Large-Scale Privatization 2015 Approved

Dentons, Kyiv, Ukraine, 

Mon, May 25, 2015

On 12 May 2015, the Cabinet of Ministers of Ukraine adoptedResolution No. 271 “On Conducting a Transparent and Competitive Privatizationin 2015” (the “Resolution”), which approved the list of more than 300State-owned entities (Supplements 1 and 2) subject to privatization in 2015.

A numberof majority shareholdings and major economic enterprises are offered for theprivatization, which is the largest in recent years, in particular:

·        In the mining industry – StateConcern “Ukrtorf,” a number of mines.

·        In the energy sector – severalpower plants and equity stakes in major electricity manufacturers andsuppliers.

·        In the oil and gas industry –equity stakes in local gas suppliers.

·        In the agricultural sector –state-owned enterprises with large amounts of arable land, State Enterprise“Horse-breeding of Ukraine” (approx. 40,000 hectares of land), Stateenterprises for the selection and breeding of livestock, a poultry farm, agreenhouse plant, a sugar mill, a sugar supply company and other entities.

·        In the transport sector: diesellocomotive works, a locomotive plant, Airline Company “Horlytsya,” State ShipCompany “Black Sea Steamship,” State Enterprise “Black Sea Yacht Club,” StateShipping Company “Ukrtanker” and Aviation Enterprise “Universal Avia.”

·        In the construction industry -100% of the shares in PJSC “Dniprometrobud” and equity stakes in otherconstruction companies.

·        In the chemical industry -majority shareholdings in public joint-stock companies “Sumykhimprom,” “OdessaPortside Plant” and JSC “Svema.”

·        In the trading sector - 50% ofthe shares in Public Joint-Stock Company “Ukrnaftoproduct.”

·        In the machine industry – equitystakes in machine-building, instrument-making and radio engineering plants.

·        In the financial sector - 51%of the shares in the Specialized Joint Stock Company “Spetseksimstrah,” 99.99%of the shares in Public Joint-Stock Company “Ukrainian Bank for Reconstructionand Development.”

The list (Supplement 2) also includes the enterprises that havebeen previously included in the list of state-owned enterprises not subject toprivatization. Specifically, this refers to 13 seaports, Public Joint-StockCompany “Ukrainian Danube Shipping Company,” Black Sea General Shipping Agency“Inflot,” State Enterprise “Main Breeding Centre of Ukraine,” a number ofquarries, Building Corporation “Ukrbud,” etc.

State-owned entities listed in Supplement 2 may be privatized onlyafter they have been excluded from the Law of Ukraine “On the List of Objectsof State Property Not Subject to Privatization.”

Pursuant to the Resolution, the State Property Fund shall beobliged to:

1) Ensure that the state-owned entities included in the listsare offered for sale through an open competitive auction, as a primary methodof sale, without imposing any participation restrictions, and

2) Submit the terms of privatization of the State-owned entitiesand proposals as to the terms of privatization of the state-owned entities tobe sold together with the underlying land plots to the Cabinet of Ministers ofUkraine for approval.     

The Ministry of Economic Development and Trade and the StateProperty Fund shall ensure the holding of special meetings with investors(“road-show”) regarding the entities subject to privatization.

The competent State-owned property management authorities mustconduct pre-privatization preparation of State-owned entities, ifnecessary. 

This Resolution was published and took effect on 15 May 2015.

It should be noted that the Verkhovna Rada of Ukraine hasregistered a draft law designed to remove the proposed entities from the listof State-owned entities not subject to privatization.  The Verkhovna Rada of Ukraine is expected toconsider the draft law in the nearest future.