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Ukraine

Ensuring Openness and Transparency of Selling Public Assets and Property (UA0072)

Overview

At-a-Glance

Action Plan: Ukraine Action Plan 2018-2020

Action Plan Cycle: 2018

Status: Active

Institutions

Lead Institution: MoE Ministry of Finance State Property Fund Private Persons Deposit Guarantee Fund (upon consent) National Bank of Ukraine (upon consent) local self-government bodies (upon their consent)

Support Institution(s): Government-Civic Initiative “Together against Corruption,” Transparency International Ukraine, other CSOs and international organizations (upon their consent)

Policy Areas

E-Government, Land & Spatial Planning

IRM Review

IRM Report: Ukraine Design Report 2018-2020

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Technology

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

Ensuring openness and transparency of selling public assets and property A number of problems are observed in the field of selling public assets and property as follows: • Lack the unified transparent and efficient system of selling public assets, public property is sold by various auction organizers each having its own rules; • A lot of illiquid and non-core assets are accumulated in public sector, significant money is spent to maintain these assets, state-run enterprises are unable to update their technical resources; • The auction organizers lack technical and professional opportunities to effectively run online auctions and optimize income from selling public assets and property (as a result, the community and investors do not trust to the transparency, integrity and efficiency of such sales); • Current process of public assets and property sale is inefficient. In particular, it is featured by asymmetry of information, technical issues with access to auctions, unequal access to specific auctions where mostly the clients of specific organizer take part; • Slowness of processes associated with selling public assets and property due to strong institutional memory of market players and resistance of the existing system to expanded range of players and increased number of sales; • Limited access of foreign investors to public property and assets auctions and for development of the national economy; • Lack of efficient control and monitoring of the results of auctions – thus, their efficiency is not analysed. Launch of transparent procedure of selling property of state-run enterprises, small privatization targets, and leaseholds of public property will help address these issues. 7 Actions Responsible Timeframe Partners Indicator 1. Launch of online auctions to sell non-core assets of state-run enterprises MoE Ministry of Finance State Property Fund Private Persons Deposit Guarantee Fund (upon consent) National Bank of Ukraine (upon consent) local self-government bodies (upon their consent) December 2018 – May 2019 Government-Civic Initiative “Together against Corruption,” Transparency International Ukraine, other CSOs and international organizations (upon their consent) Ordinance of the CMU on mandatory use of online auctions to sell non-core assets of state-run enterprises adopted 2. Launching online auctions on leasehold of public assets (pilot project) MoE Ministry of Finance State Property Fund Private Persons Deposit Guarantee Fund (upon consent) National Bank of Ukraine (upon consent) local self-government bodies (upon their consent) December 2018 – March 2019 Government-Civic Initiative “Together against Corruption,” Transparency International Ukraine, other CSOs and international organizations (upon their consent) Ordinance of the CMU on a pilot project on mandatory online auctions on leasehold of public assets adopted 3. Launching online auctions on leasehold of public assets of public sales market actors -//- December 2019 – December 2019 -//- Draft law on amending the Law of Ukraine “On Lease of Public and Community Property” in terms of mandatory use of two-layer system of transparent online auctions tabled with the Parliament Expected results of this activity are reducing opportunity for corruption abuse; simplification of the procedure of participation in sales by unification of the procedures and rules of various sales; engaging private business into looking for the participants of sales, increasing competition and budget revenues at all levels; simplification of the procedures and significant expansion of potential participants of sales – both Ukrainians and foreign nationals.

IRM Midterm Status Summary

3. Ensure transparency of selling public assets

Language of the commitment as it appears in the action plan: [19] Ensuring openness and transparency of selling public assets and property

A number of problems are observed in the field of selling public assets and property as follows:

Lack the unified transparent and efficient system of selling public assets, public property is sold by various auction organizers each having its own rules;

A lot of illiquid and non-core assets are accumulated in public sector, significant money is spent to maintain these assets, state-run enterprises are unable to update their technical resources;

The auction organizers lack technical and professional opportunities to effectively run online auctions and optimize income from selling public assets and property (as a result, the community and investors do not trust to the transparency, integrity and efficiency of such sales);

Current process of public assets and property sale is inefficient. In particular, it is featured by asymmetry of information, technical issues with access to auctions, unequal access to specific auctions where mostly the clients of specific organizer take part;

Slowness of processes associated with selling public assets and property due to strong institutional memory of market players and resistance of the existing system to expanded range of players and increased number of sales;

Limited access of foreign investors to public property and assets auctions and for development of the national economy;

Lack of efficient control and monitoring of the results of auctions – thus, their efficiency is not analysed.

