Ukraine's Odesa Port Plant suspends operations after privatisation tender fails

By bne IntelliNews January 3, 2017

Ukraine's Odesa Port Plant (OPP) will suspend operations due to unfavourable economic conditions, including overpriced natural gas supplied by national gas monopoly Naftogaz, the fertiliser company said in late 2016 after its failed privatisation.

"Due to the high price of natural gas supplied by Naftogaz, which is not in line with the prices of the plant's products on the global market, and taking into account the impossibility of supplying natural gas by Naftogaz in 2017 until the current debt is paid, it was decided to temporarily halt production and the plant's workshops," local media quoted from OPP's statement released on December 30.

The announcement followed the failure in early December of a second tender for the long-awaited privatisation of 99.567% in the giant plant located on Ukraine's southern Black Sea coast.

The new tender flopped despite the State Property Fund (SPF) more than halving the plant's starting price to UAH5.16bn ($200mn) following the first failed privatisation attempt in July. A successful sale was regarded as a centrepiece of Ukraine's privatisation process and essential to winning confidence of cautious foreign investors.

Meanwhile, according to a letter prepared by SPF head Ihor Bilhous, the Ukrainian cabinet has approved the plan to restructure OPP's debt to Naftogaz, the nashigroshi.org online news outlet reported. The plan foresees the gradual repayment of the debt, which totalled UAH1bn ($37mn) as of mid-December, in two years starting April 1, 2017.

Meanwhile, the Ostchem company of Ukrainian oligarch Dmytro Firtash has appealed to an Odesa region court to recognise and enforce the July 25 ruling of arbitrators in Stockholm on the recovery of $251mn from OPP in Ostchem's favour.

The Swedish court's decision provides for the recovery of $193mn of debt for gas and a $58mn penalty from OPP, Interfax news agency reported on December 28.

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