Ukrainian Government Launches Largest Privatisation Programme in 20 years

On 12 May 2015 the Ukrainian Government announced that over 300 stated-owned companies are to be privatised in 2015. The companies and assets on the list represent various sectors of the Ukrainian economy, including energy, mining, agriculture, transport, chemicals and construction. Included in the list are the following companies:

• a 78.29% stake in Centerenergo Public Joint Stock Company (“PJSC”), one of the major power generating companies;
• various regional power distribution companies, including a 60.248% stake in Zaporizhzhiaoblenergo Open Joint Stock Company (“OJSC”), a 70% stake in Mykolaivoblenergo PJSC, a 65.001% stake in Kharkivoblenergo Joint Stock Company, and a 50.999% stake in Ternopiloblenergo OJSC;
• various combined heat and power generating companies (“CHP”), including a 100% stake in Mykolaivska CHP PJSC, a 99.99% stake in Odeska CHP PJSC and a 99.833% stake in Khersonska CHP PJSC;
• Kyiv Passervice State Enterprise which operates the Kyiv Central Bus Station and a number of bus stations in Kyiv and in the Kyiv region;
• a 50% stake in Azovmash PJSC, one of the largest heavy machinery manufacturers in Ukraine;
• a 99.567% stake in Odessa Port Plant PJSC, one of the largest chemical producers in Ukraine;
• a 99.994% stake in the Ukrainian Bank for Reconstruction and Development PJSC;
• a 100% stake in the President Hotel Private Joint Stock Company in Kyiv; and
• a number of mines and mining companies across the country.

The list also includes 43 other state-owned companies in various industries, including 13 sea ports, that will be subject to privatisation once the legislation (which currently prevents those companies from being privatised) has been amended.

The State Property Fund of Ukraine (the “Fund”) will be responsible for putting the companies and assets up for sale via a series of auctions. The privatisation programme will be open to all domestic and foreign investors, and no express qualification and eligibility criteria currently apply.

To attract investment, the Fund and the Ministry of Economic Development and Trade of Ukraine will launch an information campaign and will carry out road-shows for potential investors.

The Government expects the 2015 privatisation programme to be the largest held in the last 20 years, and hopes that it will raise much needed capital, as well as improve the Ukrainian economy as a whole.

CMS has been providing services in Ukraine for many years, and we have a long track record of advising on privatisations across the region. If you would like to discuss any aspects of the upcoming privatisation programme, then please do not hesitate to let us know.