President Signs Law To Help Relieve Debt In The Energy Sector.

Viktor Yushchenko signed a law On Urgent Actions To Stabilize The Functioning Of Energy Sector Enterprises, which aims to solve debt problems in the energy sector. According to this law, a special list of energy companies is to be created. Bankruptcy procedures cannot be implemented to the listed enterprises for nine months.  During this period, listed companies can reconcile their outstanding payables and receivables, and reduce their debt level. If after reconciliation, the company’s debts to suppliers remain, this debt can be restructured. The law allows for a 10-year restructuring period for companies that are at least 50% state owned. Other companies can restructure their debts according to mutual agreements with their creditors. The source of funds for restructuring come from an additional surcharge to electricity or gas tariffs. Concorde Capital: This law will prevent energy companies from bankruptcy (bankruptcy procedures are open for Cherkassyoblenergo (CHON: N/R), and gas supplying companies Kyivgas and Kryvorizhgas). Now these companies will be allowed to restructure their debts. In addition, the debts of all the energy companies are expected to be reconciled or restructured. The restructuring will be implemented partially by raising costs to energy consumers, which will reduce the burden on energy companies. This is a sign of hope for Khersonoblenergo (HOEN: HOLD), whose USD 54 mln debt to the wholesale energy market operator (the highest among privatized oblenergos) had been restructured for 10 years by the previous government but then reverted by the new power.