Ukraine`s second try to sell OPP, starting price UAH 5.16 bln

The Ukrainian Cabinet at its Wednesday meeting approved the conditions for a new auction to sell 99.6% of shares of Odesa Portside Chemical Plant (OPP) at a starting price of UAH 5.16 billion (nearly $200 million).

The starting price approved is 2.6 times lower than that set by the Cabinet in July prior to the first bidding, which failed due to lack of demand from investors.

”Only the market can determine the [final] price,?said Ukrainian Prime Minister Volodymyr Groysman.

”As you remember, the Ukrainian expert earlier set a very high price for the plant, and we had to agree with that assessment. But the market has shown that the price was inflated,” Groysman said, adding that the expert`s assessment should be subject to review by law enforcement agencies, as his actions could result in state losses.

In turn, Minister of Infrastructure Volodymyr Omelyan suggested that the lower starting price could attract more buyers who would bid actively.

”For example, if we start with UAH 2.5 billion, we can reach up to UAH 7 billion or even UAH 10 billion if there is competition. But with UAH 5 billion at the beginning of trading may cause certain problems,” said Omelyan.

Head of Ukraine`s State Property Fund Ihor Bilous shares the view that is better to open the auction with a lower starting price, while noting that the proposed initial price of UAH 5.16 billion is optimal.

According to Bilous, the demand for the plant is assessed as medium-level, but it should perk up in connection with the approval of new conditions of privatization.

In addition, one of the conditions for OPP privatization is the repayment by the buyer of the company`s debt to Naftogaz of Ukraine for gas supplies until the end of 2016.

Besides, a minimum of two buyers must take part in the bidding, one of which must be a non-resident of Ukraine, otherwise the competition will be declared invalid.

The duration of the procedure of OPP privatization has been extended until January 7, 2017.

As UNIAN reported earlier, the main object of privatization this year is a 99.6% stake in the Odesa Portside Chemical Plant. The sales auction is scheduled for December 15, 2016. The previous auction July 26 with a starting price of UAH 13.175 billion (about $520 million) has failed due to lack of bids from investors. Previously, the SPF said that the initial price of the SOE may be reduced to $150 million in order to attract a larger number of investors. Bilous pointed out that the final price of the company may amount to $400 million.

Four investors – from the United States, Oman, Turkey, and Egypt – were interested in the acquisition.

Odesa Portside Chemical Plant (the town of Yuzhniy, Odesa region) is Ukraine`s second largest producer of ammonia and urea, and the third largest producer of nitrogen fertilizers. It specializes in reloading chemicals coming from CIS countries for further export. The plant is a monopoly on the national market of specialized services for reception, cooling and reloading of ammonia.

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