It has been one year this week since the President of Ukraine issued the decree, On Urgent Measures to Speed Up the Privatization of Property in Ukraine, followed by a parliament decision to adopt the State Privatization Program for 2000-2002. That date was the subject of a conference called The Main Achievements and Prospects of Privatization in Ukraine held by the State Property Fund with the support of Verkhovna Rada along with Ukrainian and foreign organizations.
In a brief introductory speech, State Property Fund (SPF) Chairman Oleksandr Bondar pointed out that although Ukrainian privatizers have not fully reached the 2000 target stipulated by the Presidential decree (UAH 2.5 billion), they still must dig up a hitherto unheard of amount of over UAH 2 billion, with UAH 1.74 billion having already been earned. Mr. Bondar also said the budget will receive another UAH 250 million before the year’s end. He called this a New Year present to the Ukrainian military as compensation for its personnel’s delayed pay. According to this country’s chief privatizer, those dealing with the funds earned from privatization should always keep pensioners and public sector employees informed about exactly what budgetary revenues have been used to pay off arrears.
After listing the few strategic facilities (ten, to be exact), which were sold for the first time in Ukraine’s modern history and accounted for the lion’s share of privatization earnings, Mr. Bondar concentrated on what he referred to as negative aspects. He is worried that this year there have been no tenders for the Crimean Soda and the Khartsyzsk Pipe Plants, which were supposed to bring in UAH 500 million in revenue. But what caused the main harm to privatization was, in his view, the tender already held to sell the Zaporizhzhia Aluminum Combine. According to him, in addition to the fact that the winner will not hand over this year the money gained ($101.5 million), the way the tender was held with the government exerting pressure on the tender commission has not exactly improved the image of Ukrainian privatization and is not going to promote foreign investment. This is why the SPF intends to initiate the required changes in the decree mentioned to ward off unlawful outside pressure. Mr. Bondar noted that if the Fund status remains as it is in 2000, there will be no hope of reaching next year’s budget target of UAH 5.9 billion. “Conflicts and misunderstandings will continue, but I don’t want to remain the whipping boy I now am,” the SPF chief said, quoting the words of a former executive in this governmental body, “It’s a common maxim: the Cabinet has done everything good and the SPF everything bad.”
The State Property Fund chief’s intention to resist government pressure was supported by Oleksiy Kostusiev, chairman of parliament’s Economic Policy Committee, and Oleksandr Riabchenko, chairman of its Privatization Oversight Commission. Mr. Kostusiev scathingly criticized the cabinet for the way it has handled the privatization of Ukrtelekom and noted that the Industry, Transport, and Communications Committee views the government’s performance in this area as unsatisfactory. “If the government continues to procrastinate this way,” the people’s deputy noted, “the 2001 budget will not receive the revenue, which the privatization of this facility is supposed to bring... These items will remain unfulfilled, as will the related expenditure items, which will in turn affect the people.” Mr. Kostusiev opined that the new law on the State Property Fund now being drafted should withdraw the SPF from the government’s jurisdiction and place it under the President’s control.
Yevhen Hryhorenko, chief of the economic and social policies section in the Presidential Administration, told about some conclusions drawn at a meeting on privatization presided over by Pres. Kuchma. According to Mr. Hryhorenko, the meeting exposed the mechanisms and methods of lobbying and pushing through decisions serving the interests of certain politically influential groups. The meeting issued a package of documents saying that Ukraine should open the door to foreign investors. This will be an uphill struggle because offshore companies must be kept clear of privatization. Mr. Hryhorenko disclosed that next year should also see the privatization of natural monopolies, but the necessary regulatory commissions have not yet been set up. The President set a goal of 8-12% monopolization in the industry, while today this level is as high as 25-27%. This is one of the most difficult elements of reforms.
Mr. Hryhorenko pointed out that the president has always supported the State Property Fund because precisely it should be the main actor, decision maker, and bearer of responsibility rather than a bogus agency taking somebody else’s blame in the process of privatization. The price mistakes will be extraordinarily high.