Launch of transparent procedure of selling property of state-run enterprises, small privatization targets, and leaseholds of public property will help address these issues.

Milestones:

  1. Launch of online auctions to sell non-core assets of state-run enterprises
  2. Launching online auctions on leasehold of public assets (pilot project)
  3. Launching online auctions on leasehold of public assets of public sales market actors

Start Date: December 2018

End Date: December 2019

Context and objectives

Ukraine has many state-owned enterprises, the privatization of which has historically not been a transparent process. [20] The government has acknowledged a number of problems related to selling public assets, including the lack of a unified transparent and efficient system for such sales. [21] This commitment aims to set up clear procedures for the sale and leasehold of public assets on a single online system. The commitment includes concrete indicators for each activity, in particular the adoption of ordinances and submission of a draft law amending the Law of Ukraine On Lease of Public and Community Property. However, milestones two and three rely on significant progress outside the scope of the commitment; the submission of a draft law to Parliament neither guarantees its adoption nor implementation.

The commitment’s implementation started prior to the adoption of this OGP action plan:

  • On 18 January 2018, the Ukrainian Parliament adopted law #2269-VIII, [22] which makes selling public assets and property on electronic platforms mandatory.
  • On 10 May 2018, the government adopted decree #432, which introduced procedures for conducting electronic auctions for selling public assets. [23]
  • From March 2017, to December 2018, ProZorro.Sale adopted multiple regulations for the electronic trade system for public auctions of assets. [24]

According to the commitment, the expected results are reducing corruption risks, simplifying the rules and procedure for asset sales, and the expansion of potential bidders of sales, which would ultimately increase competition and budget revenues. Previously, public property in Ukraine was sold by various agencies and action organizers and each had their own rules. There was a lack of efficient oversight and monitoring of sales. The launch of a transparent system for selling state property, especially under Ukraine’s recent large-scale privatization initiative, is a significant undertaking that will have major effects on the development of the national economy. This commitment involves the launch of online auctions for three types: sales of non-core assets of state-owned enterprises, leaseholds of public assets (pilot project), and leaseholds of public assets of public sales market actors.

This commitment does not explicitly mention how these activities are related to ProZorro.Sale, Ukraine’s electronic system designed to sell state property. However, the potential impact could be transformative considering the possible benefits of centralizing all auctions and the improved transparency of the procedure of sales.

Next steps

Taking into account the current action plan, country context, and best practices, the IRM researcher recommends the following:

  • The government can set up implementation indicators (for example, a pilot online auction on leaseholds of public assets is launched on the ProZorro.Sale online platform), in addition to legislative indicators, for similar commitments in future action plans. The technical activities that are within the Cabinet’s power to implement are as necessary as normative legal acts, which are not sufficient by themselves.
[20] Ivan Lakhtionov (TI Ukraine), interview by IRM researcher, 5 Mar. 2019.
[21] “The Cabinet of Ministers of Ukraine. Decree on 18 December 2018 #1088-p” on The Government Portal, The Unified Web-portal of Executive Authorities of Ukraine, (Cabinet of Ministers of Ukraine Secretariat, 18 Dec. 2018), https://www.kmu.gov.ua/storage/app/media/17-civik-2018/partnerstvo/plan_2018%20-%202020.pdf.
[22] “On the privatization of state and communal property” Verkhovna Rada News, N 12, Art. 58 (Verkhovna Rada of Ukraine, 2019), https://zakon.rada.gov.ua/laws/show/2269-19.
[23] “On Approval of the Procedure for Electronic Auctions for the Sale of Small Privatization Objects” Decree no. 432 on The Government Portal, The Unified Web-portal of Executive Authorities of Ukraine (Cabinet of Ministers of Ukraine Secretariat, 10 May, 2018), https://www.kmu.gov.ua/ua/npas/pro-zatverdzhennya-poryadku-provedennya-elektronnih-aukcioniv-dlya-prodazhu-obyektiv-maloyi-privatizaciyi.
[24] “Additional Documents” (ProZorro.Sale, accessed Dec. 2019), https://prozorro.sale/majdanchikam; “Procedures of the Electronic Trading System for the Conduct of Public Auctions for the Sale or Lease of Property (Assets)” (accessed Dec. 2019), https://docs.google.com/document/d/1iQ4lTWf3XLeNQZXZMj2fKqh6ADs9bHhqKCIB-HmdfyE/edit.

