Ukraine’s government approved the privatization of the scandal-ridden Odesa Port Plant, setting a starting auction price of 4.5 billion hryvnias ($109 million) for the massive chemical facility, which had previously been paralyzed by corruption.

The sale tests whether Ukraine can revive a critical link in global food security as the country struggles with fertilizer shortages that threaten agricultural output. Ukrainian farmers can access only half the fertilizers they need, making the plant’s restoration vital for domestic food production and international grain exports.

Strategic fertilizer hub for global markets

Before the full-scale invasion, Ukraine produced over 5 million tons of fertilizer annually as a major grain exporter.

The facility’s two ammonia production units (1.08 million tons capacity) and two urea production units (900,000 tons capacity) previously exported to over 30 countries, contributing to worldwide agricultural productivity.

With global fertilizer prices still elevated since the war began and production disrupted across the region, the plant’s revival could help stabilize Ukrainian harvests and international food supplies.

From corruption symbol to auction block

Prime Minister Yulia Svyrydenko announced the privatization decision, noting the plant has operated only partially since 2022, providing oxygen and nitrogen for critical needs while serving as a port hub.

The facility became synonymous with state enterprise corruption after investigators revealed officials stole over 2 billion hryvnias ($48.4 million) through rigged tenders and kickback schemes. The scandal effectively paralyzed productive operations even before Russia’s full-scale invasion.

Wartime privatization wave accelerates

Success could demonstrate Ukraine’s ability to conduct transparent wartime privatizations while restoring a facility crucial for feeding Ukraine and the world.

Ukraine’s Financial Stability Council cleared the government to sell its stakes in Sense Bank and Ukrgasbank in August, ending hesitation about opening up the state-dominated banking sector.

The breakthrough decision proves Ukraine wants to build a Western-style free-market economy, even when it means giving up hundreds of millions in wartime funding.

The Financial Stability Council—which includes the National Bank of Ukraine, the Finance Ministry, and banking regulators—concluded that selling the state’s stakes would not harm the banking system if done through proper legal procedures. “The sale of shares must be balanced and aimed at increasing the value of banks’ stakes,” the Council said in its statement.

Both banks fell under state control through crisis management rather than strategic planning. Ukrgasbank gradually moved under state dominance after a 2009 bailout that left the government holding nearly all shares. Sense Bank became state-owned in 2023 when Ukraine sanctioned its Russian owners (including Ukrainian-born oligarch Mikhail Fridman) during the war.

The privatization has fulfilled Western allies’ demands for years—proof that Ukraine genuinely wants a free-market transformation, not just security guarantees. The decision marks a groundbreaking first step toward dismantling the state-dominated banking model.

The choice between free markets and state profits has never been starker. While Sense Bank and Ukrgasbank are smaller institutions—ranking 7th and 10th by profit—they still generate hundreds of millions annually for the war effort.

For now, the state-owned banks control more than half of Ukraine’s financial system assets and deposits, and they’ve become reliable wartime revenue generators. In 2024, the banking sector posted record profits of UAH 104 billion ($2.52 billion), with state institutions contributing the majority. State banks transferred over UAH 67 billion ($1.64 billion) to the budget through taxes and dividends—money that directly funds the war effort.

However, there is still a long road ahead, as the National Bank indicated that privatizations are unlikely to be completed in 2025, emphasizing gradual implementation based on market conditions. That suggests Ukraine recognizes the fiscal reality of giving up billions in annual revenue during wartime.

For international partners, the Council’s decision signals a serious commitment to reform pledges even under extreme conditions. It also potentially means the loss of crucial wartime funding streams for Ukrainian finances.

The privatization path is now clear. Whether Ukraine will walk it—and how quickly—depends on balancing immediate war needs against long-term integration goals.