RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/UKR/72/Add.2
20 April 2000
(00-1618)
Working Party on the
Accession of UkraineOriginal:  English
ACCESSION OF UKRAINE
Memorandum on Privatisation
Addendum
The following additional information concerning privatisation has been received from the
Governmental Commission on Ukraine's Accession to the WTO.
_______________
1. General Situation
As of 1 January 2000, 66,7071 enterprises were privatised and changed their form of property
ownership. About three fourth of them (48,596 or 72.8 per cent) were originally municipal property,
the remaining enterprises (18,111 or 27.2 per cent)  were publicly owned.
Over the whole duration of privatisation process the breakdown into Enterprise Groups is as
follows: the majority of publicly owned enterprises privatised (80.4 per cent) belonged to Group А,
another 16.7 per cent belonged to Groups B,C,D, then about 2.5 per cent belonged to Group E, and
finally 0.4 per cent to Group F.
The largest percentage of the former publicly owned enterprises privatised since the
beginning of the privatisation process in Ukraine occurred in Donetsk oblast (11.1 per cent), Lviv
oblast (9.7 per cent), Dnipropetrivsk  oblast (7.5 per cent), Kharkiv oblast (5.1 per cent), Odesa oblast
(4.8 per cent) and the city of Kyiv (7.4 per cent).
The most frequently used privatisation method applied to publicly owned enterprises,
organizations and establishments was the company’s buy-out by employees (42.1 per cent).
It is worth mentioning that as of early 1995 the larger number of publicly owned enterprises
began to be privatised by means of auction sales.
                                                     
1 This number incorporates those companies whose purchase contracts have been discontinued by the
State Property Fund (SPF) and its regional, rayon an d city offices by 1 January 2000, (according to SPF
information).WT/ACC/UKR/72/Add.2
Page 2
The annual breakdown of the number of their privatised enterprises is as follows:
Years Number of public enterprises
privatised through auctionsPercentage to the total number of
privatised enterprises
1992-1993 280 78
1994 413 5.0
1995 1,353 8.3
1996 2378 12.2
1997 1801 21.1
1998 1405 26.0
1999 1497 28.6
Over the whole duration of privatisation process the following industries have the highest
percentage of privatisation: trade and public catering (29,917), consumer services (11,859), heavy
industry (6,974), construction (3,293), housing and municipal services (3,137), agriculture (3,072).
The number of enterprises privatised by industry as of 1 January 2000 is as follows:
Total
units% to Total Number of
Privatised Companies
Total 66,707* 100
Heavy Industry 6,974 10.4
Agriculture 3,072 4.6
Transport 1,346 2.0
Communications 24 0.0
Construction 3,293 4.9
Uncompleted Construction Sites 1,597 2.4
Trade and Public Catering including: 29,917 44.8
Wholesale trade 904 1.4
Retail Trade 24,382 36.5
Public Catering 4,631 6.9
Inputs and Sales 1,173 1.8
Procurement 498 0.7
Housing and Municipal Services 3,137 4.7
Consumer Services 11,859 17.8
Science and Scientific Support 375 0.6
Health Care, Sports and Social Security 519 0.8
Education 250 0.4
Culture and Arts 772 1.2
Other Industries 1,946 2.9
*  Out of the total number of privatised public enterprises in 1993, 45 uncompleted construction sites
were transferred to the respective industries in compliance with the data processing methodology usedat that time, and were not included in the grand total.
As a result of privatisation of publicly owned enterprises, 53,512 of them (or 80.2 per cent of
the total number of privatised enterprises) became collectively owned, 13,189 enterprises
(19.8 per cent) became privately owned, and the property of 6 enterprises was transferred into the
ownership of international organizations and foreign legal entities.
2. Privatisation Results in 1999.
January through December 1999, 5,232 enterprises changed their form of property ownership
(in 1998 this figure was 5,396), including 28.9 per cent (31.4 per cent) publicly owned enterprises and
171.1 per cent (68.6 per cent) of enterprises belonging to municipal property.WT/ACC/UKR/72/Add.2
Page 3
The number of privatised enterprises in 1999 was as follows:
(units)
Including: Total
Public property Municipal property
Ukraine 5,232 1,514 3,718
While privatising municipally owned enterprises the most frequently used privatisation
method was a buy-out by employees (61.1 per cent), and for publicly owned enterprises it was sale by
auction (52.7 per cent).
