Ukraine's parliament on Thursday barred the privatization of the Nikopol steel factory, quashing the government's hopes of repeating last year's highly profitable sale of another giant steel mill. Some 287 lawmakers voted to include the Nikopol factory on a list of enterprises that cannot be privatized.
Last month, the Supreme Court ruled that the 2003 sale of Nikopol to Viktor Pinchuk, the son-in-law of former President Leonid Kuchma, was illegal and returned it to the state. President Viktor Yushchenko called for the mill to be put up for sale in an open auction in the hope of receiving a top price. The Economics Ministry accused lawmakers of violating the law with their vote, saying it was up to the government to bar the privatization of specific enterprises.
The ministry also called the move premature because the process of returning Nikopol shares to the state was still underway. Pinchuk's Interpipe Corp. bought an initial, 25-percent stake in the Nikopol factory in 2003 and won the right of first offer to buy another 25-percent-plus-one-share stake in a later auction that no other bidders were allowed to participate in. The stakes were sold for a total of 410.5 million hryvna (US$81 million; Ђ 68 million).
Yushchenko in September abandoned his government's policy of reversing past privatizations that allegedly handed state assets at a cut-rate price to cronies of Kuchma, citing the damage it caused the former Soviet nation's reputation with the business community.
But he insisted that some of the more egregious examples should not be left to stand, citing Nikopol and the country's flagship steel mill, Kryvorizhstal. Kryvorizhstal was snapped up by Mittal Steel last year for 24.2 billion hryvnas (US$4.8 billion, Ђ 4.1 billion) in Ukraine's biggest and most profitable privatization auction. The price was nearly six times what it initially was sold for under Kuchma in a deal later canceled as illegal, reports the AP.
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