Nationalized Shell Gas Stations: Prospects and Challenges for Privatization

Businesses are assessing the likelihood of selling Shell gas stations that have been nationalized.

Serhi Kuyun estimates that the cost of a gas station could vary between $800k and $ $ 999k totaling around $105 million to $ 132 million for a total of 132 gas stations.

The likelihood of selling the government owned share in Shell gas stations is very low according to Serhiy Kuyun, from the Consulting Group A 95 who shared his views in a Facebook post dated Monday November 18th stating that the State Property Funds chances of selling this asset are currently quite slim."

As per the specialists analysis the cost of acquiring a gas station falls within the range of $800k to $1 million; thus amount to approximately $105 million to $132 million for a total of 132 gas stations with roughly 120 presently in operation. Concurrently Shell has disclosed expenditures of $460 million in its Ukrainian operations. Consequently any prospective purchaser faces the possibility of experiencing losses, with this investment.

Expert Insights: Why Selling Shell’s Stake May Be Difficult

According to Kuyuns observation the issue is not about pricing but also about the market conditions during wartime situations too. 10% Of the network is out of service due to safety concerns for employees. In addition to this challenge is the networks inability to rival competitors owing to weaker marketing efforts and stringent adherence to regulations such, as paying hefty taxes in full.

"He highlighted that Shell has been facing losses, in Ukraine for quite some time now and its revenue barely meets its costs."

Kuyun suggests that forming partnerships in Ukraine might not be practical and this could pose a challenge for the State Property Fund of Ukraine (SPFU) who may find it difficult to attract a buyer, for Shells share.

He thinks that a lot hinges, on Shells decision making process whether the company opts to buy back the stake or eventually offload its ownership stake.

Investment Risks: Low Profitability and Market Challenges

"The expert came to the conclusion that this situation's similar, to a traditional scenario of having a suitcase that lacks a handle."

In November last year in Ukraine the government took over part of Shells gas station chain. The State Property Fund acquired a 49% stake in Alliance Holding LLC, which oversees these gas stations. Before this change the ownership belonged to an individual named Eduard Khudainatov, who faced sanctions due, to Russias invasion of Ukraine.

The State Property Fund is currently getting ready to privatize a 49 percent stake that was taken over in Shells gas station network with the auction scheduled to take place via the Prozzoro.Sale online platform.