Viktor Yushchenko Dragged to Peace

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko received the president and major shareholder of Evrazholding Alexander Abramov yesterday to discuss the conflict over the Nikopolsky Ferroalloys Plant. Shareholders of Evrazholding and Renova, headed by Viktor Vekselberg, are reported to be negotiating the purchase of the plant’s controlling stake with Ukrainian Interpipe group. Once the information was disclosed, Prime Minister Yulia Timoshenko overtly warned Viktor Vekselberg against this purchase. President Yushchenko said following meeting with Mr. Abramov that “politics must not interfere in the privatization”.

The Nikopolsky Ferroalloys Plant accounts for nearly 10 percent of the world ferroalloys market. The plant’s return amounted to $462.5 million in 2004, its net profit – to $13.2 million. State-controlled 50 percent stake plus one stock of the plant was sold for $77.5 million in 2003 to Pridnieprovye consortium set up by the Nizhnednieprovsky Tube-rolling Plant, Niko Tube Nikopolsky plant of non-suture tubes, Credit-Dnieper bank and Aura insurance company. All the companies are incorporated into Interpipe group which holds a 73 percent stake in the plant.

The Ukrainian Prosecutor’s General Office filed a lawsuit with the Kyiv Economic Court to invalidate the privatization of the plant. The court dismissed the claim on May 26. It became known in late June that shareholders of Everazholding and Renova were negotiating the purchase of the plant with Interpipe. Early July prime minister Yulia Timoshenko (who is believed to support Privat, another co-owner of the plant) made an overt warning for Viktor Vekselberg against buying 50 percent plus one stock in the Nikopolsky plant, saying the state had claims on it. She repeated on Monday that “the government defends its position on the return of the shares to the state” but made an important remark that “the decision will entirely depend on court”. The case of the Nikopolsky Ferroalloys Plant is to be heard at the Kyiv Court of Appeal on July 22.

Mr. Yushchenko and Mr. Abramov met on the eve of the court’s session. Renova reported to Kommersant that Evrazholding president expressed to the Ukrainian leader the joint position of his partners in the deal, reached at a recent meeting of Alexander Abramov and Viktor Vekselberg. The purchase of the controlling stake in the Nikopolsky plant became the central topic of the talks, a source in Evrazholding confirmed. The source also maintains that Alexander Ambramov intended to seek the consent of Ukrainian president to settle the litigation over the plant by sealing some amicable agreement. The proposal allegedly fell flat with Viktor Yushchenko.

The Ukrainian president’s press service skated over the details of the talks. Still, its information contradicts the news Kommersant obtained at Evrazholding. The presidential press service reports that Yushchenko said vexed questions connected with the Nikopolsky plant must be resolved by courts only or by closing amicable agreements in line with laws. “Politics must not interfere in the issue of privatization,” the presidential press service quoted him as saying.

It is not the first time that president Yushchenko mentions “laissez-faire policy” for cases concerning disputed matters in the Ukrainian business. Shortly before the practically unavoidable displacement of Naftogaz president Alexey Ivchenko (for the absence of an agreement with Gazprom over the “lost” 7.8 billion cubic meters of Rusaian gas in the country), Viktor Yushchenko said, “Activities of Naftogaz of Ukraine cannot be a subject of political polemic. It is a strategic interest of the state.” After the speech, the government suspended the discussion of Mr. Ivchenko's personal case, and Gazprom and Naftogaz managed to settle disputed questions. It is possible that this will be the case with the Nikopolskly plant too, and the Kyiv Court of Appeal will legitimate the privatization of the plant and keep the controlling package of the plant's stocks with Interpipe.

Source: Kommersant