The SPFU: privatization of prosthetic enterprises will help them retain a skilled workforce and expand production capacity

The State Property Fund plans to hold an auction for the privatization of the Khmelnytskyi State Experimental Prosthetic and Orthopedic Enterprise on October 18, 2023. The starting price is UAH 49.5 million. The key requirement for privatization is to maintain the activity profile.

This is the State Property Fund's first attempt to find a private investor for a state enterprise producing socially important products.

In December 2022, the Ministry of Social Policy transferred 17 prosthetic and orthopedic enterprises under the management of the State Property Fund. Before making a decision on the privatization of some of them, the Fund conducted consultations with various government institutions and public organizations involved in the issue of prosthetics for military and civilians to hear their positions on maintaining the balance between the commercial and state markets.

According to most of them, the state should retain functions related to certification and market control for prosthetic production. Some enterprises can be privatized, those that require significant investment in development, if they maintain their profile.

Due to the growing demand, the Ukrainian prosthetics market needs to constantly modernize. State enterprises find it increasingly difficult to operate and compete with private manufacturers who are more technologically advanced. In such market conditions, privatization will undoubtedly allow them to maintain production, a qualified workforce, and also adopt new technologies and expand production capacity.

"During the war, our country needs to increase the number of prosthetic production and expand their capacity. State enterprises can play a significant role in this process. With the existing initial material and infrastructure base and additional investment through privatization, they will receive a powerful boost for their development," says Serhiy Symonov, Deputy Chairman of the State Property Fund.

Currently, the Fund has announced an auction for the privatization of only one such asset.

The Khmelnytskyi State Experimental Prosthetic and Orthopedic Enterprise can produce approximately 300 types of prosthetics using modern European technologies and has own stationary facilities. However, in 2022, the enterprise ended the year with a loss of UAH 500,000, and in the first half of 2023, it only made a profit of UAH 36,000. In addition to the profit, the enterprise is also losing qualified specialists because private companies offering higher salaries.

Following privatization, the new owner of the asset is obligated not only to maintain the enterprise's activity profile for 10 years but also to repay the enterprise's debts to the budget and pay wages.

For more details about the asset, visit our website – https://bit.ly/3rOc9yU