KYIV

Ukraine’s State Property Fund sold off Kyiv’s iconic “Bolshevik” machine-building plant, but the selling price of 1.429 billion hryvnias ($53 million) was only marginally more than the starting price and only three bidders took part.

The site, to the west of Kyiv’s city centre, had been touted as the jewel in a year of “large-scale privatisation” that officials hope will raise as much as 12 billion hryvnias over the course of the year.

In the end, the site was sold to the Cypriot offshore company “General Commerce”. The starting price for the auction – which lasted about 10 minutes — was 1.39 billion hryvnias. The winning company is linked to the UFuture group of businessmen Vasyl Khmelnitsky and Andriy Ivanov.

“We promised it and we did it! … The State Property Fund provided equal conditions for all investors,” the head of the Fund,  Dmytro Sennichenko, said on his Facebook page. “The investor now has a wonderful asset. And we have received confirmation that large-scale privatisation means large-scale investments.”

A far larger number of bidders had been expected at the auction of the plant, a local landmark founded in 1882.  Analysts said many were scared off by the disputed sale two years ago of five buildings along the perimeter of the complex despite the fact that the plant was on a list of properties to be sold off. Investors feared possible legal difficulties with the company that organised that sale, which has now been referred to anti-corruption bodies.

Most of the plant’s 20 workshops had ceased to be fully operational and the plant earned most of its revenue by renting out much of the facilities to tenants.

More sell-offs to come

Sennichenko announced that the United Mining and Chemical Company, a titanium and zirconium miner, was slated for sell-off later this week after being postponed last August because of timetabling issues. A starting price of 3.7 billion hryvnias (about $140 million) has been set. The Electronmash plant, a manufacturer of motors, generators and metal goods, is to be sold off next month, with a starting price of 66 million hryvnias.

Other sites set for privatisation include the President Hotel in Kyiv and the port of Ust-Dunaisk, near the estuary of the Danube.

Sennichenko has repeatedly said the aim of the privatisation process is to create fully transparent and competitive sell-offs and eliminate any notion of the privatisations plagued by corruption in the immediate aftermath of the end of Soviet rule.

In the most notorious of corrupt privatisations in post-Soviet Ukraine, former President Viktor Yushchenko ordered a new selloff of the Kryvorizhstal steel mill in 2005 – it was bought by Mittal Steel for $4.81 billion, about six times the original selloff price.

Commentators have long suggested that the principal impediment to privatisation in Ukraine lies in the country’s failure to uphold and guarantee fair and transparent auctions.