Privatization of 30 state-owned assets for Ukraine reconstruction and ‘injection’ of $50 billion in Russian seized assets
The Ukraine reconstruction project was decided to privatize about 30 state-owned assets and invest $50 billion in interest income from $230 billion in Russian assets seized by the G7.
U.S. President Joe Biden is expected to sign a new security agreement guaranteeing long-term support to Ukraine and the use of profits from Russian seized assets at the G7 summit in Italy.
At a briefing on the 12th, Assistant Director Sullivan said, “Signing this agreement (security) sends a signal to Russia that we are strengthening our resolve,” and regarding the frozen assets of the Russian central bank, “The United States will put the profits from frozen assets to good use.” “We are making progress in coming up with a solution,” he said.
The G7 meeting has attempted to access Russia's frozen assets to secure financing for Ukraine, and it is expected that the G7 will agree to privatize Ukraine's state-owned assets and use proceeds from Russian asset management.
Reuters said, "President Biden is pressuring the G7 countries to agree to a plan to provide Ukraine with a $50 billion (69 trillion won) loan using interest on $281 billion (385 trillion won) worth of frozen assets from the Russian Central Bank as collateral." “We will impose it,” he said on the 12th.
The New York Times reported on the 12th that the Ukrainian government plans to auction off the $25 million Hotel Ukraine, a large shopping mall in the capital Kiev, and about 20 state-owned enterprises, including several mining and chemical companies, starting this summer to use for reconstruction funds.
“We have a budget deficit, so we have to find other ways to make money to keep the macroeconomic situation stable, to help the military and to win the war with Russia,” Ukraine's Deputy Economy Minister Oleksiy Sobolev said in an interview. It was announced on the 12th that the Irshansk titanium mine in the Zhytomyr region of Ukraine will be included.
Ievgen Baranov, managing director of Kiev-based investment firm Dragon Capital, said of the sale of state-owned assets that “the government acts as a responsible seller capable of providing guarantees and indemnities to potential buyers.” “Privatization will only be effective if it is done,” he told the NYT.
“The country desperately needs money,” said Michael Lukashenko, a partner at law firm Aequo, which advises on privatization. “If we don’t sell now and raise money, soon there will be nothing to sell because the properties will be destroyed or occupied.” " he said.
In a recent interview at the fund's headquarters, Vitaly Koval, head of the Ukrainian National Property Fund, a state-owned enterprise management agency, placed about 30 state-owned enterprise pins with a map of Ukraine on the wall of the fund's office and said, "Currently, only four are operating. “The goal is to remove all pins,” he told the NYT.
Kobal, a former construction and transport businessman, said he and the State Property Fund were promoting privatization focused on Ukraine's recovery at a conference in Berlin this week, adding, "We see state-owned enterprises as hotbeds of corruption and other illegal activities." “The fund of funds is now carrying out a ‘triage’ to determine which companies should be privatized, liquidated or placed under state control. “Privatization is synonymous with purification,” he said.
The biggest auction asset, the United Mining and Chemical Company (UMCC), the world's largest producer of titanium used in aircraft and medical implants, is valued at more than $100 million, with three auctions canceled before the war in Ukraine and a fourth this year during the war. is in progress.
“Seven investors have already expressed interest in the sale, which will start at around $100 million,” Vitaliy Strukov, a Ukrainian partner at financial firm BDO, which advises UMCC, told the NYT.
“We are particularly keen to attract foreign investors to show that private investment is possible even during a war,” Baranov of Dragon Capital, which is pushing for the privatization of Ukraine’s state-owned assets, told the New York Times.
NYT said, “But Ukrainian officials and economists acknowledge that the war situation will make it difficult to attract investors.”