The 2026 state budget provides for UAH 2 billion in privatization revenues. Is that a lot or a little? How was this figure calculated?
This is a very conservative forecast. Of course, we proceed from the assumption that the actual target is much higher — at the very least, to sell no less than in 2025. Let me remind you that in 2025, total revenues from privatization, including sanctioned assets and leases of state property, amounted to around UAH 9.5 billion.
The main task for 2026 is to accelerate privatization and successfully sell several key assets. At the same time, we understand that there are many risks and uncertainty factors, which is why we planned this figure very cautiously.
In previous years, forecasts of budget revenues from privatization were based on expectations regarding the sale of certain large assets. Which assets are the greatest expectations for meeting and exceeding the budget revenue target linked to this year?
Yes, among large-scale privatization assets, the key one remains Odesa Portside Plant, or OPP. Last year, the auction for OPP did not take place, and this was an important signal for us. The market showed that, under the existing conditions and at the starting price, investors were not ready to enter. Therefore, we are now forecasting very carefully and analyzing how we can make this sale successful this year.
OPP is a complex asset: the company has debts, including an old debt to Group DF confirmed by the Stockholm Arbitration. Therefore, it is clear that we need to fundamentally rethink our approach to the sale of this asset and define the sale terms more accurately and delicately.
For this, we need legislative changes that would unblock price reductions for large-scale privatization assets during repeat sales. I am very much counting on support from members of parliament here. The sequence would then be as follows. First, the asset is put up for sale at its book value or at a value determined by appraisal. If the asset is not sold, the second auction is held at a reduced starting price, but with bidding going upward. If the second attempt also fails, the third auction proceeds with a downward price mechanism. This makes it possible to find the real market value and a real investor. Unfortunately, at the beginning of the full-scale invasion, changes were introduced for large-scale privatization that effectively halted the second and third stages.
If such changes are not adopted, we will look for other ways, possibly through restructuring the company’s debts. In any case, however, we plan to put this asset up for sale this year and hope that we will be able to find buyers.
The second asset is Sumykhimprom. We understand the risks: it is located close to the front line, and this is a significant risk factor for the asset. Here, the issue is not only economic but also security-related.
There are also a number of sanctioned assets that have been transferred to the state under the sanctions law. Decisions have been made regarding them by the High Anti-Corruption Court, they have been recovered into state ownership and transferred for privatization to the State Property Fund of Ukraine. There are 26 such assets planned for this year, with starting values ranging from tens of millions to billions of hryvnias. The most interesting and priority assets for the Fund are Mykolaiv Alumina Plant and the capital’s Ocean Plaza shopping and entertainment center. For sanctioned assets, the government adopted a separate resolution expanding the instruments for preparing them for sale: it allows the starting price to be reduced at repeat auctions and enables the formation of pools consisting of corporate rights, individual property and claims. This is not just a technical decision, but a real mechanism that allows such assets to be brought to transparent auctions already this year.
I have already heard about hopes for the sale of Mykolaiv Alumina Plant, but I am somewhat concerned that MAP has always been just one link, albeit an important one, in Rusal’s chain. Now raw materials cannot be delivered there by sea, and it is also not entirely clear who the products could be sold to.
Potentially, this is a very interesting asset, especially for large international companies that can integrate it into their value chain. Therefore, we are conducting active negotiations with international businesses and see interest from outside Ukraine. Yes, such restrictions do indeed exist, but there are different scenarios for overcoming them, depending on the strategy of each potential buyer.
In the non-ferrous metallurgy sector, the state also owns ZTMC and ZALK. Ukraine once had its own aluminum cycle, although with the current electricity shortage and the occupied Zaporizhzhia Nuclear Power Plant, it is hardly possible to seriously discuss its restoration. Are these assets also up for sale? How do you assess the chances of finding buyers for them?
Yes, these assets are on the privatization list, and we expect to bring them to market. The State Property Fund is already preparing these assets. ZALK, in particular, is included in the list of sanctioned assets that may be offered under a simplified procedure this year. Preparations are ongoing, but we will be able to comment on the details a little later.
How can complex frontline assets, such as Ukrainian Energy Machines, the former Turboatom, Elektrovazhmash and ZTMC, be sold during the war? Of the 15 large-scale privatization assets named in autumn 2023, only one was sold — United Mining and Chemical Company — and even that without competition.
Clearly, security is the key factor for these assets. We believe these assets may have a chance of finding a new owner when there is a ceasefire and corresponding security guarantees. At present, the sale of such assets in frontline areas is significantly complicated by security restrictions and market risks. Therefore, we are simultaneously working through different management models for such complex assets.
From time to time, government representatives make statements about the possibility of putting other interesting assets up for privatization: state-owned banks, Ukrnafta, Energoatom. Prime Minister Yuliia Svyrydenko spoke about this last year in Davos, when she was still first deputy prime minister. This year, Economy Minister Oleksii Sobolev also mentioned it. What are the chances that any of these assets could be put up for sale already this year? Or are these still more like ideas?
