UAH 60 million was offered for the alcohol asset. The first success stories and the short-term plans for privatization of assets of alcohol distilling industry

How many assets of distilleries have already been privatized, how much money has the state received from it? Which distilleries will be put up for tender in the nearest future? And how does the State Property Fund cooperate with SOE “Ukrspyrt”?

Taras Yeleyko, the Deputy Chairman of the SPFU, and Ihor Ilchyshyn, the Director of the Ukrspyrt Concern have told about all of these during the traditional Friday live broadcast.

Here are the most interesting theses of the conversation:

·         As of the beginning of November, the State Property Fund has already sold six assets of the alcohol distilling industry for a total of UAH 268 million. During auctions the prices on some assets of distilleries exceeded UAH 60 million.

·         In total, there are about 80 distilleries in Ukraine. Half of the industry’s assets was a part of the SOE “Ukrspyrt” and the other half was a part of Ukrspyrt Concern. The facilities being a part of the Concern are registered as state-owned enterprises. Therefore, their preparation for a transparent privatization requires more time than assets of the SOE “Ukrspyrt”. Despite this, in a few weeks the first facilities of the Concern will be put up for privatization at transparent auctions.

·         At the same time each alcohol distilling asset has its own features; there are assets in the form of factories, integrated plants, trading houses. However, most of them are in critical condition today.

·         Since 2010 the alcohol distilling industry has accumulated many problems. Ukraine actually lost foreign markets and due to the fact that the state did not invest in the development of enterprises the production was significantly reduced – the industry operated at 20% of its capacity.

·         Lack of funds for modernization has caused many problems with the ecology of alcohol production. Therefore attracting private capital is critical – it should become a key source for modernization. On the other hand, modern alcohol production can become actually zero waste.

·         The science does not stand still; new technologies are being implemented. Bioethanol, gasoline additives have appeared among the products of alcohol production. The development of alcohol production can be the basis for new areas of production. For example, Ukraine imports ethyl acetate today which is used for production of paints and in pharmaceutical industry. Upon condition that the distilleries are modernized Ukraine is able to provide itself with own-produced raw materials.

·         The other example is the so-called “barda” used for fattening cattle. There is a very high demand for this type of animal feed so the distilleries can get a significant additional profit.

·         Ukraine exports agricultural raw materials but it is much more profitable to export finished product. Privatization and de-monopolization of the alcohol industry will allow increasing alcohol production mainly for the needs of own Ukrainian industry.

·         No one has been involved into the development of the industry for many years. We have lost many specialists. Most of the production is located in rural areas and skilled specialists look for jobs in the cities. However, they would come back should the investors provide jobs openings and decent wages.

·         The production of sanitizers is a very large new market. Distilleries receive many requests for raw materials. But, it is better to produce sanitizers right here in Ukraine. A whole chain of added value will appear: alcohol, sanitizers, containers, labels, packaging, etc.

·         In addition,privatization would facilitate the fight against counterfeit goods. The honest investor will not play with fake arrangements. Soon, when the word “alcohol” is used, no one would mention counterfeiting and will mention only exports.

·         Transparent conditions are created and equal access is provided today for investors interested in the assets of the alcohol industry. We look forward to seeing you at auctions!

·         The alcohol distilling industry will boom and Ukraine will be proud of it.

Read more about the privatization of the alcohol industry at the special thematic website: https://privatization.gov.ua/alcohol-industry/