Exclusive: Ukraine state
fund to recommend reserve price for Odessa plant at
below $200 million
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[September 12, 2016]
By Natalia Zinets
KIEV (Reuters) - The head of Ukraine's
State Property Fund said on Monday he will recommend more than
halving the reserve price for the flagship privatization of the
Odessa Portside Plant (OPP) to below $200 million.
The auction of the state-run fertilizer group is the first major
privatization since a 2014 uprising brought in a pro-Western
leadership in Ukraine.
It is seen by the country's allies as a test of its ability to
attract vital foreign investment and improve transparency in line
with a $17.5 billion aid-for-reforms program from the International
A previous attempt to sell the plant in July attracted no bidders
and the State Property Fund announced it might lower the reserve
price, which was originally set at $521 million, without specifying
by how much.
The IMF and the European Bank for Reconstruction and Development had
written to the government in May, saying the high price for the
Odessa plant would deter credible investors and would harm Ukraine's
Ihor Bilous, the head of the State Property Fund, said it would be
difficult to attract investors if the reserve price went above $200
He said he hopes that if the government approves a viable price
based on the State Property Fund's recommendations, a new auction
date could be announced later in September.
Ukraine's finance minister last week said the failure to privatize
OPP had sent a bad signal, but added he was confident the process
would succeed at the next attempt.
"I want to put the price at lower than $200 million. I think this
needs to be done, although it's hard to accept politically," Bilous
"I don't know if everyone is ready for such a hard decision, but the
market is the market," he said.
[to top of second column]
Ihor Bilous, the head of Ukraine's State Property Fund, speaks
during an interview with Reuters in Kiev, Ukraine September 12,
2016. REUTERS/Valentyn Ogirenko
Bilous said the Fund had sought advice from UBS on the current value of
the plant, which the bank put at between $50-180 million.
"There are investors who are willing to come and buy. I think the signal that
investors are willing to invest in Ukraine today is significantly more important
than the starting price," he said.
Ukraine's State Property Fund oversees the privatization of state assets. Its
recommendation needs to be approved by a privatization commission, on which
Bilous also sits, and then the government.
Bilous said Ukraine could launch the privatization of six regional energy
distributors if parliament made changes to the legal framework regarding
Ukraine's energy market.
(Writing by Matthias Williams; Editing by Toby Chopra)
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