For sale: Heavily subsidized, unprofitable state-owned Ukrainian coal mines

Ukraine’s Cabinet of Ministers on May 29 ordered the State Property Fund to prepare an auction of 38 state-owned coal mines as part of a cost-saving measure in line with International Monetary Fund requirements. Most of these mines are loss-making and, moreover, enjoy direct subsidies from the central government to stay afloat.

Last year, the mines were propped up with nearly $1.8 billion of financial aid to ensure salaries get paid. Former President Viktor Yanukovych, a native of the coal-mining Donbas region, paid special attention to the needs of miners, many of whom were his electorate.

However, the current government’s austerity measure plans to cut subsidies to the coal mines by $230 million, coupled with privatization plans are part of this policy, said First Deputy Energy Minister Yuriy Zyukov on May 29.

Only some 120 coal mines in function in Ukraine, while another 70 are either temporarily or permanently shut. Thus, more than 30 percent of the functioning mines will be put up on the auctioning block.

http://www.kyivpost.com/content/business/ukrainian-mines-on-sale-350079.html