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Odessa Port Side – Dmitry Firtash

October 18, 2014

Odessa Port Side is a State owned entity of arguably some strategic value – which is why despite being rumoured to be on the privitisation lists of various Ukrainian governments over the years, it has after deliberation, never actually been sold – at least it has never been sold as far as anybody knows, and remains on the register of the State Property Fund.

For many years, off and on, it has been rumoured that the well known oligarch Dmitry Firtash was going to buy Odessa Port Side each time it appeared upon any privitisation list.  His company, РГК Трейдинга (RGK Traiding)  has supplied the gas used by Odessa Port Side for quite some time.

That was until a few months ago.  Whilst Mr Firtash found himself on the end of a substantial bail sum and is currently cooling his heels in Austria pending extradition to the USA, Odessa Port Side signed a deal with the German company E.on to supply its gas.

Very good.  Nothing against Mr Firtash, but there is an urgent need to open up the Ukrainian gas market, and external players like E.on who are large enough to take on the oligarchy monopolies and grubby deals they make in the process of maintaining their monopoly, are certainly welcome.

It is also rumoured that Odessa Port Side will be up for sale once more – and let us be frank, in such a bad condition is the Ukrainian economy, there is far more chance that the sale of this State asset (and others) will now occur.  It is unlikely that Mr Firtash’s interest in Odessa Port Side has wained despite many on/off/maybe plans to privatise Odessa Port Side.  Whomever buys it will purchase an asset that not only does genuinely make money, but is also of some strategic importance economically both to Odessa but also Ukraine as a whole.

Oligarchs such as Mr Firtash naturally prefer to be sole bidders or preferred bidders when obtaining Ukrainian State owned entities.  Dirty little deals for far below market values even after large “facilitation payments” to people and entities who seem to have no real added value or role within the privitisation process usually result.  The net result everybody’s a winner except the State coffers, and by extension, the Ukrainian people – at least, that is what has historically been the case.

If that is to change, and greater transparency over such deals may be the future, then other routes must be sought to either prevent privitisation of desired State assets until a nefarious purchase can once again be procured, and/or, steps to take control of these assets by way of property transfer in  lieu of outstanding State debt for services provided, taken.  In short, attempt to force bankruptcy with the creditor getting the assets in lieu of payment.

With this in mind, it probably comes as no surprise that  РГК Трейдинга has submitted a claim for $1.39 billion against Odessa Port Side relating to unpaid gas bills between April and June, to Odessa Regional Economic Court.  The actual debt for gas claimed is $1.237 billion in relation to 217 million cubic meters of gas.  The remainder of the claim relating to to penalties incurred.

Needless to say Odessa Port Side disputes the claim.

Just what or how much, if anything, is owed to Mr Firtash’s company, time will tell – but during that time, the privatisation of Odessa Dock Side will likely stall.

 

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