The Odesa Portside Plant is finally set to be privatized after years of bickering among Ukraine’s authorities over the ammonia producer’s fate.
The Cabinet
of Ministers approved the sale of 99.6 percent of the plant’s shares during a
May 18 meeting, the government said in a press release.
According
to the release, citing a statement by Prime Minister Volodymyr Groysman, the
starting price for the stake will be $521 million.
In deciding
to initiate the privatization of the plant, the Cabinet of Ministers announced
that it had eliminated a number of criteria for potential buyers that would
have reduced the number of potential investors.
Groysman
said that the government was attempting to maximize the number of bidders for
the plant.
“Our task
is to have the largest possible amount of participants,” said Groysman in the
statement. “We will begin this process of privatization, and must demonstrate
to Ukrainians and to the entire world, what open, public, and effective
privatization really is.”
The move
comes after a Feb. 17 vote in parliament that changed the country’s
privatization law. Under the new amendments, passed as an apparent concession
to reformers hours before former Prime Minister Arseniy Yatsenyuk survived a
vote of no-confidence, minority stakes in state enterprises no longer had to be
sold at local stock exchanges.
The new
amendments also banned Russian companies from being able to purchase Ukrainian
state-owned entities through privatization.
The plant
is the first state enterprise scheduled to be sold since the 2014 EuroMaidan
revolution.
If it is
successfully sold, the Odesa Portside Plant will be the third-largest single
privatization in Ukraine’s history, following the 2005 privatization of
Krivorozhstal for $4.8 billion and the 2011 privatization of Ukrtelekom for
$1.3 billion.
But who’s the buyer?
Analysts
say the sale of the Odesa Portside Plant’s privatization can be seen as a
microcosm of the country’s dilemma – will it be sold to the same small group of
oligarchs that control much of the country’s industry, or will it go to foreign
investors that lack ties to Ukraine’s oligarchic system?
Some
oligarchs could try to block the sale — as Ihor Kolomoisky, the beneficiary of
Privat Group, has been accused of doing in the past — while others may seek to
add the plant to their business portfolios.
The company
Nortima, which is reportedly part of Privat Group, has been in a lengthy legal
battle over the privatization. Nortima claims that it won a 2009 attempt at
privatizing the plant, and has filed a legal complaint to uphold that result.
During the
Cabinet of Ministers meeting where the privatization terms were agreed upon,
Interior Minister Arsen Avakov said that gas trade multi-millionaire Dmytro
Firtash could attempt to block the sale.
The plant
is in debt to both the Ukrainian government and to Firtash’s Ostchem Group for
gas deliveries. The debts to Ostchem reportedly total $193 million.
