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Large-scale privatization may be unblocked next week

25/ 03/ 2021
  Dmytro Sennychenko, Chairman of the State Property Fund of Ukraine, shared such expectations during a meeting with the EBA business community on March 24. The full launch of large-scale privatization is one of the Funds priorities for 2021. The Verkhovna Rada may soon pass a government draft law that will lift a ban on the privatization of large objects. This restriction was introduced last March in connection with quarantine. After the long-awaited unblocking, the SPFU will first initiate the privatization auction for JSC United Mining and Chemical Company, PJSC President Hotel, the Bolshevik plant, and the last six state-owned regional power distribution companies. Among other priorities for this year, the Fund noted reforming property valuation and lease. Thus, the SPFU has developed a draft law On Amendments to the Legislation on Property Valuation and Professional Valuation Activities in Ukraine, which aims to bring the Ukrainian valuation system in line with international standards. Besides, the reform provides for the elimination of the factional valuation of real estate. Mr. Sennychenko emphasized that Ukraine may be left the only country in the world with such a valuation practice when the value of the real estate is determined as the sum of its physical components: of the land and land improvements (buildings, facilities located on the land). According to him, the modernized valuation system will ensure the transparency of state registers and update them with relevant information which is necessary for the state and investors to make decisions in the context of property privatization. The SPFU hopes that the reform of the valuation industry will be completed in 2023. During the meeting, the Fund shared statistics on the results of its activities last year. Thus, in 2020, 420 objects were transferred to the SPFU for privatization. In 2020, privatization brought 6 times more revenue to the budget than in 2019. Besides, the number of participants in privatization auctions has doubled during this period. In the year since its inception, the Sustainable Investments Office has processed more than 300 inquiries from investors regarding 107 state-owned enterprises. Of the 206 potential applicants to the Office, 72 are foreign investors from 28 different countries. Furthermore, the business expressed concern about last years changes in the Procedure for construction work, which made it difficult to perform construction work on leased state-owned facilities. The problem is that the State Architectural and Construction Inspectorate of Ukraine requires notarized consent from the owner for the reconstruction/repair of the leased property. In the case of state property, such a certificate must be obtained from the state, which is not entirely expedient. Therefore, the SPFU proposes to simplify the procedure by issuing consent from state landlords through a simple written form or the ProZorro system. It was noted that business representatives can also submit their proposals, which the Fund must take into account when resolving this issue with the Inspectorate. On behalf of the European Business Association, we thank Mr. Sennychenko and his team for an active discussion! We hope that by joint efforts we will be able to accelerate quality changes that will help improve the investment climate in the country!   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.    

Dmytro Sennychenko, Chairman of the State Property Fund of Ukraine, shared such expectations during a meeting with the EBA business community on March 24.

The full launch of large-scale privatization is one of the Fund’s priorities for 2021. The Verkhovna Rada may soon pass a government draft law that will lift a ban on the privatization of large objects. This restriction was introduced last March in connection with quarantine. After the long-awaited unblocking, the SPFU will first initiate the privatization auction for JSC United Mining and Chemical Company, PJSC President Hotel, the Bolshevik plant, and the last six state-owned regional power distribution companies.

Among other priorities for this year, the Fund noted reforming property valuation and lease. Thus, the SPFU has developed a draft law “On Amendments to the Legislation on Property Valuation and Professional Valuation Activities in Ukraine”, which aims to bring the Ukrainian valuation system in line with international standards.

Besides, the reform provides for the elimination of the “factional” valuation of real estate. Mr. Sennychenko emphasized that Ukraine may be left the only country in the world with such a valuation practice when the value of the real estate is determined as the sum of its physical components: of the land and land improvements (buildings, facilities located on the land). According to him, the modernized valuation system will ensure the transparency of state registers and update them with relevant information which is necessary for the state and investors to make decisions in the context of property privatization. The SPFU hopes that the reform of the valuation industry will be completed in 2023.

During the meeting, the Fund shared statistics on the results of its activities last year. Thus, in 2020, 420 objects were transferred to the SPFU for privatization. In 2020, privatization brought 6 times more revenue to the budget than in 2019. Besides, the number of participants in privatization auctions has doubled during this period. In the year since its inception, the Sustainable Investments Office has processed more than 300 inquiries from investors regarding 107 state-owned enterprises. Of the 206 potential applicants to the Office, 72 are foreign investors from 28 different countries.

Furthermore, the business expressed concern about last year’s changes in the Procedure for construction work, which made it difficult to perform construction work on leased state-owned facilities. The problem is that the State Architectural and Construction Inspectorate of Ukraine requires notarized consent from the owner for the reconstruction/repair of the leased property. In the case of state property, such a certificate must be obtained from the state, which is not entirely expedient. Therefore, the SPFU proposes to simplify the procedure by issuing consent from state landlords through a simple written form or the ProZorro system. It was noted that business representatives can also submit their proposals, which the Fund must take into account when resolving this issue with the Inspectorate.

On behalf of the European Business Association, we thank Mr. Sennychenko and his team for an active discussion! We hope that by joint efforts we will be able to accelerate quality changes that will help improve the investment climate in the country!

 

Be the first to learn about the latest EBA news with our Telegram-channel EBAUkraine.

 

 

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