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The president of Ukraine suspends OPP privatization
Apr 16 2008, 16:00
The president of Ukraine has suspended OPP privatization

According to the press-service of the President, the ukase N. 359/2008 of V. Yushchenko has suspended the action of the order N. 261-r of the Ukraine Cabinet from February, 11th, 2008 «About the affirmation of conditions of carrying out of competition on sale of a share holding of joint-stock company «Odessa port plant».

It is stated in the text of the presidential ukase: «At the absence of the state privatization program adequate to a modern level of public attitudes development, privatization of the open joint-stock company «Odessa port plant» the enterprises which has strategic value for economy and safety of the state is not equitable to interests of national safety in sphere of privatization. Hence, the order of the Cabinet of Ukraine does not answer the Constitution of Ukraine, in particular to clause 17 according to which maintenance of economic safety of the state is one of its major functions».

Besides as the President notes the order from February, 11th, 2008 is accepted by the Cabinet of Ukraine on the contrary to the requirement of clause 5 of article 116 of the Constitution of Ukraine which commits the Ministry to carry out management of state ownership objects according to Laws of Ukraine «About management of state ownership objects» and «About state property privatization» which limits Cabinet of Ukraine powers concerning the conditions of state ownership objects privatization having strategic value for economy and safety of the state but only the coordination of such conditions.

According to clauses 15, 17 of the first part of article 106 of the Constitution of Ukraine the President has decided to stop action of the Cabinet of Ukraine order from February, 11th, 2008 N. 261-r «About the affirmation of conditions of carrying out of competition on sale of a share holding of open joint-stock company «Odessa port plant».

The ukase signed by the President today, on April, 15th, inures from the date of its publication.

As Context-Prichernomorie informed earlier, competition on OPP sale has been declared on February, 20th, auction is scheduled for May, 6th. Conditions of OPP privatization have been approved by the Cabinet order N. 261-r from 11.02.2008. Dmitry Parfenenko, vice-president of the Ukraine state property fund informed that the initial price of OPP sale according to sale terms will make 3 billion grn., auction step 30 million grn. According to D.Parfenenko, privatization will be conducted by a principle of «Krivorozhstal» sale.

It was not the first plant privatization attempt.

Earlier, on August, 15th, 2007 Ukraine state property fund has declared competition on sale of 99,52 % of actions of the open joint-stock company «Odessa port plant» with a face value of 794 million 703 thousand 700 hrn. The initial price was 2 billion 500 million hrn.

Competition on sale of OPP actions has been scheduled for October, 30th, 2007. After the announcement of OPP sale, Valentina Semenyuk chairman Ukraine state property fund of has declared that she personally was always against the Odessa port plant privatization, however inclusion of Odessa port plant in the list of objects set for privatization in 2007 was the requirement of the President of Ukraine who has put it as a condition of signing the «Budget law».

On August, 20th the President of Ukraine Victor Yushchenko has stated that he opposes Odessa port plant privatization on present conditions, expressing concern that in this situation OPP transport part can get under the control of private investors that would actually make them ammonia trans-shipment monopolists. In Victor Yushchenko's opinion this will lead to a rise in price of port functions which are carried out by the plant, and to the establishment of private monopoly in this part of the chemical market.

On August, 21st Ukraine state property fund chairman Valentina Semenyuk has declared that applications of the President of Ukraine for a suspension of Odessa port plant privatization are connected with the fact that «oligarches do not like transparent conditions of competition and great social obligations».

On September, 12th President Victor Yushchenkos ukase has suspended the order of the Cabinet of Ukraine which entrusted Ukraine state property fund to carry out competition on sale of open joint-stock company «Odessa port plant» share holding. It is said in the ukase that according to the order of the government «About the affirmation of conditions of carrying out of competition on sale of a share holding of joint-stock company «Odessa port plant», privatization of Odessa port plant, enterprise that has a monopoly position in the market of services on an overload of chemical production in Ukraine, in particular, ammonia, is carried out together with a property complex (ammonia overload shop). Such decision in the view of absence of the tariffs coordination mechanism in sphere of chemical production overload in Ukraine and without introduction of measures on monopolization counteraction in this sphere can lead to unreasonable increase of tariffs for these services by OPP buyer that will negatively affect, in particular, the Ukraine chemical industry enterprises activity.

The president also notes that OPP carries out manufacture and overload of liquid ammonia and hence is the high risk object and there are no corresponding safety control measures stipulated by the Ministry.

Hence the President believes that the conditions of OPP alienation stated in the order of the Ministry mismatch the Law of Ukraine «About bases of national safety of Ukraine» and Constitution of Ukraine (regarding maintenance of ecological safety in territory of Ukraine by the state, and also regarding guarantees of economic safety of the state), and the ukase suspends this order.

As a result on October, 15th, 2007 Fund chairman Valentina Semenyuk in execution of the President ukase has signed the order on cancellation of sale competition of the open joint-stock company «Odessa port plant» share holding.

INFORMATION: «Odessa port plant» was created on June, 16-th, 2004. Statutory fund is 798,544 million hrivnas. Odessa state port plant has been put into operation in 1978. This is one of most technically perfect enterprises of Ukraine. It is on the second place in the country (after Styrol) on manufacturing capacity of ammonia and carbamide. The plant is located in immediate proximity from Odessa on Adzhalyksky estuary coast. Specialization of the plant is manufacture of ammonia and carbamide, overload of the export chemical production from the CIS countries. «Odessa port plant» is a monopolist in the nation-wide market of specialized services on reception, cooling and an overload of ammonia.


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