In general, we have three major tracks in the privatization process.
The first is “ordinary” privatization, where a classic sale of 100% ownership takes place under the privatization law.
The second is the sale of sanctioned property. In January this year, the Cabinet of Ministers of Ukraine adopted a resolution that opens up many opportunities for the sale of such assets. This makes it possible to remove the obstacles I mentioned earlier specifically for the sale of sanctioned property.
In addition, this resolution provides for the possibility of signing an NDA — a non-disclosure agreement — with an investor even before the sale procedure begins. This allows potential investors, under NDA terms, to have several months to inspect and study the asset in detail before the sale. This was a direct request from investors.
The third area is the partial privatization of strategic assets. This is a separate track that we are currently working through at the conceptual level. It concerns assets that are strategic for the state, where a controlling stake must remain in state ownership. We are currently developing a vision for the procedure and possible instruments for such partial privatization. Possible mechanisms include an auction, IPO or private placement.
We are already discussing specific assets within the government and with international partners in order to begin preparing them. The immediate goal is to prepare several companies for the possibility of attracting a minority shareholder in 2026. This is not only about the sale procedure itself, but also about the transparency and clarity of all financial flows within the companies. In particular, this concerns PSO issues, audited reporting and transparent corporate governance. All of this is a major block of work that needs to be carried out inside each company in order to prepare it for the possible entry of a minority shareholder. Our goal is to bring in a strategic international investor who will bring capital, expertise and new technologies.
I wanted to clarify one general question related to the war factor. Should the sale of state assets wait until the war ends or not? What is your view? Perhaps the answer depends on the assets themselves?
It depends very much on the specific asset. The answer also depends on whether there are potential investors, because different investors have different risk appetites.
In our view, if there are potential investors, privatization should be carried out now. An asset that is idle loses value every year. Take Odesa Portside Plant, for example. Last year, we made the fifth privatization attempt in the history of this asset. The four previous attempts failed for various reasons, including fears that the state would “sell too cheaply” by selling OPP. But if we look at it, each subsequent time the starting price of the asset in dollar terms becomes lower, because over time, without intensive investment in modernization, the asset effectively loses its market value. And despite this, let me remind you that OPP has not been operating since 2022, meaning it has no cash flow of its own. How can we wait for a “post-war” period under such conditions? We cannot delay this.
Therefore, I repeat: assets for which we can find a strategic investor should be sold now. We want to sell these assets specifically as businesses that will be integrated into global value chains and benefit Ukraine’s economy. Although both OPP and the aforementioned MAP are currently idle, they have assets, expertise, a raw material base and equipment. Waiting for a bright future in order to launch processes there someday actually means risking these assets as such.
How does the Ministry of Economy choose which assets are better to put up for privatization and which should be transferred into concession? The relevant parliamentary committee proposes adding bankruptcy to the mechanisms for attracting private owners to state assets, as in the case of Oriana.
If we start with Oriana, it is precisely an example of how the condition of an asset changes over time. Once, it was an asset for which an investor could have been found and which could have been sold. However, since 2003 the company has been in bankruptcy proceedings for years, production has stopped, and debts have been growing. Instead of an industrial complex, today these are non-functioning premises, part of which are leased out.
In general, we have an ownership policy approved in November 2024, which clearly provides for a triage procedure for more than 3,000 state-owned assets. This was conducted back in early 2025.
As part of the implementation of the ownership policy, a list of almost 1,800 assets was identified for transfer to privatization. Of these, about 1,300 were already in the State Property Fund, while roughly up to 400 still had to be transferred to it.
In addition, as part of the triage, assets of strategic importance to the economy were identified, as well as defense sector assets that remain in state ownership, at least for the duration of martial law.
And finally, the third group consists of assets that are to be liquidated.
As for concessions and concession tenders, a different logic applies. Facilities that have public importance are usually transferred to private investors under concession. This is not a sale, but the right to manage the facility for a certain period and receive income from it. At the same time, ownership remains with the state precisely because it is a socially important facility.
Regarding the involvement of advisers for privatization. Recently, EBRD representatives visited Ukraine, after which the Ministry of Economy announced that the bank would support the government in preparing for privatization, including legal and technical structuring, management of legacy debts and liabilities. There was even a statement about the “possibility of creating a special EBRD project preparation facility to support complex privatization assets and ensure successful, transparent transactions.” Could you clarify more specifically what this is about?
We look at this more broadly than simply “hiring an adviser.” We have two tracks: full privatization and partial privatization. The approaches to them differ.
With international partners — IFC, the World Bank, the EBRD, the European Commission and the UK government — we are discussing how to structure cooperation properly. The general logic is to involve partners who will take individual assets under their support and help prepare them for sale.
