#Official Commentary of Elena Melnick on privatization process in Ukraine

The privatization process of state enterprises is one of the main themes in the economic life of Ukraine. This process has been announced by the Ukrainian authority as a strategic plan that would have become a salvation for the Ukrainian economy, however the situation is different now.

On September 31, 2016, once again, the Ukrainian government expanded under Petro Poroshenko’s pressure the list of state enterprises for the privatization in 2016-2017. There are such enterprises as PJSC “Turboatom”, LLC “Zaporozhye Titanium-Magnesium Plant”, PJSC “Agrarian fund”, number of collieries and enterprises of power complex and another strategic enterprises as well.

The reasons, why Kharkov PJSC “Turboatom”, one of the world’s largest companies in designing and producing equipment for CHP plants, TPPs, NPPs, HPPs and HPSP plants, are completely unclear. The enterprise competes successfully in the world market and sells its products in about 40 countries, it has no arrears of wages, and moreover, it is profitable and brings income to the national treasury.

The intention to sell “Turboatom” confirms the fact that the privatization ‘in the Ukrainian way’ is another attempt of ruling business elite to occupy profitable enterprises in order to enrich.

I would like to consider a question of the collieries’ privatization more detailed and where such ‘reforms’ will Ukraine to. The Ukrainian authority explains the necessity of the collieries’ privatization saying that they are subsidized and unprofitable. The western creditors, who insist on the privatization and shutting collieries as one of the terms for getting another tranche, play a certain role in this question.

Currently, Ukraine has about 33 state-owned collieries in the country’s territory. 7 of them will be in a public ownership, about 11-13 enterprises have to be liquidated and the rest – privatized.

Supposing the western creditors do not realize (which is unlikely) the importance of collieries for certain Ukrainian regions, then the official Kiev authority do know that and that is why they close their eyes to this fact. The collieries, especially coal mines, are city-forming for the most cities of the eastern region of Ukraine. Local budgets are replenished for account of these enterprises that ensures the development of the whole infrastructure and provides local population with jobs. By the way, these regions are inhabited by people who received an appropriate specialized education.

Any private owner, who buys a coal mine today, will be interested in making profit, but will not spend on a social sphere. That’s exactly why the process of collieries’ privatization should undergo after passing legal acts that will oblige an owner to provide certain social guarantees. But the Kiev rulers are not interested in a well-being of the own people.

If the collieries are really privatized or liquidated, it is even worse, it will be the beginning of the degradation of entire cities and towns in the coal regions. Most people will lose their jobs, local budgets will lose a significant income and, as a result, the entire infrastructure will fall into disarray. Current pace of developments will lead to massive strikes and miners rallies, which have already happened in Kiev this summer. This means that public concern is growing.

Another adverse consequence of the privatization and the liquidation of collieries will be the reduction in electricity generation. According to experts’ statements, the Ukrainian CHP plants and TPPs are incurring a deficit of coal. Of course, the situation will aggravate after the implementation of ‘coal reforms’. It will result in mass power cuts and increase of electricity prices.

All in all, I can characterize the privatization process, with the consideration of military operations in the east and a profound crisis, as an incompetent, ineffective and even felonious management of state assets. The Ukrainian authority is systematically destroying entire sectors of the economy. Selling out the enterprises of power complex, the authority puts at threat the energy security and lead Ukraine to the energy dependence. But who knows, maybe this is the main goal of the current political leadership of Ukraine, which lobbies the interests of the West.

Elena Melnick, the DPR People’s Council deputy

The official website of the DPR People’s Council

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