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Ukraine said it accepted an offer for a state-run titanium producer in a rare wartime privatization deal as the government grapples with mounting pressure on the wartime budget.
A bid of 3.94 billion hryvnia ($96 million) for UMCC-Titanium was approved, the State Property Fund said Wednesday in a website statement. Cemin Ukraine, a Neqsol Holding unit, was the only participant in the auction.
Even before the start of the war in February 2022, the government in Kyiv struggled to sell assets due to a poor investment climate marred by corruption. Now with military spending boosted to help fight Russian advances in the east, the Finance Ministry has become increasingly reliant on foreign aid and the domestic bond market to address a budget gap of around 20% of economic output this year.
“The budget will receive a significant resource for strengthening our defense capability,” Ivanna Smachylo, acting head of the property fund, said in the statement. Following the sale of a hotel in Kyiv last month, more privatizations are planned.
UMCC is one of the world’s largest producers of titanium, mining and processing ores into sands and concentrates. More than 90% of titanium ore it manufactures is used in paints, while it also supplies to industries like glass, ceramics and refractory.
The successful bidder at auction is obligated to maintain the enterprise’s core operations, invest at least 400 million hryvnia in technical conversion and modernization, as well as to pay wage arrears and debts to the budget, the property fund said.
Neqsol Holding is an international group of companies founded by Azeri businessman Nasib Hasanov and active in the energy, telecommunications, construction and high-tech industries, according to its website. The company owns Ukraine’s second-largest mobile operator, Vodafone Ukraine.
The holding plans not only to fulfill all privatization commitments, but also to modernize, develop new products through deep processing of raw materials and expand into global markets, Volodymyr Lavrenchuk, the company’s regional director, told Forbes Ukraine before the auction winner was announced.
Lavrenchuk didn’t respond to a Bloomberg request for comment on Wednesday, while calls to the company’s headquarters in Amsterdam went unanswered.
(By Volodymyr Verbianyi)
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