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UPDATE 1-Ukraine to put Odessa plant back up for auction at lower starting price
October 19, 2016 / 12:05 PM / 9 months ago

UPDATE 1-Ukraine to put Odessa plant back up for auction at lower starting price

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KIEV, Oct 19 (Reuters) - Ukraine's government on Wednesday approved a plan to put a state-owned fertiliser plant in Odessa back up for auction at over half the price originally sought after the prime minister called for privatisations that did not hurt the country's image.

The auction of the Black Sea plant is the first major privatisation since a 2014 uprising brought in a pro-Western leadership in Ukraine and could be a test of the government's promise to implement economic reforms and tackle corruption.

Prime Minister Volodymyr Groysman said the starting price for the Odessa plant would be 5.16 billion hryvnia ($200 million) - down from the $521 million reserve price set at a failed auction last July which attracted no bidders.

The International Monetary Fund and the European Bank for Reconstruction and Development wrote to the government in May, warning that the high price for the plant would deter credible investors and would harm Ukraine's image.

Groysman urged police to establish why such a high price had been fixed last July since the failure of the attempted sell-off had seriously damaged Ukraine's image.

"We need to show more examples of successful privatisations that have virtually not existed in the past 10 years," Ihor Bilous, the head of the State Property Fund, told a government meeting.

Bilous said five foreign firms had expressed an interest in the company while the total costs for the potential winner could reach around $600 million, according to calculations made by Ukrainian ministers.

The winner has also to cover $300 million debts of the plant and to find around $100 of working capital. (Reporting by Pavel Polityuk; Editing by Richard Balmforth)

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