Photo by Giorgio Trovato on Unsplash

Kyiv Post has found the number of profitable state-owned companies further underlining the need to privatize.

Just 24 percent of the state-owned companies are profitable. The rest are not functioning or makes no money, the Kyiv Post reported citing “Economic Truths” weekly monitor. This shows how many of the companies are just a burden on the state budget. But it alls shows the enormous potential waiting to be fulfilled in Ukraine.

Out of a total of 3332 companies owned by the state, 1369 are functioning but only 802 makes a profit. According to the Ministry of Economy, Kyiv Post reports, a total share of assets owned by state-run enterprises has decreased all though only marginally. Still, it also shows that the privatization process is moving forward.

There has also been a slight decrease in number of employees in the state owned enterprises.

Privatization is key

The data confirms the reporting of Ukraine Nu. Previously, we have written about how specific companies have been put up for sale or have been put on a list of companies to be auctioned of later. The latest company to be put on that list was the Bolshevik machine building factory in Kyiv. The starting price is 52 million USD with a few conditions attached.

The factory, located in Kyiv close to the Shuliavska metro station, spans over 35 hectares and could attract as much as 500 million USD in real estate investments, according to Ukraine Business News. However, buying the plant comes with some strings attached.

First and foremost, the 19 million USD debt of the plant has to be paid back, wages of the 315 employees needs to be backed and a 2 million USD investment in “preservation of basic activities” is also required. The factory is 140 years old and the most modern equipment dates back to the eighties.

Anti-corruption, anti-deficit

The Bolshevik machine building plant only created 3 million USD in revenue last year and is one of many state-owned companies to be privatized. After the fall of the Soviet Union, a lot of these companies were kept by the state, where some of them decayed beyond repair, while others simply stopped generated profits.

Many of them actually costs the state money to maintain, and some of them are also hotbeds for corruption. This is why the Ukrainian government has put almost a thousand companies on a list, where they are to be either liquidated or sold off.

The State Property Fund is going to be the authority for this process and they have already sold off the first properties, including a prison that was sold on an auction for 13.6 million USD. The whole process was delayed by the pandemic, but is slowly being picked up again with auctions of prisons, factories, bakeries and other type companies.

Even state-owned hotels have been put up for sale. The hotels were owned by the Ministry of Defense which is possibly surprising to some. It was decided in spring to pick up the reigns again and start privatizing.

“We have begun processes that the leaders of our country have been avoiding for years. Probably because of their terrible names – demonopolization, de-shadowing, deregulation. We started large-scale privatization in Ukraine. It slowed down a little due to COVID-19, but we definitely realize that this process, important for the country, for business, will continue, getting rid of ballast, which brought only losses to the country and, unfortunately, brought corruption to Ukraine,” Zelensky said at the end of March.