Ukraine said Thursday it would offer nearly 350 state firms for sale to foreign investors at an upcoming US conference aimed at saving the war-shattered country's imploding economy. The huge privatisation 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 neighbouring Russia's effective economic blockade.
But foreigners have been wary of plowing 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. The privatisation 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 US and European investors Monday.
"These properties will be included in the first wave of privatisations," 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 Yatsenyuk is expected to promote the potential returns of acquiring chunks of struggling electricity companies and an outdated portside plant in Odessa - the Black Sea region now governed by former Georgian President Mikheil Saakashvili.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. Kiev's SigmaBleyzer venture capital firm reported a private investment decline in this year's first quarter of 25.1 percent.
Yatsenyuk seems undeterred by the data and intends to see $500 million raised by the sale of the Odessa port plant alone. He told a tense meeting of ministers Wednesday that the government would also part with a massive but loss-making power generator called Tsentrenergo "by the end of the year." The initial sales package also includes six regional power generation and distribution companies. "I demand that we reach a transparent decision to privatise these assets," Yatsenyuk said.
Yet the Washington crowd will be keenly aware of Ukraine's spotty privatisation 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 Kiev. Ukraine's new pro-Western leadership has vowed to clean up its act in order to apply for EU membership by 2020. But Yatsenyuk has been openly challenged by ministers and senior officials who oversee the very properties being advertised in the United States. Ukrainian Energy Minister Volodymyr Demchyshyn told Yatsenyuk at Wednesday's meeting that he would not give up Tsentrenergo until "the entire power generation market has been de-monopolised."
And the head of Ukraine's state property fund said it might be wiser to let foreigners operate the Odessa port plant rather than own it outright. "Personally, instead of selling ports, I would prefer to see them being put under public-private-ownership - the way it is done all over the world," Igor Bilous told reporters.
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