This is far from the first attempt to involve advisers, but previous attempts were not very successful.
For various reasons, that practice was not successful at the time, and it was abandoned at the legislative level. But the possibility of involving consultants remains, because they can also work on the buyer’s side, and no one prohibits such consultants from working with assets.
With our international partners, we are discussing who can take on which part of the work: who can help with due diligence, who with legal risk mitigation, and who with M&A. If I may put it this way, we are building a matrix of assistance. At this stage, I am not yet ready to announce anything specific, because all agreements and negotiations are still in progress. But the discussion is very substantive. Our goal is for every large asset to have professional preparation for sale.
Are private consultants also involved in this work?
We met with the Ukrainian investment community, where we presented our privatization plans during closed discussions.
Advisers are needed — that is obvious. The question is what functions they will perform and who will pay them. In the case of full privatization, the government is unlikely to pay for the preparation of every individual asset. In the case of partial privatization, we are asking international partners to join in supporting the engagement of consulting services for the preparation and support of the sale. It is then up to them whether they do this with their own resources or pay an external consultant.
By the way, during these discussions, experts said that the privatization procedure itself looks good and that there were no complaints. But another request was clearly voiced: to ensure post-privatization support. Therefore, one of the team’s homework assignments for this year is to develop such a support procedure.
After an almost one-and-a-half-year pause, the State Property Fund received a new head. Mr. Natalukha has spoken in favor of transforming the State Property Fund into “something like an Industrial Development Corporation that would ‘grow’ national industrial champions out of state-owned companies.” In his view, China’s State-owned Assets Supervision and Administration Commission of the State Council, SASAC, could serve as a benchmark. What do you think about this?
First, I do not want to comment on a colleague’s words; this is a matter of professional ethics. I think you should ask Dmytro Andriiovych himself about his position.
Second, it seems to me that constructive cooperation between the Ministry of Economy and the State Property Fund is now being established. Dmytro Natalukha and I were together in London at an investment conference last week, where we met with international investors and worked very well together. When an investor communicates simultaneously with the institution responsible for policymaking and with the Fund that manages assets, they gain a much deeper understanding of what is happening. At the same time, such joint meetings also help us better hear investors’ requests and understand where certain processes need to be fine-tuned.
Third, in fact, the functionality Dmytro Natalukha is talking about is already effectively envisaged within the State Property Fund today. The Fund is already responsible not only for privatization but also for asset management, property valuation, partial regulation of the real estate market, the land bank and so on.
And regarding the discussion about how best to manage state-owned companies — through a single holding, several holdings, or with the involvement of professional managers?
The government and the Fund, together with international partners, are currently discussing different models for managing state-owned assets so that management is as effective as possible.
So there is still no decision on whether it will be a single state holding, a group of holdings, or some kind of holding of holdings?
For now, this is the stage of verifying ideas. We are studying international experience and looking at what could work in Ukrainian realities. Once the concept is finalized, we will be able to talk about it.
Privatization and funded pension reform. Is there a possible link, and what could it be? Especially since you previously worked on pension reform at the Ministry of Social Policy.
Ideas about investment accounts and a “people’s IPO” — the sale of small stakes in shares to Ukrainian citizens — are indeed being discussed.
But my task is to ensure that the management of state property and the sale of shareholdings can later be converted into added value.
Are there any timeframes for when you plan to do all this?
From the point of view of government policy, preferably yesterday. But it is very important for us to do everything properly so as not to discredit the ideas.
We want state-owned companies in Ukraine to become the foundation for the capital market, for new investment instruments to emerge, and for foreign investment to be attracted. Perhaps something similar to a sovereign fund will emerge, which would also generate added value for the country.
However, all of this is the final stage in terms of state property management processes.
I ask about timeframes because these ideas have been discussed continuously, if I am not mistaken, since 2014, when Aivaras Abromavičius was still economy minister.
This is a systemic reform. During this time, triage has been carried out and several concepts have been developed. Back in 2023, with the support of USAID’s SOERA project, a fairly detailed vision was developed of what centralized asset management in Ukraine could look like. All of this was supported by calculations, specific lists of companies and a business model. Such things are not done quickly, because they require many calculations.
So we already have a large base of work that has been done. We are now verifying and updating this base and these calculations, and working out the business model and its components.
State-owned real estate. What should be done with it? The former head of the State Property Fund, Dmytro Sennychenko, who is currently wanted by NABU but was nevertheless an expert in this field, once proposed creating a separate real estate bank, including premises occupied by ministries and agencies, and engaging a specialized company to manage it. What do you think about this?
I think this is a matter for the State Property Fund. From the point of view of operations, this is a large block of work. Private owners can manage assets effectively, and therefore I do not see the point of spending state resources on performing this function. But again, I think it would be better for the State Property Fund to formulate its own position on this.