Commitments

  1. Infrastructure Data Portal

    UA0070, 2018, Anti-Corruption

  2. Open Standard for e-System

    UA0071, 2018, E-Government

  3. Ensuring Openness and Transparency of Selling Public Assets and Property

    UA0072, 2018, E-Government

  4. Transparency in Public Procurement (Prozorro)

    UA0073, 2018, Anti-Corruption

  5. Awarenss Raising About Social and Economic Development

    UA0074, 2018, Aid

  6. e-Calls for Proposals to Support CSOs

    UA0075, 2018, Civic Space

  7. Beneficial Ownership Registry

    UA0076, 2018, Anti-Corruption

  8. Anti-Corruption Training

    UA0077, 2018, Anti-Corruption

  9. Publishing Environmental Information

    UA0078, 2018, E-Government

  10. Database of Natural Resources

    UA0079, 2018, Anti-Corruption

  11. Interactive Map of Mines

    UA0080, 2018, E-Government

  12. Priority Electronic Services

    UA0081, 2018, Citizenship & Immigration

  13. Online Platform for Executive Bodies and CSOs

    UA0082, 2018, Civic Space

  14. EITI Online Data

    UA0083, 2018, Anti-Corruption

  15. Electronic Resources for Education

    UA0084, 2018, E-Government

  16. Online Verification of Education Certificates

    UA0085, 2018, E-Government

  17. Free Access to National Repository for Academic Texts

    UA0086, 2018, E-Government

  18. Administrative Service Decentrilisation and Improvement

    UA0057, 2016, Capacity Building

  19. United State Portal Extension; Electronic Government Information Services Unification; Modern Tools for Electronic Identification

