Donbasenergo to get UAH 2.5 bln loan from Oschadbank

Power GenCo Donbasenergo (DOEN UK) is going to sign a loan agreement with Oschadbank (OSCHAD), the Interfax-Ukraine news agency reported on September 26. The bank is going to open a seven-year revolving credit line for a total consideration of UAH 5.47 bln and with a debt limit set at UAH 2.5 bln, Interfax said. The loan is being taken to finance reconstruction of the company’s Slaviansk Thermal Power Plant Unit #6 at a total cost of UAH 6.81 bln.

Earlier this year, Donbasenergo received a UAH 1.34 bln loan from Oschadbank to finance the reconstruction of its power unit #7 at Slaviansk TPP and already gained UAH 1.1 bln in compensation from a tariff markup to service the loan. Before that, Ukraine’s Cabinet of Ministers approved a modernization plan for the two power units at Slaviansk TPP.

Alexander Paraschiy: Following the logical sequence of investment projects at Ukrainian power plants (the Cabinet approves a plan – the GenCo secures a loan – the power sector regulator grants a CapEx-related tariff markup), Donbasenergo should receive a significant tariff markup that will partially cover the cost of servicing the new loan.

We see the new markup (which will be paid by power consumers) as enabling the company to generate at least UAH 2 bln (and up to UAH 5 bln) of additional revenue in the next five-seven years. We expect that will increase Donbasenergo’s profit in the coming years and boost the company’s dividend payouts. As a company with a 25% state stake, Donbasenergo is obliged to distribute at least 30% of its profit in dividends.