As for the breakdown of privatised enterprises into Enterprise Groups, Group А constitutes of
4,212 companies, or 80.5 per cent (in 1998 those figures were 4,178 and 77.4 per cent, respectively),
Group E - 473, or 9.0 per cent (373, 6.9 per cent), Groups B, C, D- 288, or 5.5 per cent (830,
15.4 per cent), Group F - 259, or 5.0 per cent (15, 0.3 per cent). In this respect, the number of Group E
enterprises (uncompleted construction sites and bankrupt enterprises) privatised in 1999 was largerthan the number of enterprises subject to large and medium scale privatisation.
The largest number of privatised Group A enterprises was located in Donetsk oblast (561
enterprises), Dnipropetrivsk oblast (450), the city of Kyiv (389) and Lviv oblast (368); of Group E –
in Zhytomyr oblast (58), Luhansk oblast (42), Done tsk oblast (39) and Mykolayiv oblast (31), and of
Groups B,C,D – in Kyiv oblast (31), Luhansk oblsat and the city of Kyiv (22 each), and
Dnipropetrivsk oblast (21).
During 1999 privatisation of social sphere companies (Group F) accelerated. The largest
number of privatised Group F enterprises was located in Ternopil oblast (23), Volyn and Lviv oblasts(21 each). Only Dnipropetrivsk oblast has not yet commenced to privatise social sphere enterprises.
Of the total number of enterprises privatised in 1999, independent legal entities comprised 9.2
per cent, 82.4 per cent were structural units, and 8.4 per cent were uncompleted construction sites.
The following table shows the structure of the privatisation process by categories:
1998 1999
Number of
enterprisesIn % of the total
numberNumber of
enterprisesIn % of the
total number
Total 5,396 100 5,232 100
Legal entities 1,302 24.1 481 9.2
Structural units 3,729 69.1 4,314 82.4
Uncompleted construction sites 365 6.8 437 8.4
The number of enterprises privatised in 1999 as independent legal entities was three times
less than in the previous year. At the same time, the number of enterprises structural units of theenterprises privatised increased 1.2 fold. The rate of privatisation of uncompleted construction sites
also kept increasing. If in 1998 every fifteenth privatised enterprise was an uncompleted construction
site, in 1999 it was every twelfth site.WT/ACC/UKR/72/Add.2
Page 4
The number of enterprises privatised in 1999 by industry as follows:
Number % to the Total Number
Total 5,232 100
Heavy Industry 220 4.2
Agriculture 118 2.3
Transport 38 0.7
Communications 8 0.1
Construction 113 2.2
Uncompleted Construction Sites 437 8.4
2203 42.1
116 2.2
1835 35.1Trade and Public Catering including:
Wholesale trade
Retail TradePublic Catering 252 4.8
Inputs and Sales 64 1.2
Procurement 22 0.4
Housing and Municipal Services 611 11.7
Consumer Services 612 11.7
Science and Scientific Support 30 0.6
Health Care, Sports and Social Security 180 3.4
Education 63 1.2
Culture and Arts 145 2.8
Other Industries 368 7.0
In heavy industry, the number of privatised enterprises in 1999 was almost twice less
(1.9 times) than in the previous year. However, privatisation rate for retail enterprises remains high.
Most of the privatisation in 1999 took place by means of employee buy-outs (49.2 per cent) or
auction sales (28.6 per cent).
Buy-out by employees was the privatisation tool  used for reforming property ownership at the
majority of enterprises belonging to the “General Commercial Activity on Market Support” industry
and “Other Types of Businesses in Material Production Sphere” industry (92.5 per cent each),
“Management” industry (78.8 per cent), “Housing and Municipal Services” industry (69.1 per cent),in almost two-thirds of “Communications” industr y enterprises (62.5 per cent), more than a half in
“Culture and Arts” industry (58.6 per cent), “Trade and Public Catering” (51.7 per cent), and
“Consumer Services”  industry (50.3 per cent).
Every third enterprise was sold by auction (in 1998 it was every fourth). A considerable part
of uncompleted construction sites (71.6 per cent), en terprises in the sports industry (71.4 per cent),
more than a half of recreation and tourism enterprises (56.2 per cent), inputs and sales (62.3 per cent)
and education (54.0 per cent), about a half of health care enterprises (46.4 per cent) changed their
form of ownership by this particular method.
