of public enterprises in Ukraine that cannot be privatised. The substantiation of the List is another Law of Ukraine On Privatisation of State and Communal Property that in article 4 contains criteria of state assets that cannot be privatised. Based on these criteria, the Ukrainian Parliament had adopted as a Law of Ukraine the list of specified public enterprises that cannot be sold to the private sector.

The List was first adopted in 1999 (with amendments) and includes terminals of seaports, airports, grain elevators, even airlines (for instance, Public Enterprise “Odessa Airlines”), radio centres and film studios.

Effect of adopting the draft law No.1054-1

The draft law proposes to abolish the List and make it possible to privatise such assets. However, it is only the beginning of the privatisation process. The State Property Fund of Ukraine will be responsible for the sale of state assets through an open auction process.

The draft law also amends the Law of Ukraine On Privatisation of State and Communal Property. It proposes amending the criteria of public enterprises that cannot be privatised such as military equipment manufacturers and sport infrastructure for international sporting competitions. Moreover, the draft law forbids the privatisation of state assets situated in temporarily occupied territories.

Every region has many state objects to sell (in the list you can find the most relevant examples), including a Regional Broadcasting Center, distilleries and grain elevators. Schedule 1 lists the state property that can be legally privatized as a result of this law.

Meanwhile, the State Property Fund of Ukraine this January approved the list of privatisation in 2019 that included electricity plants (Ternopil Oblenergo, Centerenergo, Kharkivoblenergo, Zaporizziaoblenergo) and Odessa Port Factory. This privatization has not occurred and a new list should be shortly prepared by the Fund and updated to reflect law No.1054-1 (as it was notified as urgent by the President of Ukraine).

Conclusion

To summarise, although the law No.1054-1 is very small in volume (only one page of a text), it determines an important aspect of state policy for coming years and aims to promote significant investment activity in Ukraine. The draft law represents a first step in the revamped process of privatisation. The decision to sell state assets remains the competence of the State Property Fund of Ukraine. Privatisation is seen a key priority among the supranational institutions supporting Ukraine and the law sends a signal to the international community that Ukraine serious about reforming its economy.

Schedule 1

Donetsk region (mines)

Central Bureau of Scientific Technical Information

The Dzerzinski mine

The Torezka mine

The Nova mine

The Pivnicna mine

The Artem mine

The Pivdenna mine

The Mechanical Repair Factory “Dzerzinskcoal”

The Dzerzinska factory

The Mariupol Seaport

Dnipro region (mechanical engineering, metallurgy, grain elevators, distilleries)

The Eastern Mining and Processing Plant

The Dnipro Regional Broadcasting Center

The Pavlograd Chemical Plant

The Southern Mechanical Engineering Factory

The Isotope Enterprise “Ukrmetalurgisotop”

The Pavlopil Grain Elevator

The Balivka Bakery

The Dnipro Stud Farm

The Dnipro Distillery Factory

The Dnipro Wine Distillery Factory

Ivano-Frankovsk region

The Company for Purchasing Liquefied Gas “Ukrtransgas”

Kyiv region

The Borispol Company on Petroleum Product Pipelines

The Central Company for Processing Radioactive Wastes

The Zuliani Mechanical Engineering Plant “Visar”

Lviv region

The Dashava Factory of Composite materials

Petroleum Product Pipelines Company “Druzba”

The Lviv Regional Broadcasting Center

The Special Production Factory “Lorta”

Kyiv

Naftogas of Ukraine

The Company of Technological Connection “Ukrnaftozviazok”

The National Expo Center of Ukraine

The Production Enterprise “Isotop”

The Special Production for Arsenal Factory

The Mechanical Engineering Firm Artem

Borispol International Airport

Publishing houses “Veselka”, “Dnipro”, “Zdorovia”, “Libid”, “Mistectvo”, “Muzicna Ukraina”, “Ukrainska Enciklopedia”, “Urozai”, “Tehnika”

Film studios “Ukrkinhronika”, “Ukranimafilm”

Vinnitsia region (distilleries, grain elevators)

The Kalinivka Production Factory

The Vinnitsia Alcohol Factory

The Bershad Alcohol Factory

The Bar Alcohol Factory

The Martinivka Alcohol Factory

The Chechelnitski Alcohol Factory

The Trostianecki Alcohol Factory

The Urkivecki Alcohol Factory

The Bdzilnianski Alcohol Factory

The Ovecacki Alcohol Factory

The Uladiv Alcohol Factory

The Nemiriv Alcohol Factory

The Gaisin Alcohol Factory

The Pishansk Open-Cast Mine

The Vinnitsia Distillery Factory

The Ladizinka Alcohol Factory “Extra”

The Brailov Juice Factory

Volin region

The Lutsk Distillery Plant

The Kovel Veterinary Plant

The Lutsk Bakery

The Volodimir-Volinski Bakery

Zaporizhia region

The Factory “Tramplin”

The Zaporizzia Electronic Mechanical Engineering Plant “Iskra”

The Zaporizzia Regional Broadcasting Center

The Berdiansk Seaport

Lugansk region

The Petrovski Chemival Plant

The Chemical Plant “Zoria”

The Workbench Factory

Mykolaiv

The Komunar Shipbuilding Factory

The Mykolaiv Seaport

Odessa region (seaports)

The Odessa Seaport

The Illichivsk Seaport

The Illichivsk Fish Seaport

The Reni River Port

The Izmail Seaport

The Southern Seaport

Sumi region

The Shostka Factory “Impuls”

The Shostka Factory “Zirka”

Kharkiv region

The Kharkiv Radio Factory

The Dzerzinsk Izum Instrument Making Plant

The Kharkiv Machine Engineering Plant “Fed”

The Production Union “Monolit”

The Kharkiv Aviation Production Enterprise

The Kharkiv Electronic Mechanical Plant “Hems”

The Production Union “The Malishev” Plant

The Kharkiv Plant of Electronic Equipment

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