New privatisation regulation
Igor Bilous, the Chairman of the State Property Fund of Ukraine (the "Fund"), has recently announced in a press conference that the Fund has prepared a new draft of the privatisation law. According to Mr. Bilous, the draft law aims at introducing a number of changes to the current legal framework for privatisation in Ukraine, the most significant of which are as follows:
- the draft law should consolidate various laws dealing with the peculiarities of the privatisation procedure;
- the term for conducting a privatisation auction should be increased from 45 to 180 days, which should allow an investor enough time to make a well-informed decision about the privatisation target;
- the existing classification of the privatisation assets should be simplified so that there will only be a small-scale and a large-scale privatisation; and
- an auction should be the only way to sell privatisation assets.
According to Mr. Bilous, the draft law was circulated to the Ukraine’s Government and other executive authorities for consideration and further discussion.
Privatisation of power distribution companies
Mr. Bilous has confirmed the Fund’s intention to sell six regional power distribution companies by the end of 2016. The auctions should take place in October through December in the following order:
- first group – Ternopiloblenergo and Khmelnytskoblenergo;
- second group – Kharkivoblenergo and Mykolayivoblenergo; and
- third group – Zaporizhiaoblenergo and Cherkasyoblenergo.
Additional companies to be privatised in 2016-2017
Ms. Yulia Kovaliv, the first deputy Minister of Economic Development and Trade, has recently announced in the media the possibility of expanding the list of companies subject to privatisation in 2016-2017 (the “List”).
It is expected that the List may be expanded with additional 126 companies in exchange for 102 companies which privatisation is not practically possible due to them being i) already privatised; or ii) under liquidation; or iii) located in the Anti-Terrorist Operation Zone. The most attractive assets which may be included in the List are as follows:
- Turboatom Public Joint Stock Company, one of the world’s largest enterprises designing and manufacturing steam and hydro turbines;
- Elektrovazhmash State Enterprise, the Ukraine’s only designer and manufacturer of high-power hydrogenerators, hydrogenerator-motors, turbogenerators for thermal and nuclear power plants;
- United Mining and Chemical Company State Enterprise, an operator of Vilnohirsk State Mining and Metallurgical Plant and Irshansk State Ore Mining and Processing Plant;
- State Food and Grain Corporation of Ukraine Public Joint Stock Company, a national operator of Ukrainian grain market; and
- a state-owned stake in Zaporizhzhia Titanium and Magnesium Combine Limited Liability Company, a manufacturer and supplier of high quality titanium products and ferro-titanium.
The above companies will be subject to privatisation once the legislation (which currently prevents those companies from being privatised) is amended.