About privatization

What is privatization

Privatization is the paid alienation of state-owned property in favor of individuals or legal entities.

All privatization objects are divided into small-scale and large-scale privatization objects. Objects of small-scale privatization include not only state-owned enterprises and stakes but also objects of unfinished construction and socio-cultural purposes, separate movable and immovable property, the value of which does not exceed UAH 250 million. If the cost of the object is higher than UAH 250 million – these are large-scale privatization objects, to which only state-owned enterprises and share packages can apply. Usually, such objects require more time for pre-privatization preparation, attraction of potential buyers and their familiarization with information about the enterprise.

All objects are sold exclusively through government’s electronic trading system ProZorro.Sale, which is built on the principles of full transparency – the entire sale process takes place publicly and openly to avoid corruption. For entrepreneurs and companies, this is a good opportunity to buy something interesting for the development of their business and their community. For the country, this is economic recovery and development of the state.

Potential buyers can also initiate the inclusion of objects in the list of privatization – by submitting an application for the inclusion of a state-owned object in the list of objects subject to privatization. More details here.

What is the state of state-owned enterprises in Ukraine

At the beginning of 2021, there were 3,343 state-owned enterprises (SOEs) in Ukraine. Only 943 of them are profitable, and 511 are unprofitable. 1,885 state-owned enterprises do not work at all, of which 585 are located in the temporarily occupied Crimea and the zone of operations of the United Forces (Donbass region). A significant part of these enterprises should be declared bankrupt and liquidated long ago. The majority should be transferred to privatization and new efficient owners should be found for them at open and transparent auctions.

The number of SOEs in different countries of the world is extremely insignificant: Poland – 55, Lithuania – 91, Sweden – 46, Canada – 50, Australia – 9. 

What are the main goals of privatization

• To fight against corruption, which is common in SOE and when managing the state property.
• To attract direct investments and strategic investors, both from Ukraine and from other countries.
• To сreatе effective prerequisites for reconstruction and economic recovery of the state.
• To attract additional revenues to the budget both from sales and, subsequently, from tax revenues from new businesses.
• To improve the performance of enterprises or the quality of property use through an effective owner search.
• To modernize production or re-profile facilities and to create of new jobs.

What will not be privatized

• Enterprises that ensure the security of the state.
• Enterprises that are natural monopolies.
• Enterprises that are important to society or whose services/goods cannot be performed by private businesses.

The main legislature on privatization in Ukraine:

• Law of Ukraine “On privatization of state and communal property”
• Resolution of the Cabinet of Ministers of Ukraine dated 10.05.2018 № 432 “On approval of the Procedure for conducting electronic auctions for the sale of small privatization objects”