As for regional breakdown, the largest share of enterprises privatised by auctions in respect to
the total number of privatisation occured in Zhytomyr oblast (68.4 per cent), Vinnytsya oblast (60.2
per cent), Cherkasy oblast (58.8 per cent), Kyiv oblast (52.2 per cent), Chernihiv oblast (51.6 per
cent), Sumy oblast (50.5 per cent) and the Autonomous Republic of Crimea (51.2 per cent).
In the industry, only in printing a large share of the enterprises was privatised by auction; in
other industries privatisation took place by selling shares of open joint-stock companies (on anaverage, 35.9 per cent of the enterprises privatised in heavy industry). Some of the industries applied
this method more frequently than the others. For instance, in construction materials industry, as wellWT/ACC/UKR/72/Add.2
Page 5
as in chemical and petrochemical industry, a large share of enterprises was privatised by applying this
method (76.9 per cent and 60.0 per cent respectively).  In cereal milling and mixed fodder industry, in
machine-building and metal-working industry, and in  food industry the share of this privatisation
method was higher than in the heavy industry in ge neral, (with 50.0 per cent, 46.5 per cent, and 46.2
per cent respectively).
Privatisation through property certificates was completed in 1999.Furthermore, 240 uncompleted construction sites reformed their form of property ownership
as parts of integrated property complexes (with 223 of them being public and 17 municipal) in 1999,
while 1 public enterprise was privatised as a part of a structural unit.
Out of the total number of companies privatised in 1999, 256 (4.9 per cent) belonged to
agricultural industrial complex (AIC) (in 1998 736 or 13.6 per cent), with most of them originally
publicly held (224 or 87.5 per cent).
The number of privatised enterprises in the agricultural industrial complex (AIC), is as
follows by classification groups:
(units)
1998 1999
Including Including
Group Groups Group Group Groups GroupNumber of
AIC
Enterprises А B,C,D ENumber of
AIC
Enterprises А B,C,D E
Total 736 122 602 12 256 37 186 33
Originally public
ownership681 101 568 12 224 30 166 28
Originally municipal
ownership55 21 34 - 32 7 20 5
Some 2,495 enterprises (47.7 per cent of total number) were transferred into collective form
of property ownership in 1999, 2,734 enterprises (52.2 per cent) became privately owned, and 3
companies (0.1 per cent) became property of international organizations and foreign legal entities.
The percentage of enterprises that became privately owned increased by 13 per cent comparing to the
previous year.
Receipts from privatisation are expected to exceed UAH 184.0 million in 1999, of which
UAH 182.3 m illion are expected to be in cash. A reve nue of UAH 1,106.9 million are expected to be
generated through stock floatations, of whic h UAH 926.6 million are expected to be in cash.
This Table shows stock value parameters from privatisation in 1999:
Number of
Privatised
CompaniesProperty
Value of
Integrated
Property
Complexes
according to
Evaluation
ActsValue of
Privatised
Public
PropertyDepreciated
Cost of
Fixed AssetsExpected
Revenues
Generated from
SalesValue of
Stock
Planned to
Be Sold
UAH million UAH million UAH million UAH million UAH million
5,232 3,633.3 2,032 3,128.6 184 1,106.9WT/ACC/UKR/72/Add.2
Page 6
Sales of retail trade enterprises are expected to generate UAH 65.2 million, uncompleted
construction sites UAH 24.9 million, housing and municipal services UAH 16.5 million and public
catering services UAH 13.5 million.
Through stock floatation in heavy industry planned to be sold in 1999 for cash it is expected
to generate UAH 818.8 million, in housing and municipal services  UAH 20.4 million, in inputs and
sales  UAH 17.0 million, in agriculture  UAH 14.6 million, in science and scientific support  UAH
13.7 million.
