Ukraine holds Odessa auction, rejects ‘inadequate’ winning bid

29 September 2009 12:25  [Source: ICIS news]

MOSCOW (ICIS news)--Ukraine's authorities on Tuesday rejected the result of a controversial auction of a controlling stake in ammonia producer Odessa Port Plant.

The state-owned 99.567% stake was auctioned on Tuesday at an initial price of hryvnya (HRN) 4bn (€320m, $471m).

Ukraine's Nortima placed the winning HRN5bn bid, but Ukraine's State Property Fund (SPF) announced that the auction commission unanimously voted against the approval of the result.

After the auction, the SPF head, Dmitry Parfenenko, described the auction's result as "inadequate" and said that the stake was worth HRN8-9bn.

The country’s prime minister, Yulia Tymoshenko, said in a statement: “It became evident on live television how the three participants in the auction conspired to buy the Odessa Port Plant for a song.”

Nortima represented the interests of Ukrainian tycoon Igor Kolomoisky, owner of the Privat metals and banking group. Russia's Azot-Service, controlled by Sibur, also took part in the auction.

Ahead of the auction, Parfenenko said there were no legal obstacles to privatising the plant. Earlier on Tuesday, Ukraine’s president, Viktor Yushchenko, had warned that the government would be held responsible for the "illegal privatisation", the presidential press service said in a statement.

On 17 September, Yushchenko issued a decree to suspend the government's order allowing the privatisation of the plant, saying that the plant was of strategic importance to Ukraine and that its privatisation would not be in the country's national interests. He requested that the Constitutional Court intervene. However, on 28 September the Constitutional Court said an investigation was unnecessary.

The 1.5m tonnes/year Odessa plant is Ukraine's second-largest ammonia producer. Ukraine first announced plans to privatise the plant in 2004.

(HRN1 = €0.08, $1 = €0.68)

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By: Sergei Blagov
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