A disputed auction of a Ukrainian Black Sea chemical plant plunged into confusion on Tuesday with Ukraine's Nortima first being declared the winner and then being told its $624 million offer had been rejected.
The privatisation auction of the Odessa Port fertiliser plant went ahead on live television despite a Sept. 17 decree by President Viktor Yushchenko banning its sale.
Nortima, which is controlled by Ukrainian oligarch Ihor Kolomoysky, was declared to have won after upping its offer to 5 billion hryvnias ($624 million).
But within minutes a senior official of the country's privatisation agency said Nortima's offer had been rejected because it was too low and Prime Minister Yulia Tymoshenko made clear she was in agreement.
"It became evident on live television how the three participants in the auction conspired to buy the Odessa Port plant for a song," she said in a statement.
Apart from Nortima, two other companies -- Ukraine's Frunze-Flora and Russia's Azot Servis, a unit of Sibur holding -- were in the bidding.
The State Property Fund had set a minimum price for the plant of 4 billion hryvnias ($500 million).
The sale was potentially the largest in the ex-Soviet country since 2005 and Tymoshenko's government had hoped to bring vital funds into the stretched state budget.
But the decree by Yushchenko, Tymoshenko's political rival, which banned the Odessa plant's privatisation had always made the status of the auction legally dubious.
Even before it opened, a spokesman for Yushchenko condemned the auction as "hasty and illegal".
Ukraine's privatisation history since independence from the Soviet Union in 1991 is chequered.
Successive governments have tried to sell off the Odessa fertiliser plant as well as Ukrtelekom, the dominant state telecoms company, for about 10 years.
Yushchenko had banned the sale of the Odessa twice before, citing national security concerns. He has also said ownership of a port terminal would give a non-state owner an unfair advantage over other firms trying to send goods via the terminal.