Stock value parameters in privatisation by industries is as follows for 1999:
Property
Value of
Integrated
Property
Complexes
Accoring to
Evaluation
ActsValue of
Privatised
Public
PropertyDepreciated
Cost of
Fixed
AssetsExpected
Revenues
Generated
(From
Sales)Including
For CashValue of
Stock
Planned to
Be SoldIncluding
For CashNumber of
Privatised
Enterprises
UAH
 millionUAH
millionUAH
millionUAH
millionUAH
millionUAH
millionUAH
million
Total 5232 3633.3 2032 3128.6 184 182.3 1106.9 926.6
Heavy Industry 220 2292.1 1564.4 1923.2 6.2 6.1 972.2 818.8
Agriculture 118 549.0 126.0 569.1 0.6 0.6 17.8 14.6
Transport 38 44.4 13.7 41.0 0.5 0.5 11.9 10.5
Communications 8 0.78 0.8 0.1 0.8 0.8 - -
Construction 113 93.0 28.1 78.1 2.6 2.6 17.5 11.0
Uncompleted
Construction Sites437 21.6 43.7 30.3 25.0 24.9 0.5 0.5
Wholesale Trade 116 21.2 12.5 16.3 5.7 5.7 4.1 3.2
Retail Trade 1835 67.8 64.2 25.2 66.1 65.2 2.3 2.2
Public Catering 252 13.8 13.2 4.4 13.6 13.5 - -
Inputs and Sales 64 18.3 7.2 11.7 1.2 1.2 17.6 17.0
Procurement 22 58.7 19.7 27.5 0.6 0.6 13.6 7.7
Housing and
MunicipalServices611 211.8 56.5 202.0 16.6 16.5 24.6 20.4
Customer
Services,
ProductionBusinesses397 8.5 7.1 8.1 7.3 7.1 0.6 0.6
Customer
Services, Non-ProductionBusinesses215 2.4 2.4 3.3 3.4 3.4 - -
Health Care,
Sports and Social
Security180 6.9 6.7 4.4 6.7 6.6 0.3 0.3
Education 63 2.4 2.4 7.3 2.4 2.4 - -
Culture and Arts 145 2.6 2.5 3.1 2.5 2.5 - -
Science and
Scientific Support30 71.6 25.8 54.9 1.6 1.6 16.8 13.7
Other Industries 368 146.4 35.1 118.6 20.6 20.5 7.1 6.1
The number of enterprises that sold stock as open joint-stock companies that were temporarily
in public property or were publicly owned as a part of inter-industry enterprises or joint venturesWT/ACC/UKR/72/Add.2
Page 7
(Group F enterprises) reduced 1.8 fold in comparison to 1998. Namely, 329 enterprises conducted
such sales in 1998, while in 1999 their number was 188. Some regions did not have such enterprises
at all. Here is the number of Group F enterprises:
 (units)
Of which:
Total
As of
1 January 2000including
for
1999Sold Shares
Publicly Owned
In Stock of
Joint Ventures
And Inter-
Industry
Companies
(IIC)Privatised Stock
Not Assessed
During
Stock Value
Evaluation
of Enterprises to
be Privatised and
Not Included in
Equity FundSold Shares as
Open Joint-StockCompaniesTemporarily
In Public
Property
Ukraine 986 188 46 40 102
The sale of group F enterprises is expected to generate UAH 60.1 million, with more than one
third (39.9 per cent) of them being in heavy industry. Stock floatation in group F are expected to
generate UAH 6.9 million, wi th 77.6 per cent of them in heavy industry.
Expected revenues generated from Group F privatisation, by industries, are as follows:
Number of EnterprisesExpected Revenues
from
Sales,
UAH millionValue of Stock Planned
To Be Sold,
UAH million
1998 1999 1998 1999 1998 1999
Total 329 188 40.0 60.1 21.5 6.9
Heavy Industry 110 67 24.2 24.0 3.9 5.4
Agriculture 6 6 0.3 0.1 0.4 0.1
Transport 68 43 1.2 2.3 0.3 0.3
Communications 4 - 0.0 - - -
Construction 46 6 0.9 0.1 0.8 0.2
37 12 2.9 1.0 0.8 0.6
14 5 1.0 0.2 0.8 0.6
17 7 1.5 0.8 - -Trade / Public Catering including:
Wholesale Trade
Retail Trade
Public Catering 6- 0 . 4 ---
Inputs and Sales 6 - 3.8 - - -
Procurement 11 27 2.3 3.5 - 0.3
Customer Services 8 1 0.3 0.3 - -
Housing and Municipal Services 3 - 0.0 - 0.0 -
Health Care, Sports and Social
Security7 5 1.8 9.8 15.3 -
Education 1 2 0.0 0.3 - -
Culture and Arts 4 - 2.1 - - -
Science and Scientific
Support 15 13 0.1 0.3 - 0.0
Other Industries 3 6 0.1 18.4 - -WT/ACC/UKR/72/Add.2
Page 8
Some 67 out of the 188 Group F enterprises in 1999  belonged to heavy industry, 43  to
transport, 27  to procurement, 13 to science and scientific support.
Through 1999 and early 2000 there were no significant changes in legislation pertaining to
privatisation.
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