A court in Odesa region ruled on May 10 that Ostchem Holding, controlled by Ukrainian gas oligarch Dmitry Firtash, should collect multi-million debts from state-owned Odesa Port Plant (OPP) as was ruled previously by the Arbitration Institute of the Stockholm Chamber of Commerce. It said last year that the plant's debt to Ostchem formed over almost three years, (excluding fines, penalties and other losses), comes to $193mn.
OPP is a major chemical production company accounting for 17% of Ukraine's ammonium nitrate capacity and 19% of urea production capacity. Due to its strategic location and connections to the chemical transportation infrastructure, the plant is export-oriented: export sales constitute up to 85% of output, while the major export destinations are the EU and US.
"The Odesa region's appeals court yesterday [on May 10] declined all our appeals and motions… This opens the door to the potential bankruptcy of OPP, a key enterprise in the region," acting head of Ukraine's State Property Fund (SPF) Dmytro Parfenenko told a government meeting on May 11.
The statement followed decision of the Ukrainian government to include privatisation of OPP and a number of electricity companies to the priority action plan for 2017. Privatisation tenders are scheduled for the second to the third quarter of the year.
Meanwhile, the Ukrainian authorities "remain committed" to the privatisation of OPP by the first half of 2017, the International Monetary Fund (IMF) said in its country report published in April.
In December, the Ukrainian authorities failed to sell via a second tender a 99.567% stake in OPP, which is located on the country's southern Black Sea coast.
Potential buyers must reckon with repaying $251mn in debt to Ukrainian oligarch Dmytro Firtash's Ostchem company, $32mn to banks and traders for previously supplied natural gas, and invest at least $100mn in restarting the plant's operations, which will demand further large volumes of gas.
Another reason for the failure of the privatisation is the conflict with the Nortima company, controlled by oligarch Ihor Kolomoisky. Nortima previously threatened to block the OPP privatisation, saying any sale deal would be regarded as a purchase of stolen assets following a 2009 tender in which it outbid two rivals with an offer of $600mn at the exchange rate at the time.