2023 Privatization Geography: regions that sold the most assets and replenished the budget by a significant amount
Vitaliy Koval, Chairman of the State Property Fund of Ukraine
The number of successful auctions for small privatization objects held by the SPFU this year amounted to about four hundred by the beginning of December. And the income from these auctions exceeded UAH 2.6 billion (during January to December 8, 2023).
More than 1.4 thousand participants submitted their proposals for participation in the auction, and about 300 of them became winners in at least one auction. The auctions were organized by 9 regional offices of the State Property Fund.
The SPFU’s RO in Lviv, Zakarpattia and Volyn regions held the largest number of auctions - more than a hundred, which is almost a quarter of all successful auctions. The second place is occupied by the SPFU’s RO in the Rivne and Zhytomyr regions, and the third place - the SPFU’s RO in the Vinnytsia and Khmelnytsky regions (61 and 45 successful auctions, respectively). At the same time, there are certain regions that have significant privatization results.
Where in Ukraine have the most state assets been privatized?
According to the specialized privatization analytics module of Bi.Prozorro.sale, the Lviv oblast became the most active region of Ukraine in 2023. More than 60 successful auctions were held in this region in less than 12 months, accounting for more than 15% of the total.
This result is quite expected, since this region is economically developed with a high level of business activity. It is located close to the western border of Ukraine and has convenient international logistics. The Lviv oblast is a relatively safe region compared to those where hostilities are taking place or the front-line areas. This is why real estate and other privatization objects in this region were in demand among auction participants.
According to the data of the module, the second position is occupied by Rivne region. It has 37 successful auctions or almost 10% of the total number in 2023. Another 8% (32 successful auctions) took place in Vinnytsia.
Like the Lviv region, these regions are located at a distance from the combat zone, and at the same time have a convenient logistics location within Ukraine. In particular, Vinnytsia oblast is one of the most powerful central regions of Ukraine.
The average privatization activity, which ranges from 20 to 30 successful auctions, was observed this year in the Volyn, Zhytomyr, Odesa and Chernihiv regions.
The lowest rate of sale of state assets was in the Sumy region (4 successful auctions), as well as in the Mykolaiv and Chernivtsi regions (8 in each).
Where were the revenues from privatization the greatest?
Despite the fact that a little more than a dozen successful auctions took place in Kyiv, it was the capital that became the record holder for the amount of income from privatization. This is approximately UAH 750 million for incomplete 2023 or 28% of the total value of the property sold.
Of course, in the capital of the state, where large and small businesses are concentrated, more than 3.6 million people live (data as of spring 2023) - real estate or other property is a valuable resource. It costs accordingly, and there are enough people who want to buy it.
For example, the income from only two auctions where capital assets were put up for sale totaled more than UAH 500 million. At the first auction, the subject of sale were buildings in the city center, on Bohdan Khmelnytsky Street, with an area of 3.17 thousand sq. m. and 1.96 thousand sq. m. These are the premises of the former Hermitage Hotel, which is included in the list of historical and cultural monuments of local significance. Considering the uniqueness and value of the lot, 39 participants competed for it, who during the auction raised the bid from 21.2 million starting price to 311 million UAH.
The second most valuable object privatized in Kyiv is the Single Property Complex of the State Enterprise “Ukroboronresursy”. Its cost increased from UAH 17.6 million up to UAH 210 million thanks to the competition of 21 auction participants. The name of this asset may indicate its involvement in the defense sector, but in reality, this is not the case. The enterprise worked on processing and recycling the property of the Ukroboronprom Concern; it was not engaged in the manufacture of weapons, ammunition, or military equipment. As a privatization object, it included 57 units of real estate and related infrastructure.
In terms of income from privatization, after Kyiv, Lviv region comes next with an indicator of almost 400 million UAH (15% of the total amount). This result was achieved by the region primarily due to a large number of successful auctions, including two auctions with an asset sale value of more than UAH 100 million.
One of the first to be privatized was the Storonybabsky distillery located in the Zolochevsky district. About 18 thousand sq. m. of the enterprise’s buildings and its property were sold for UAH 142 million (the starting price was UAH 53 million).
The subject of the second auction was the property complex of the State Enterprise Hotel “Vlasta”. This is a 12-story building with an area of 8.2 thousand sq. m. The hotel is located at a distance of 1.7 km from the center of Lviv, so its value and prospects attracted 23 bidders, who increased the lot price from UAH 7 million to UAH 115 million.
The Odessa region brought more than 326 million UAH from 22 successful privatization auctions to the budget. This is the third place among all regions of Ukraine. State assets in the most developed southern region of Ukraine, with access to the Black Sea, have constantly attracted interest from bidders. The auction with the highest income was the one where the state sold the property complex of the Ust-Dunaisky Sea Trade Port for UAH 201 million.
From 100 to 300 million UAH earned from the sale of state assets of Volyn, Vinnytsia, Rivne and Ternopil regions.
The smallest amount, only UAH 125 thousand was brought by privatization in the Sumy region. All other regions, as of early December 2023, had carried out privatization in amounts ranging from several million to several tens of millions of hryvnia.
The Lviv region is the leader in privatization in 2023. It is the leader in the number of auctions, and ranks second in terms of income. This region and the city of Kyiv brought more than UAH 1.15 billion to the budget (approximately 44% of the total result). In times of war, these are important revenues that can significantly support the Defense Forces and help our defense capability.