New rules of game: How state enterprises will be privatized in Ukraine

Author : Olha Chaika

Source :

The document unites 7 existing laws and is developed to simplify the life of investors
23:44, 11 October 2017

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The bill No. 7066 on the privatization of state property in Ukraine is ready for adoption as a basis. It combines all the norms necessary for the investor, leaves only two categories of privatization objects - large and small, and instead of five methods of sales, it leaves two - at auction and via electronic site. It is expected that these and other norms will make the privatization process more transparent and attract new investors.

"The bill introduces new rules of the game, the state unites seven laws into one, so it will have everything the investor needs," said acting Chairman of the State Property Fund Vitaly Trubarov in his commentary to

Only large and small privatization

Trubarov named the main innovations that the document contains.

"This bill removes a large gradation of privatization objects, leaving only two categories - the so-called large privatization with a value of assets of more than 250 million UAH and a small one - all that is less. It means that large privatization will be carried out with the assistance of advisers-companies with the world name, they form the starting price, they guarantee transparency of the process, and besides, they will attract investors to Ukraine," Trubarov said.

According to the explanatory note to the document, objects of unfinished construction, conserved objects, social and cultural objects (hospitals, boarding houses, homes for the elderly and the disabled, kindergartens, children's camps, cultural and amateur sports facilities) are going to be classified as small privatization.

The bill suggests that small privatization will be carried out via electronic platforms.

"I could not say what exactly sites we will use, we are currently conducting a pilot project with ProZorro - we are placing 30-40 objects there," Trubarov said.

According to him, in this way they intend to test how privatization will be carried out with the help of this site.

"We plan to finish the project before the New Year, and then, I think, a meeting will be held at the level of the Cabinet of Ministers - and we will think about how to launch such sales throughout the country with the involvement of other electronic platforms," he said.

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Vitaly Trubarov 

Shortened terms of privatization and its appeal

And acting Chairman of the State Property Fund Vitaly Trubarov emphasized that one of the important innovations of this bill is the limitation of the time when one can appeal against the privatization.

"The procedure for appealing sales is changing, officials come and sometimes they want to check how the privatization was conducted 5-7 years ago. This worries investors. Now we are introducing a rule: you want to appeal - there are three years for this, so we avoid the influence of officials,” he noted.

In addition, the bill reduces the terms of privatization. In particular, it cancels pre-privatization preparation, does not contain norms on the development and approval of privatization plans, the creation of a privatization commission, and so on.

According to Trubarov, the term of large privatization will be reduced from 24 months to 12, and for small - from 9-12 months to 4-5.

Draft law at final stage

The document was registered in Verkhovna Rada on September 4, 2017, and two weeks later MPs withdrew it and submitted another option for replacement. Vitaly Trubarov explained this by the fact that registration in parliament took place before the National Council of Reforms, during which some comments were made to the document, including from the President of Ukraine Petro Poroshenko.

However, according to Trubarov, the changes are not global. Some of the points that have been discussed will be changed already in preparation for the second reading - in particular, regarding  which legislation investors will rely on, protecting their rights - Ukrainian or international.

Earlier it was reported that this bill suggests the possibility to sell the company for 1 UAH after three unsuccessful attempts to privatize. Trubarov denied the existence of such a norm in the draft law.

"I couldn’t say who is the author of such a norm, as many experts were involved in the creation of the document. According to my information, at present there is no such norm in the body of law. I am skeptical about this idea. I don’t think the society will accept this norm and will apply it properly. In addition, we do not need to sell enterprises for UAH 1. We intend to privatize and sell businesses for impressive amounts much higher than UAH 1," he said.

On the eve, the head of the Committee on Economic Policy, People's Deputy Andriy Ivanchuk registered in the Verkhovna Rada a decision on the adoption of this bill as the basis. According to Trubarov, this is only a way to emphasize that the document will be finalized for the second reading.

"It seems to me that this is a procedural moment," he said.

So, there are almost three months by the end of the year, and there are five plenary weeks in the Ukrainian parliament. Perhaps during this time the document will be approved both as the basis and, as a whole, - and already in 2018, privatization in Ukraine will take place according to the new rules.

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