* Ukraine slashed starting price to $200 mln from $500 mln
* PM blames state agency for "mediocre" management of sale
* Western backers question authorities' commitment to reform
(Adds EBRD and analyst comment)
By Natalia Zinets and Alessandra Prentice
KIEV, Dec 7 A second attempt to auction
Ukraine's state-owned Odessa Portside Plant failed to attract
any bids, the State Property Fund said on Wednesday - a major
setback for the country's Western-backed push for privatisation
The Black Sea fertiliser plant was meant to be the first big
privatisation since a 2014 uprising brought in a pro-Western
leadership and to prove the government can modernise the economy
and tackle entrenched graft.
Ukraine is already struggling to convince its international
backers, which include the International Monetary Fund and
Western powers, that it has the political will and competence to
bring meaningful change to the ex-Soviet country.
The first attempt to sell the Odessa plant in July failed
amid warnings from international donors that the government's
handling of the sale was deterring credible Western bidders.
The government dropped the floor bidding price by more than
half to around $200 million in the latest attempt to sell the
plant but still failed to draw any offers.
"Unfortunately no bids were received from potential
investors to participate in the auction, although around 10
potential buyers had shown interest in the company," the fund
said in a statement.
Analysts said investors were deterred in part by the plant's
debt of over $200 million owed to exiled tycoon Dmytro Firtash
and an ownership dispute with a Ukrainian group controlled by
billionaire Ihor Kolomoisky.
"There's the risk that after (the sale) it would all have to
be sorted out in the courts," said Andrei Bespyatov, chief
analyst at Ukrainian investment bank Dragon Capital.
The continued influence of powerful vested interests in
politics and business, and weak rule of law, are repeatedly
cited as key obstacles on Ukraine's path to reform.
Prime Minister Volodymyr Groysman blamed the State Property
Fund on Wednesday for the failed sale, saying its handling of
the privatisation was "mediocre" and the latest results proved
the fund was not capable of managing it.
Other planned sales of state-owned firms, including thermal
energy company Centrenergo, have been postponed repeatedly,
prompting investors to question the authorities' commitment to
selling valuable but cash-strapped state assets.
Sevki Acuner, Ukraine director for the European Bank for
Reconstruction and Development, told Reuters that Ukraine needed
to focus on better preparing state companies for sale.
The lack of privatisation revenue has been an extra drag on
the state budget. Selling state firms is not an explicit
condition of Ukraine's $17.5 billion aid programme from the
International Monetary Fund, but forms part of the fiscal
rebalancing the IMF requires.
(Editing by Matthias Williams/Ruth Pitchford/Susan Fenton)