Tomorrow, on March the 16th, Ukraine will privatize the first prison with the auction of Irpin Correctional Center.
Tomorrow the Ukrainian state is hoping to sell of a prison in the Kyiv region, the Irpin Correctional Center. The prise is mere 220 million UAH, and the lucky new owner will then have a small prison a few kilometres from Kyiv, according to Ukrinform.
It is unclear whether or not the prison will be an actual privatization of prison management, or if it is strictly a property sale, though it seems most likely to be just a matter of real estate sales. It is the second time that the state of Ukraine is trying to sell this particular prison.
The money made on the sale will be used to build new prison infrastructure and for the state budget. 70 percent will be spent on construction new prisons that will meet European standards, while the rest will go to the budget.
Small piece in a big puzzle
Selling old prisons is a natural step for the Ukrainian government that has a list of around 800 companies that are making no profits or a net loss. 40 percent of the companies are up for liquidation.
That will close a hole in the state carapace that is bleeding money. Furthermore the sales could lead to foreign investors putting in the money and know-how needed to turn around the Ukrainian state companies.
More importantly than the money side of things, the companies are also problematic in terms of corruption. Some of the companies on the list are even losing money because of corruption in the management.
The Ukrainian state has a lot of companies in a lot of sectors, where the state usually does not belong in a free market economy. For instance, the Ukrainian state has been running hotels in Kyiv.
From weapon manufacturing to coal mining to hospitality, the state economy is broad in Ukraine – a remnant of the Soviet Union, where communism placed the economy in the all incompetent hands of central planning comities.
When the Soviet Union collapes and Ukraine was trying to consolidate as a state, some of these state companies were given to people or sold at gift-like prices to the oligarchy of Ukraine.
Other companies stayed in the possession of the state, but following the collapse of the Soviet Union, Ukraine did not have the funds to keep investing in companies to prepare them for the open world market.