Small privatization brought UAH 4 billion to the state budget for the year. This is a good help for strengthening Ukraine's defense capabilities. The Cabinet of Ministers promises to unblock even large-scale privatization. But it is not known whether this will happen before martial law is lifted.
The restoration of privatization turned out to be quite a successful step. According to the State Property Fund (SPF), in 9 months of 2023, the state budget received UAH 2.7 billion from privatization. This is three times more than for similar periods in the pre-war years. Since September 2022, when privatization was actually unblocked, revenues to the budget amounted to UAH 4 billion.
The total number of objects and assets privatized by FDM since the beginning of 2023 exceeded 300, and the number of participants in privatization auctions exceeded 1,600.
So far, small and medium-sized objects worth up to UAH 250 million are going under the hammer. These are mostly "dead" enterprises and real estate for administrative purposes, which are used as platforms for the deployment of new business.
At the same time, the start of large-scale privatization, which includes large strategic enterprises, is constantly postponed.
What objects of privatization are in demand
Every month, FDM puts up for sale 40-50 different objects and assets. Accordingly, the Fund holds about a dozen privatization auctions every week. Of course, not all of them are successful. But on average, the FDM replenishes the state budget in the amount of UAH 50 to 200 million per week.
It all depends on what is being sold. As practice shows, the most willing are distilleries, property complexes (EIC), assets of the agro-industrial sector (bakeries, elevators) and mining enterprises, as well as non-residential real estate (starting with administrative and office buildings and ending with sanatoriums, hotels and recreation centers). .
According to the FDM, more than 60% of the lots sold in 2023 are commercial real estate that entrepreneurs are restoring and using to open new stores, offices or cafes.
By the way, the competition at the auction is about 5 applicants. That's how many potential buyers compete for one lot.
What assets and objects have already been sold
In the framework of small privatization, mainly non-working and problematic objects are sold. These are bankrupt companies or state-owned enterprises that have large debts and appear in criminal cases and lawsuits.
From September 2022, the largest objects that were sold as part of privatization were:
Hotel "Hermitage" (Kyiv) - UAH 311 million;
SE "Ukroboronresursy" (Kyiv) - UAH 210 million;
SE "Rivnetorf" (Rivna region) - UAH 205 million;
Sea port "Ust-Dunaisk" (Odesa region) - UAH 201 million;
JSC "Lviv Jewelry Factory" (Lviv) - UAH 185 million;
EIK SE "Volyntorf" (Volyn region) - UAH 212 million.
By the standards of small privatization, all these are quite large lots, which, moreover, were sold at a significant increase in price. For example, the Hermitage hotel had a starting cost of UAH 21 million, and the Ust-Dunaisk port – UAH 60 million.
But as mentioned above, along with the privatized asset, the new owner gets a lot of worries.
Hotel "Hermitage" will not be able to resume work without renovation. Experts estimated that for this it is necessary to invest up to 350-400 million hryvnias. In fact, this is almost the same amount that was spent on its purchase. The sold state-owned enterprise "Rivnetorf" does not have a special permit for peat extraction, and in addition, the company's debts exceed UAH 7 million. And with the privatization of Ust-Dunaysk, an incident happened: FDM mistakenly sold not only what belonged to the state, but also infrastructure objects that were already in private ownership.
What else will the State Property Fund sell?
As of October 10, there were more than 1,300 objects in the FDM privatization plan. Among those assets that will be sold by the end of October and the beginning of November, there are a little more than 20 lots.
In particular, on October 27, the Fund will hold an auction for the privatization of the Moryak recreation center, located in the Odesa region. Its starting price is UAH 808,000.
On October 31, auctions will be held for the sale of the Dniproblagrostandart EIC with a starting price of UAH 109,000.
An auction is planned for November 14, at which an administrative building in the Lviv region with an area of 131 square meters will be offered. Its initial price is 413,000 UAH.
But the largest lot is a 50%+1 share in the authorized fund of the enterprise "Rivnensky radio engineering plant". The auction will take place on November 7, FDM intends to start bidding with UAH 121 million. Like many other objects, the plant does not function. It was stopped back in 2013, and after some time declared bankrupt.
By the way, privatization is not only the sale of state assets, but also the leasing of state property. There, of course, the amounts are smaller. But in just 9 months of 2023, the State Property Fund accumulated UAH 572.1 million from leases and concluded almost 1.3 thousand new lease agreements. Thus, the plan to attract funds from the lease was fulfilled by almost 80%.
