Ukraine plans to auction state-owned companies to fund military, boost economy

KYIV: The Ukrainian government is planning to auction off about 20 state-owned companies as part of a privatisation drive to help fund the military and bolster a war-battered economy. 
Ukraine is hoping to raise at least US$100 million from the auctions later this year, including a large shopping centre, a historic hotel, and several mining and chemical firms. 
The country is also hoping to cut losses from state-owned enterprises, said the State Property Fund of Ukraine. 
Ukraine has more than 3,000 of these entities, but only 15 per cent of them are generating profits. Many are costing the state millions of dollars to run or maintain. 
One of the properties that will be put up for sale will be Kyiv’s Hotel Ukraine, which has witnessed important moments in the nation’s history since it opened in 1961. 
The hotel will be for sale with a starting price of US$25 million.
This comes as increasing revenue streams for Ukraine’s war-ravaged economy becomes an urgent task. 
The country’s budget deficit is set to rise to a record US$43.5 billion, partly due to delays in military aid from the United States. 
It will cost US$16 billion to fund immediate restoration needs this year, and at least US$400 billion for post-war reconstruction. 
Since 2022, nearly all of Ukraine’s tax income has been spent on fighting against Russia’s invasion.
Kyiv has had to look to foreign financial support to pay for its humanitarian and social expenses. Now, it is increasingly examining its domestic options.
Last year, the Ukrainian state won a court case to wrest Ocean Plaza, one of the largest shopping malls in Kyiv, away from Russian control. It was until recently owned by Russian oligarchs.
Yet, there are still thousands of assets in Ukraine that are tied to the Kremlin.
The State Property Fund has nationalised almost 800 objects, said Zoriana Hreskiv, director of its sanctioned property department. 
“It is a diverse range of items, (including) corporate rights to cars and parts for vehicles,” she added.
The goal is to put the state-owned entities, including formerly-Russian-owned ones, up for auction, privatise them, and then use the profits to help Ukraine. 
“Money from privatisation will go directly to the state budget,” said Vitaliy Koval, director of the State Property Fund. 
“They do not go to the State Property Fund or any other institution, but directly to the state budget. The funds will then be used to eliminate the consequences of Russia’s armed aggression.”
Ocean Plaza is among the top five most valuable properties that have been seized so far, with a starting auction price of US$39 million.
But claiming such assets from so-called “pro-Russian” owners has not been easy.
Markiyan Galabala, a judge at the High Anti-Corruption Court, said: “The Ministry of Justice has to get evidence that the defendant is connected to the Russian Federation or committed some kind of terroristic acts on the territory of Ukraine.”
This requires investigations that can take months or years. The case is then submitted to Ukraine’s High Anti-Corruption Court.
Galabala said Ukraine is ensuring it adheres to the European Union’s legal standards, despite the urgency.
“Every party has the right to put his arguments before the court, and we have to guarantee the right for the defendant to stand before the court,” he added.