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Last Updated: Wednesday, 12 May, 2004, 10:18 GMT 11:18 UK
Ukraine hopes for sell-off boost
Russian steel worker. Pic from Severstal website
Russian control of Ukrainian assets has worried many
One of the biggest privatisation deals in Ukrainian history is creaking into action, with a Russian-led team tipped to snap up steel maker Kryvorizhstal.

The State Property Fund has scheduled a tender for the firm on 8 June, and reckons the 92% stake should fetch at least 3.8bn hryvnia (395m; $694m).

Russia's Severstal and Luxembourg-based Arcelor have joined forces for the bid.

They are reportedly willing to spend $1bn to buy and modernise Kryvorizhstal, which is profitable but indebted.

Name game

The sale is crucial for Ukraine's image in the international business community.

After some initial optimism in the wake of independence, Ukraine has earned a reputation for political instability, sluggish reform and corruption.

Monastery of Caves, Kiev
Ukraine is currently growing, but the outlook is uncertain
Privatisation, rapid in many other ex-communist states, has been slow, and many sell-offs have been criticised for murky governance.

Ukraine's economy is now growing rapidly - gross domestic product in the first quarter of this 2004 was up 10.8% year on year - and its credit-rating was upgraded late last year.

But troubled politics this year, centring around the apparent intransigence of long-time President Leonid Kuchma, have cast doubts on Ukraine's prospects.

Old habits die hard

The sale to the Severstal-Arcelor team will not be unopposed - not least because there are concerns over Russian dominance of Ukraine's economy.

Russian companies have been among Ukraine's few foreign investors in recent years, and have been particularly acquisitive in the energy sector.

Russia sees Ukraine as a crucial transit market for its oil exports, and a place for processing its raw materials.

This has aroused some concern in Ukraine, where many fear "strategic" industries falling into the wrong hands.

Among the other likely bidders is Interpipe, a company controlled by Mr Kuchma's son-in-law.


SEE ALSO:
Ukraine MPs vote against reforms
08 Apr 04  |  Europe
Country profile: Ukraine
21 Apr 04  |  Country profiles
Kuchma gets chance of third term
30 Dec 03  |  Europe


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