Ukraine must launch tenders for sale of at least two large SOEs by late 2020 – IMF memo

The International Monetary Fund (IMF) has said the Ukrainian authorities must launch tenders for the sale of at least two large SOEs by end-December 2020.

"We [Ukraine] have appointed new management at the State Property Fund (SPF), while parliament adopted legislation to reduce the list of companies banned from privatization, leaving only companies of strategic importance or essential for national security on the list. As of end-March 2020, we have transferred 530 companies from line ministries to the SPF," according to a letter of intent and the memorandum of economic and financial policy on the new 18-month Stand-By Arrangement (SBA) between Ukraine and the Fund.

"The SPF will aim to launch tenders for the sale of at least two large SOEs by end-December 2020, market conditions permitting, and at least three more by end-June 2021, including companies from the following list: the Odesa Portside Plant, United Ore and Mining Company, CentreEnergo, Elekrovazhmash, Krasnolymanska mine, and the President Hotel," reads the report.

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Ukraine has also committed to continuing with the sale of small companies and assets and leasing of state property through open, competitive and transparent two-tier electronic auctions (ProZorro.Sale).

"We will further strengthen SOE corporate governance including by: (i) revising the corporate governance framework for SOEs, with the assistance of the OECD and EBRD, to bring it in line with OECD Guidelines on Corporate Governance of State-Owned Enterprises; (ii) adopting the draft SOE corporate governance law to broaden the powers of supervisory boards to appoint CEOs and approve financial plans; (iii) adopting an overarching state ownership policy; and (iv) adopting a new corporate charter for Naftogaz (structural benchmark, by end-September, 2020), in line with the OECD's recommendations on corporate governance, and applicable legislation, including the current law 'On Joint Stock Companies,'" the report says.

In addition, Ukraine will strengthen the Anti-Monopoly Committee of Ukraine (AMCU) in line with international best practices.

"We will adopt legislation to ensure: (i) its financial and operational independence; (ii) that the appointment and the dismissal of the AMCU's chairperson and its commissioners are transparent, competitive and insulated from political interference; (iii) strengthens the powers of AMCU to conduct physical searches and confiscate documents and to obtain information from, and share information with other law enforcement agencies and other government bodies; and (iv) that the decisions of AMCU will gain the status of enforcement documents, therefore ensuring that there is no need for a court process to enforce decisions," the letter says.

As UNIAN reported earlier, the IMF Executive Board on June 9 approved an 18-month Stand-By Arrangement (SBA) for Ukraine, with access equivalent to SDR 3.6 billion (about US$5 billion, or 179% of quota). The first disbursement is worth US$2.1 billion.