The potential buyer of state-owned Odessa Port Plant (OPP) in any new privatisation tender should repay $251mn in debt to Ukrainian oligarch Dmytro Firtash's Ostchem company, $32mn to banks and traders for previously supplied natural gas, as well as invest at least $100mn in restarting operations at the idled plant, which is in danger of going bankrupt, according to the head of the State Property Fund (SPF), Ihor Bilous.

Bilous’ statement followed July’s aborted tender for a 99.567% stake in the chemicals plant, which failed due to a lack of bids from investors. The failure was attributed to the burden of OPP’s debt to Ostchem, and to a conflict with the company Nortima, allegedly controlled by controversial billionaire Ihor Kolomoisky. The authorities also recognised that the starting price of around $530mn was too high for investors.

The failure to sell OPP was a setback for the Ukrainian authorities, who consider the sale of OPP as a landmark event that would send a message to investors globally that transparency is being introduced into Ukraine’s economy.

According to Bilous, OPP has been idle since August 11. “The situation on the mineral fertilizer market is the worst in over 15 years. According to authoritative forecasts, the negative trend will likely remain until 2019,” the official wrote on his Facebook page on September 19, adding that if OPP is not put up for sale this autumn, “it will go bankrupt”.

“We understand that we need to announce the auction and reduce the starting price,” he added.

On September 13, Bilous told journalists that the SPF must reduce the starting price of OPP to about $150mn. The final decision on the starting price should be made by the government, the official added, while outlining some possible extraordinary measures to recommission OPP. In particular, the government could rule that state gas monopoly Naftogaz will supply gas to the plant under special conditions.

OPP accounts for 17% of Ukraine’s ammonium nitrate capacity and 19% of its urea production capacity. Due to its strategic location on the Black Sea coast and connections to chemical transportation infrastructure, the plant is export-oriented: export sales constitute up to 85% of output, while the major export destinations are the EU and US.