Zelensky asks Akhmetov to buy state mines, vows to pressure Anti-Monopoly Committee

A coal miner stands in front of a government building during a trade unions rally in central Kyiv on Oct. 17, 2018.Photo by Kostyantyn Chernichkin

President Volodymyr Zelensky has suggested that Ukraine’s largest energy group, DTEK, should privatize unprofitable state-owned coal mines to make them finally bring revenue to the country. 

If the company refuses to do it voluntarily, Zelensky threatened to try and force the firm to buy the mines by influencing the Anti-Monopoly Committee to make the state mines part of a deal DTEK wants.

Ukraine currently has about 100 mines, but only four of them are turning a profit.

Owned by oligarch Rinat Akhmetov, DTEK controls 19 coal mines — most of Ukraine’s private mines. Conditions and salaries at DTEK’s mines are better than those at the state-owned ones, where salaries often are delayed. 

According to Zelensky, if DTEK — a major energy player — wants to purchase Centrenergo, a coveted state-owned energy distribution company that is up for privatization, the government should consider making unprofitable state coal mines part of the deal.

“I think that is a wonderful idea,” Zelensky said of plan, which he announced at a national meeting dedicated to the coal industry in Kyiv on Feb. 25.

DTEK’s CEO Maksym Tymchenko, who was at the meeting, didn’t show enthusiasm for the plan. 

“If you are not ready and the Anti-Monopoly Committee, as you said, is against it, then I will talk to them and they will support it,” Zelensky told Tymchenko. The president also encouraged DTEK to help find strong partners and people who can privatize and invest in the modernization of state-owned mines.

Later, Tymchenko told the Kyiv Post that DTEK has enough thermal generation capacities and is not going to take part in the privatization of state-owned coal mines, primarily because of anti-monopoly restrictions and the company’s current interest in investing in green energy.

“I think we need new players to enter the industry, so we have healthy competition,” Tymchenko said.

Earlier this month, the Ukrainian State Property Fund won the right to privatize Centrenergo over controversial investment fund Ukrdoninvest, owned by Ukrainian multimillionaire Vitaliy Kropachov.

On Feb. 10, the Kyiv Economic Court unblocked the process of that privatization, and the State Property Fund hopes to sell the energy giant within the next two years.

The Ukrainian government plans to privatize state-owned companies in a bid to bring more foreign investors to Ukraine.

(C)KIYV POST 2020

3 comments

  • Is Zelensky stupid? Just how will privatizing the mines make them them profitable? According to the article, Ukraine has 100 mines, DTEK controls 19 of them, but only 4 out of 100 make a profit. You are still thinking like a Soviet. Stop throwing money down a bottomless pit, (no pun intended 😁), and close them.

    Liked by 3 people

    • Puns are fun when speaking about Moskali.
      Hasn’t Ukraine learned their lesson yet, about putting oligarchs in control of energy sectors? The mines would likely be more profitable if they had enough regulations to ensure safety, labor hours and transparency from management.

      Liked by 3 people

  • Prince William of Orange

    Hmm, in some way I think Zelensky has a point.
    I think we are wasting capital if currently unprofitable mines are being closed.
    I think none of the DTEK mines are unprofitable, I think the 100 mentioned are owned by the state.

    With decent management, many companies that are currently unprofitable can be made profitable eventually.
    After the GDR collapsed, a large number of companies were immediately liquidated, while they could have profitable if only they had some time to adjust to market conditions. So much capital was wasted in the ’90s, which still results in present-day unemployment.

    The GDR was capable of producing silicon chips, excellent suspension of trucks, optics and more stuff, and most of these capabilities did go to waste. Ukraine has 1000’s of state companies, and to liquidate all of them while some may be unprofitable only because some managers steel from these companies, is absolutely stupid.

    Akhmetov is most likely a crook, but I prefer a company that is operating in his hands over a company that is standing idle at the expense of the Ukrainian state. If the state gets rid of it, the state does not have to make up for losses, and they can spend the money on defense instead.

    Liked by 2 people

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