Ukraine offers huge state firms to foreign investors – The China Post
The huge privatization effort — due to kick off in October — hopes to raise billions of dollars that could be used to plug a leaking budget and deal with the consequences of neighboring Russia’s effective economic blockade.
But foreigners have been wary of ploughing cash into a country still torn by a pro-Moscow separatist crisis that has claimed the lives of more than 6,500 people and brought swathes of Ukraine’s devastated industrial heartland under rebel control.
‘Big ambitions, bigger hurdles’
The privatization plan has also been hurt by some ministers’ refusal to hand over companies under their jurisdiction into private — and possibly foreign — hands.
Ukrainian Economy Minister Aivaras Abromavicius said a total of 345 government-run properties would be presented to major U.S. and European investors Monday.
“These properties will be included in the first wave of privatizations,” Abromavicius told reporters.
Ukrainian Prime Minister Arseniy Yatsenyuk said 150 chief executives had promised to visit the Washington roadshow.
Yatsenyuk is expected to promote the potential returns of acquiring chunks of struggling electricity companies and an outdated portside plant in Odessa — the Black Sea region now governed by former Georgian President Mikheil Saakashvili.
But economists and some of Yatsenyuk’s own allies warn that this may be a terrible time for Ukraine to part with some of its largest holdings.
The economy shrank by 17.2 percent in the first three months of the year compared to the same period in 2014. Property values are collapsing and the unpredictability of the ongoing war turns standard economic forecasting into an very imprecise science.
Kyiv’s SigmaBleyzer venture capital firm reported a private investment decline in this year’s first quarter of 25.1 percent.
The Ukrainian government seems undeterred by the data and intends to see US$500 million (450 million euros) raised by the sale of the Odessa port plant alone.
The initial package also includes the Tsentrenergo federal power generation company and six of its regional distributors.
The initial sales are meant to bring in about US$800 million — a relatively small figure that will do little to relieve a multi-billion-dollar fiscal deficit that is projected to reach 7.5 percent of gross domestic product in 2015.
The Washington crowd will also be keenly aware of Ukraine’s spotty privatization record. Most important firms have previously been hoovered up by oligarchs — some of them based in Russia — who offered low bids but enjoyed close powerful contacts in Kyiv.