Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Ukraine to Sell State's Stakes in Big Energos

KIEV -- President Leonid Kuchma has ordered the sale of large stakes in most of Ukraine's energy companies, just months after state prosecutors discovered violations during previous privatizations in the industry, a news report said Wednesday.

A presidential decree signed Monday ordered the government to sell stakes of 26 percent to 35 percent in four energy-producing giants that control thermal power plants and are majority-owned by the state.

Kuchma also ordered the sell-off of controlling stakes in seven regional electricity distributors and stakes of 26 percent to 45 percent in 12 other such companies, Interfax reported.

The decree told the government to draft a resolution on how to conduct energy privatization tenders and to attract foreign companies experienced in such privatization internationally to advise on the process.

The latest attempt to privatize Ukraine's energy sector came three months afterthe Prosecutor General's Office launched a large-scale investigation into alleged financial machinations in the industry and asked the judiciary to revoke privately owned stakes in seven companies sold before.

The probe was prompted by numerous media reports that blasted authorities for allegedly selling the energy distributors to obscure companies that might have been linked to the government.

Ukraine has 27 regional energy distributors. They are considered among the former Soviet republic's most attractive properties as each holds a monopoly or near monopoly on electricity supplies in its region.

The state sold shares in seven such companies last year, and controlling stakes in five of them came to be owned by the same, little-known group of offshore companies.

Energy privatization in Ukraine was interrupted several times over the previous years and has been suspended since 1998, with government officials feuding over how to better sell the lucrative firms.

Foreign energy giants, meanwhile, have shunned Ukraine's energy sector because of changing privatization rules and the government's failure to bring a halt to the country's protracted economic decline.

The announcement came soon after the Ukrainian government issued a statement reiterating its commitment to market economics.

"We are convinced that there is no other alternative to this course,'' the government statement said.

"Any attempt ... of returning to the planned-Soviet methods of economic control, the state's neglect toward its internal and foreign obligations will lead to a civil conflict and international isolation of Ukraine,'' it said.

The angry statement issued last Friday followed two days of closed-door Cabinet discussions devoted to remarks made at government session by First Deputy Prime Minister Volodymyr Kuratchenko.

The official had given a speech that slammed the International Monetary Fund and came down strongly in favor of returning to a Soviet-style planned economy.

According to Ukrainian reports, Kuratchenko's speech surprised Cabinet ministers by its conservatism and a call on Ukraine to correct the path of reforms and re-examine its relations with the IMF, the country's key lender.