Ukraine moves to speed up privatization of state-owned assets

Ukraine’s privatization agency could see a major boost in the near future after parliament approved the first reading of a bill on Oct. 12 to streamline the auction of thousands of state-owned assets.

If passed, the bill could help alleviate bottlenecks the State Property Fund has repeatedly faced when trying to sell state-owned assets and help shore up funds for the state budget. Privatization is also key condition set by Western partners such as the International Monetary Fund and the World Bank for continued financial support to Ukraine.

Under the current rules, the fund can only privatize assets after other state bodies, such as ministries and local authorities, transfer them. There is also no deadline for those transfers, so assets can sit on the books of government bodies indefinitely with no clear path to privatization.

One of the bill's key amendments would give state bodies a strict 20-day deadline to transfer assets to the fund. Until now, such transfers have sometimes taken months or even years, Dmytro Natalukha, chairman of the State Property Fund, told the Kyiv Independent. If the bill passes, and an agency misses the deadline, the fund would be able to take over the assets itself, he added.

"This will allow us to improve the efficiency of the privatization process and generate additional revenue for the state budget," Natalukha said.

"This draft legislation was prepared to speed up property transfer procedures, accelerate the preparation of assets for auction, and relieve the state budget of preparation expenses."

Additionally, the bill proposes creating a state-owned consulting firm managed by the fund that would employ specialists to prepare assets for privatization. It would act like a sales department, Natalukha said, and receive 5% of an asset’s sale price if the sale is successful. The buyer would cover the fee, he added.

The bill’s second reading could take place in the near future, and it could be adopted by early December, Natalukha said.

"Strengthening the institutional capacity of the fund should create better conditions for attracting investments, developing enterprises, and making more efficient use of state property," the parliament wrote in a press release.

Parliament also approved the first reading of several other bills on Oct. 12, including a proposal to direct more money to the military. Revenue from processing and issuing documents related to state export controls on military and dual-use goods would go to the state budget and then be allocated to the Defense Ministry.

Of those funds, 50% would go toward the procurement, modernization, and repair of weapons and military equipment, while the remaining 50% would be used to pay allowances to Armed Forces personnel, Ukraine’s Parliament wrote on Telegram.

As Ukraine faces a severe budget shortfall, it is looking for ways to boost funding. The government has positioned privatization as a relatively straightforward and secure way to invest in Ukraine, with the goal of raising $295 million by the end of 2026.

But the State Property Fund has been plagued by problems, including staffing shortages and low salaries. As the Kyiv Independent previously reported, these issues are discouraging foreign investors. Experts told the Kyiv Independent that poor government communication about viable projects and the risks posed by the ongoing war are also major roadblocks.

Meanwhile, the assets often come saddled with debt, are in poor condition or — if confiscated — in the firing line of potential lawsuits.

In total, the government’s portfolio includes about 3,000 assets, ranging from factories to bakeries. Kyiv has previously said it wants to whittle that number down to just 100 key enterprises.

Since the start of Russia’s full-scale invasion, 1,200 assets have been added to the State Property Fund’s portfolio, with about 200 more expected by the end of the year.