11:00 01.03.2024


500 Days of Privatization: UAH 6.4 Billion of Economic Impact and the Chance for a New Life for State Assets

6 min read
500 Days of Privatization: UAH 6.4 Billion of Economic Impact and the Chance for a New Life for State Assets

Vitaliy Koval, Head of the State Property Fund Vitaliy Koval


Since the resumption of privatization in September 2022, 500 days have passed. During martial law, all processes in the state become more complicated. However, the decision – even in this period of challenges – not to stop the sale of state property was correct. The evidence for this is the result of privatization over these 500 days.

The number of completed auctions, where parties signed contracts and payments were made (as of February 1, 2024), exceeded 560. Therefore, on average, the Fund held 1.1 successful auctions per day, the proceeds from these auctions were directed to the state budget of Ukraine.

Income and price increase

During this period, the State Property Fund of Ukraine sold assets worth over UAH 4.4 billion. Moreover, this is not the final financial result. Buyers also paid UAH 808 million in VAT during privatization.

It is essential that the new private owners take on certain obligations regarding the payment of debts to the budget and wages that the enterprise had at the time of sale. In the first 500 days of small privatization, such payments amounted to UAH 1.2 billion. Thus, the total economic impact of privatization has already reached UAH 6.4 billion.

The declared value of the privatization assets already sold by the SPFU was approximately UAH 1.8 billion. Thus, the price increase during competitive bidding was almost 2.4 times.

Overall, there were 12 auctions, each of which replenished the budget by an amount that exceeded UAH 100 million. These were real estate, property complexes, and enterprises with great potential and value to the market, so participants were willing to compete for them and raise bids. The results of these auctions provided almost 50% of the revenues from small privatization within 500 days since resumption.

The three most expensive lots sold during this period had a total value of UAH 730 million. The leader was the premises of the "Hermitage" hotel, located in the central part of Kyiv, on Bohdan Khmelnytsky Street. Hotel's value and prospects (location and status as a local monument of history and culture) led to a 15-fold increase in the initial value during the auction, from UAH 21.2 million to 311 million.

The Ukrainian budget received UAH 212 million from the privatization of the Property Complex "Volyntorf". Another UAH 210 million came from the sale of the Property Complex "Ukroboronresursy" (this name may be misleading, as the enterprise is not strategically important and is not involved in the production of weapons, equipment, etc.). These two assets took the second and third places in terms of sales value.

At the same time, the state offers property for various requests and opportunities. In 70% of auctions, the value of the sold assets was less than UAH 1 million. That is, more than two-thirds of the assets could be purchased, for example, by individual entrepreneurs or representatives of small businesses. This property can serve them for development or expansion of activities and become an effective investment.

It is indicative that in some auctions, the price the market was willing to pay for state property increased by hundreds, sometimes thousands of times compared to the initial price. For example, one of the highest growth coefficients in value was in auction where non-residential premises with an area of ​​approximately 200 square meters in the Ternopil region were privatized. With an initial selling price of UAH 402, the asset was sold for almost UAH 1.36 million, which is an increase of 3.4 thousand times.

A garage in the Vinnytsia region was sold by the state for UAH 188 thousand, although the initial price was approximately UAH 370, which means an increase of over 510 times. And a block of greenhouses with annexes in the Lviv region was purchased by an auction participant for UAH 800 thousand, although the initial price was slightly over UAH 2.1 thousand (an increase in value of 375 times).

Such cases are not uncommon. When market players see an object worth attention, even if book value is low, they will pay the asset's real price. Competition with other interested participants forces them to do so.

The most successful month of privatization during this period was October 2022 when the market had just gained access to state assets and actively took advantage of it. Then the SPFU (and accordingly – the state budget) received over UAH 681 million from privatization. May 2023 with an income of UAH 544 million ranked second in financial success, and January 2023 was third with an indicator of UAH 513 million.

Diversity of privatization participants

Privatization in Ukraine is gaining momentum, attracting more and more investors. Both large and small businesses are ready to invest in the country's development.

Companies lead in the purchase of large assets. The average value of assets where legal entities have become winners is over UAH 17 million. Their share of total revenues from privatization reaches 96%.

Privatization is also available for individuals. 56% of the total number of auction winners are individuals and entrepreneurs. The average value of assets where they win is almost UAH 540 thousand.

Competition at auctions is quite high. On average, there are 4+ participants competing for one asset. This ensures that the state receives the most advantageous prices for assets.

The diversity of participants and competition confirm the accessibility and fairness of the privatization processes. This makes them attractive to new investors, which contributes to stimulating the economy and creating new jobs.

Geography of privatization

Buyers were interested in both urban and rural privatization objects. The latter accounted for approximately 60% or over 340 completed auctions of all assets sold. At the same time, it was expected that state property in cities would be more expensive, and the amount from the sale was UAH 2.48 billion (approximately 56% of the total privatization revenue).

Since the resumption of privatization, Lviv region has become the regional leader. The result is 80 completed auctions (which make up 14% of the total number) and income exceeding UAH 804 million (19% of the total income). Although Kyiv has only 15 completed auctions, the income from them is over UAH 836 million. Thus, Lviv region and the Ukrainian capital significantly outperform other regions in terms of their indicators.


Ternopil region also has high financial indicators (UAH 469 million), and Vinnytsia region leads in the number of successful auctions, with 53.

Privatization contributes to solving many urgent problems. It helps generate income for the state budget, the deficit of which exceeds UAH 1.5 trillion this year, and the expenditures from it for the defense of our country – an issue of the country's survival.

Privatization provides incentives for the development of the national economy, the creation of new jobs, and the development of entrepreneurship. Moreover, it helps the state get rid of assets that have been unprofitable for decades and have become a burden.

Therefore, privatization in Ukraine during the war is a necessity. The fact that it is proceeding successfully once again proves the correctness of the decision to resume it.