    UA0058, 2016, Capacity Building

  20. System for Entities Performing Government Functions

    UA0059, 2016, Anti-Corruption

  21. Free Urban Planning Documentation

    UA0060, 2016, E-Government

  22. Beneficial Ownership Verification System

    UA0061, 2016, Anti-Corruption

  23. CoST Beneficial Ownership Standards

    UA0062, 2016, Anti-Corruption

  24. Transpartent Budget System

    UA0063, 2016,

  25. Starred commitment Open Public Procurement

    UA0064, 2016, Anti-Corruption

  26. Starred commitment Extractive Industries Transparency Initiative

    UA0065, 2016, Anti-Corruption

  27. Environmental Public Monitoring

    UA0066, 2016, Environment and Climate

  28. Community Policing System

    UA0067, 2016, Education

  29. Draft Law on Public Consultations

    UA0068, 2016, Legislation & Regulation

  30. Development of E-Democracy.

    UA0069, 2016, E-petitions

  31. Improve Government Rules on CSO Involvement

    UA0031, 2014, E-Government

  32. Financing of Charities

    UA0032, 2014, Civic Space

  33. Not-For-Profit Status for CSOs

    UA0033, 2014, Civic Space

  34. Public Participation Law

    UA0034, 2014, E-Government

  35. Establishing Rules on Processing Official Information

    UA0035, 2014, E-Government

  36. Access to Urban Planning Documents

    UA0036, 2014, E-Government

  37. Starred commitment Access to Communist-Era Archives

    UA0037, 2014, Legislation & Regulation

  38. Starred commitment Draft Law on Open Data

    UA0038, 2014, Legislation & Regulation

  39. Starred commitment Supervisory Mechanism for the Right to Information

    UA0039, 2014, Legislation & Regulation

  40. Compliance with EITI

    UA0040, 2014, Anti-Corruption

  41. Monitoring of Infrastructure Projects

    UA0041, 2014, Anti-Corruption

  42. Adopt Regional Anti-Corruption Programmes

    UA0042, 2014, Anti-Corruption

  43. Corruption Risk Assessment Methodology

    UA0043, 2014, Anti-Corruption

  44. Starred commitment Asset Disclosure on a Single Web Portal

    UA0044, 2014, Anti-Corruption

  45. Law on Administrative Procedure

    UA0045, 2014, Legislation & Regulation

  46. Law on Streamlining Payment of Administrative Fees

    UA0046, 2014, E-Government

  47. Administrative Services Portal

    UA0047, 2014, E-Government

  48. Draft Law on Decentralisation of Administrative Services

    UA0048, 2014, Legislation & Regulation

  49. Draft Law on Social Services

    UA0049, 2014, E-Government

  50. e-Government Laws

    UA0050, 2014, E-Government

  51. Electronic Readiness Assessment

    UA0051, 2014, E-Government

  52. Government Regulations on Open Data

    UA0052, 2014, E-Government

  53. Electronic Democracy Development Roadmap

    UA0053, 2014, E-Government

  54. Open Budget Initiatives

    UA0054, 2014, E-Government

  55. e-Petitions

    UA0055, 2014, E-Government

  56. e-Governance Training for Local Government

    UA0056, 2014, Capacity Building

  57. Laws on Public Participation

    UA0001, 2012, Civic Space

  58. Amendments to the Law on Community Associations

    UA0002, 2012, Civic Space

  59. Amendments to Resolutions on Collaboration with Civil Society

    UA0003, 2012, E-Government

  60. Training for Public Servants on Consultations

    UA0004, 2012, Capacity Building

  61. Harmonisation of Access to Information Laws

    UA0005, 2012, E-Government

  62. By-Laws on Access to Information

    UA0006, 2012, Legislation & Regulation

  63. Guidelines for Classifying Data

    UA0007, 2012, Public Participation

  64. Public Information Recording Systems

    UA0008, 2012,

  65. Law on Public Broadcasting

    UA0009, 2012, Civic Space

  66. Public Access to Information in State Registers

    UA0010, 2012, E-Government

  67. Starred commitment Extractive Industries Transparency Initiative

    UA0011, 2012, Anti-Corruption

  68. Law for Controlling Declarations of Public Servants

    UA0012, 2012, Anti-Corruption

  69. Public Declarations of Officials’ Assets

    UA0013, 2012, Anti-Corruption

  70. Guidelines on Conflicts of Interest

    UA0014, 2012, Anti-Corruption

  71. Updated Anti-Corruption Laws

    UA0015, 2012, E-Government

  72. Regional Anti-Corruption Programmes

    UA0016, 2012, E-Government

  73. Law on Competitive e-Government Procurement

    UA0017, 2012, Anti-Corruption

  74. Starred commitment Administrative Services Reforms

    UA0018, 2012, E-Government

  75. Electronic Access to Administrative Services

    UA0019, 2012, E-Government

  76. Governmental Web Portal of Administrative Services

    UA0020, 2012, E-Government

  77. Administrative Services in a Digital Format

    UA0021, 2012,

  78. Starred commitment Regional Administrative Service Centres

    UA0022, 2012, Public Service Delivery

  79. Programme for Promotion of e-Government

    UA0023, 2012, E-Government

  80. Electronic Collaboration Between Executive Agencies

    UA0024, 2012,

  81. Web-Based Petitions System

    UA0025, 2012, E-petitions

  82. One Stop Shop for e-Reporting

    UA0026, 2012, E-Government

  83. e-Region Pilot Project

    UA0027, 2012, E-Government

  84. Network of e-Government Practitioners

    UA0028, 2012, Public Participation

  85. Public Libraries as Bridges Towards e-Governance

    UA0029, 2012, E-Government

  86. e-Government Knowledge Management Portal

    UA0030, 2012,

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