Ukraine parliament adopts new privatisation bill in first reading

Ukraine parliament adopts new privatisation bill  in first reading
By bne IntelliNews November 10, 2017

Ukraine's parliament, the Verkhovna Rada, has adopted in the first reading a new bill on the privatisation of state-owned enterprises, which should re-start the stalled privatisation drive in the war-torn country.

On November 9, the motion was supported by 258 lawmakers with the necessary minimum being 226 votes.

In 2017, the Ukrainian authorities have so far had a good year, obtaining UAH3.244bn ($123mn) from the privatisation of state-owned assets. Kyiv restarted its privatisation drive in August, when the State Property Fund of Ukraine (SPF) sold blocking stakes in several power companies to SCM Group controlled by Ukraine's richest oligarch Rinat Akhmetov. At the same time, the government in Kyiv intended earlier to meet its planned UAH17.1bn of privatisation revenues by the end of 2017.

Last year, Kyiv obtained only UAH188.92mn ($7mn) from the privatisation of state-owned assets, or 1.1% of the UAH17.1bn ($627.5mn) plan set in the 2016 budget.

"[This adoption of the document] proves vital to ensure economic growth, and this will be our most resolute step towards pursuing of the anti-corruption policy in the country," the government's media office quoted Prime Minister Volodymyr Groysman as saying on the same day. "The public sector is the largest source of corruption in Ukraine. We have to acknowledge that and root it out."

Groysman added that the government is talking about "the introduction of competitive and transparent procedures." At the same time, "the sale of strategic enterprises is out of the table", he added. Earlier, the PM opposed to possible privatisation of a controlling stake in the biggest Ukrainian producer of turbine equipment Turboatom.

According to the government's media office, the bill creates "a system for transparent sale of government assets, most of which were put into operation in the last century, and defines the main provisions of this process".

Specifically, the document envisages a procedure of establishing of ownership rights, as well as control over the implementation of investment obligations. A landmark innovation of the document is the definition of the dispute procedure, which enables the possibility of appeal to the International Commercial Arbitration Court and the conduct of the case following the principles of the English law rules, the media office added.

Earlier, Groysman said that for the most part state enterprises in Ukraine are unprofitable. In 2016, 89 of the 100 largest state-owned companies generated UAH9.5bn in losses.