Odessa Portside Plant Privatization

odessa_portside_plant_ukraineOdessa Port-side Plant was not privatized on the September 29 despite the open tender which took place on the day as originally scheduled by the Ukrainian Cabinet of Ministers headed by Yuliya Tymoshenko. The State Property Fund of Ukraine declared the tender results void. Mrs Tymoshenko confirmed that the bidders did not adhere to the rules of the game and kept the bidding price as low as UAH 5 billion (around USD 600,000 million) having moved 1 billion above the original asking price of UAH 4 billion.

The price issue and the validity of the deal is now to be taken to court by the highest bidder, the Nortima company associated with one of the Ukraine’s tycoons, Ihor Kolomoisky. The managers of Mr Kolomoisky believe that their rights as a buyer were violated. However, most of the experts believe that the State Property Fund of Ukraine had the ultimate right to validate or refuse the winner of the tender given the economic circumstances of the privatization deal for Odess Port-side Plant.

While the government scheduled the tender for September 29,  President of Ukraine Viktor Yushchenko raised objections. On September 17 he suspended the government resolution No 1517-r of December 3, 2008, which basically halted the privatization of the Odessa port-side plant.

Several bidders for Odessa Port-side Plant canceled their participation as a result of the President’s Decree. A consortium of Norway’s Yara, Polish Kulczyk Holding and Libyan LIA who had announced the intention on September 14 to take part in the privatization tender to buy Odessa port-side plant, eventually did not participate.

The three participants who remained, Azot Servis (Russia, associated with Gazprom), Frunze-Flora (Ukraine) and Nortima (Ukraine) had a different interpretation of the Presidential Decree and made a decision to continue their pursuit of Odessa Port-side Plant.

While Nortima is going to get itself busy with legal actions, the Cabinet of Ministers of Ukraine is now planning to hold a new tender for Odessa Port-side Plant next year following the Presidential elections to be held on January 17, 2010.