Cabinet considers suing Oblgazes and Oblenergos for bankruptcy

Prime Minister Yulia Tymoshenko said yesterday that the Cabinet of Ministers could soon sue Oblgazes and Oblenergos for bankruptcy in courts over debts owed to Energorynok and Naftogaz of Ukraine. The measures are part of the government’s initiative to increase the solvency of the gas and electricity distribution sectors. Tymoshenko said that if the companies clear their debts to the two state companies, this will help to fill state budget income. According to Kommersant, the government considers nationalization of privately-owned energy companies via exchanging their debts for equity. Alexander Paraschiy: To realize Tymoshenko’s plan, parliament has to amend Law #2711, which protects energy companies from bankruptcy until the end of 2010. Even if the law is amended (which seems unlikely), there is a low chance of opening bankruptcy procedures against Oblenergos with high outstanding debts to Energorynok (the exclusion is Donetskoblenergo, DOON). Officially, the majority of the most indebted Oblenergos: Odesaoblenergo (ODEN), Dniprooblenergo (DNON), Krymenergo (KREN) and Vinnytsyaoblenergo (VIEN) restructured their outstanding payables for 10-30 years. Moreover, most of them (except ODEN) are state-controlled. The candidates for nationalization would, thus, seem to be Khersonoblenergo (HOEN, UAH 369 mln debt to Energorynok) and Mykolaivoblenergo (MYON, UAH 530 mln debt).