Cabinet of Ministers removes electricity companies from strategic asset list

Ukraine’s Cabinet of Ministers yesterday excluded electricity generation and distribution companies from its list of strategically important enterprises, Interfax reported. Yegor Samusenko: By excluding the companies from the list of strategically important enterprises (read “the list of enterprises excluded from privatization”), the government yesterday unlocked the long-awaited privatization in the electricity sector. We expect the state to announce the first privatization in November-December, with Zakhidenergo most likely the first generator to be privatized. We expect this to be a strong catalyst for the whole sector, as this will be the first ever privatization in the electricity generation sector and would mean the end of state dominance in thermal power generation. The government can now move forward with the privatization of its remaining stakes in generation companies over 2011-12, with electricity distribution companies following over 2011-2014. We see the current unity among the State Property Fund, Fuel & Energy Ministry, Cabinet of Ministers and President, as well as the budget deficit and GenCo’s thirst for CapEx, as a unique combination favoring privatization.