Ukraine president signs power regulator law that benefits DTEK

Ukrainian President
Petro Poroshenko signed on Dec. 12 a law to unfreeze the activity of the NERC,
Ukraine’s power sector regulator, according to the website of Ukraine’s
parliament. The law, approved by parliament on Dec. 7, allows the president to appoint at
his discretion any amount of NERC commissioners for no longer than three months
to ensure the regulator’s quorum.

Recall, the NERC has
lacked quorum since Nov. 13, when one of four remaining commissioners stopped
attending the NERC’s meetings. Later on, the president dismissed that
commissioner, leaving the NERC without a quorum of four.

Alexander
Paraschiy: As we’ve reported, it is vital for DTEK Energy
(DTEKUA), Ukraine’s leading coal and power holding, that the NERC becomes
operational as soon as possible and adopts necessary regulation by Dec. 21 to
enable DTEK’s thermal power plants to secure a higher electricity price for
1Q18 (the price hike may amount to 20% from today’s levels).

As we expected, all
the power brokers are acting quickly enough to meet the Dec. 21 deadline: the
parliamentary speaker signed the law on Dec. 8 and the president signed it on
Dec. 12. For instance, another law voted the same day (for changes to the tax
code) was not even signed by the speaker.

Now we expect the president will unfreeze the NERC’s activity in the
coming hours by appointing loyal temporary commissioners. All this confirms our
expectations that DTEK will enjoy better prices for its electricity in the new
year. That confirms our bullish view on DTEKUA bonds.