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. Last Updated: 07/27/2016

Oligarchs Eye Ukraine's Privatization Offerings




KHARKOV, Ukraine -- Ukrainian officials have reported that Russia's oligarchs may contribute a big chunk of the more than $450 million the country is hoping to generate from its privatization sales this year.


Oleg Deripaska's Siberian Aluminum, Mikhail Fridman and Pyotr Aven's Alfa Group and Boris Berezovsky's LogoVAZ are just a few of the companies that have already made clear their intent to begin snapping up Ukrainian industrial companies when they go on sale at the end of summer.


The crown jewel of this year's privatization tenders will likely be the country's telephone monopoly Ukrtelekom. A draft law outlining the parameters of the sale are already before Ukraine's parliament. If passed, the bill would retain a 50-percent-plus-one-share stake in government hands, with the rest to be sold off to private investors.


According to information from the country's State Communications Committee, the primary contenders for the telecom are companies closely affiliated with LogoVAZ.


The country's metallurgy industry has attracted the attention of its Russian counterparts. Ukrainian State Industry Committee director Dmitry Derkach said the most likely buyers in that field are Russian companies.


Derkach named the Ukrainian Metals Company, Ukrsibbank and Metals Russia as the favorites among those expected to bid for the country's metals prizes. Ukrainian Metals and Ukrsibbank are affiliated with Deripaska's Siberian Aluminum. And though registered in the Virgin Islands, Metals Russia was established by Russians.


Siberian Aluminum already has a controlling stake in Nikolayev Alumina, the country's largest alumina plant. Now Siberian is focusing its interests on the Azovstal steel smelter, 50 percent of which is scheduled to go on sale in 2000.


Metals Russia is hoping to acquire the Ilych metallurgy plant in the city of Mariupolsk. Derkach said that Metals Russia representatives visited the plant in March. Following that visit, the Russians began negotiations with the State Industry Committee over conditions regarding its purchase and subsequent investments into the plant.


Ukraine's State Property Committee announced earlier that a 67 percent share in the Linos oil refinery is almost certain to be sold to Alfa Group or Alfa-controlled Tyumen Oil Co., or TNK.


TNK senior vice president Iosif Bakaleinik confirmed Tuesday that his company will be participating in the bidding for Linos.


Ukraine Property Committee press secretary Natalya Tkachenko said the privatization plans were decided in a closed meeting of potential investors and the country's Cabinet of ministers.


Alfa Group has also expressed an interest in the country's regional power utilities as well as its oil refineries.


This year, Ukraine is launching a large-scale sell-off of 12 regional electric companies. Small shares, some of which approach the size of controlling stakes, are being considered for sale.


A member of the Alfa Group and the largest private shareholder in the Dneproenergo and Tsentrenergo electric stations, Alfa Kapital Ukraine has already announced its plans to participate in the regional energo tenders.


Tkachenko said she hopes Alfa will face some competition for the energos. "Russia's Unified Energy Systems, Swedish-Swiss ABB, France's Alstom and others have shown interest in the large-scale privatization of Ukraine's energo companies," she said.


However, Tkachenko's hopes may be somewhat premature regarding UES. "It's still early to talk about the company's participation in the privatization of specific energy organizations in Ukraine," said a representative from the UES' Moscow press office.