On September 26, the National Council of Reforms considered and supported the draft law “On Privatization of State Property” developed by the Government. On October 4, the Committee of the Verkhovna Rada on Economic Policy and Entrepreneurship approved the draft law amended by the Government and recommended it for the first reading.
The main purpose of the Law No.7066 is to ensure fair and transparent sale of state property, which will be a tool for attracting real investors to Ukraine. Investment inflows should give an additional impetus to economic development, help to create new jobs, increase the efficiency of enterprises and overcome corruption. As a result, budget revenues, which the government will transform into improving the lives of Ukrainians, should increase. In addition, privatization is an effective method to overcome corruption in state-owned enterprises.
Before submitting the draft law “On Privatization of State Property” for the government’s consideration, an inventory of state-owned enterprises was carried out for the first time. The central executive bodies own about 3,444 state enterprises with a total assets value of 1.7 trillion hryvnas. For example, such enterprises are 10 times less in Poland.
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The Draft Law No.7066 will:
- ensure faster and easier procedures for selling enterprises
- cancel the classification of facilities by groups. This will simplify the preparation for the sale, make the procedure transparent
- remain only 2 ways of selling – via open online auctions (for small privatization) and auctions with the involvement of an investment advisor (for large privatization). This will allow to prevent corruption in sales, manipulations with the price and terms of sale.
- expand the range of potential investors, thus increasing competition and the final sale price
- strengthen the protection of investors’ rights
- make it impossible for persons associated with the aggressor country to participate in auctions
- establish a single transparent algorithm for selling large state-owned facilities and a single procedure for selling small facilities
After assessing the portfolios of state-owned companies, 15 strategic enterprises that should remain in state ownership (Ukrzaliznytsya, Ukrposhta, Naftogaz, the Administration of Seaports, etc.) were identified, 359 facilities were designated for transfer to the concession (forestry facilities, airports, road services), 1,255 non-functioning facilities will be reorganized, liquidated or bankruptcy procedures will be completed. The issues on 559 facilities located in the annexed territories and in the ATO zone will be resolved when Ukraine gets control of the temporarily occupied territories.