May 18, 2016 / 11:15 AM / in 3 years

Ukraine sets $522 mln starting price for OPP privatisation

KIEV, May 18 (Reuters) - Ukraine has set a starting price of 13.175 billion hryvnia ($522 million) for the auction of state-owned fertiliser producer Odessa Portside Plant (OPP), the head of the State Property Fund said on Wednesday.

The sale of OPP would be the first major privatisation in a programme key to the financial rebalancing required to secure $17.5 billion of aid from the International Monetary Fund, though repeated delays have dampened interest from foreign investors needed to shore up Ukraine’s war-torn economy.

“Almost all the preparatory work for privatisation has been completed. We have all the documents for a transparent, international agreement,” State Property Fund chief Ihor Bilous said in a government meeting without elaborating on the exact timing of the auction.

The starting price for auction has been set at 13.175 billion hryvnias for 99.6 percent of the business, he said.

The pro-Western authorities who came to power in 2014 after a Moscow-backed president fled protests against his rule pledged to sell off state firms they said were crippled by graft. The new government predicted that it would raise $778 million, but only $7 million has been raised so far, State Property Fund data shows.

Transparency has been a key issue because of fears that the sale of state assets could strengthen the control of Ukraine’s powerful oligarchs over strategic industries.

OPP’s sale will be valid only if two or more buyers take part in the auction and if at least one of them is a non-resident of Ukraine, Bilous said, adding that these additional conditions were drawn up in consultation with the IMF and the European Bank for Reconstruction and Development.

It is not clear when the sale will take place, but the State Property Fund has previously said it could be put on the market in June.

Five or six potential investors are interested in buying OPP, a managing director at Dragon Capital, Ukraine’s largest investment bank, told Reuters in April.

Russian investors are banned from buying Ukrainian assets in a move to reduce Russia’s influence after the collapse in relations over its support for pro-Russian separatism in Ukraine. ($1 = 25.2300 hryvnias)

Reporting by Natalia Zinets; Writing by Alessandra Prentice; Editing by David Goodman

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