Cabinet to unite Centrenergo, coal mines in old energy holding

Ukraines’ Cabinet decided to unite state-controlled
power generation company Centrenergo (CEEN UK) with state coal mines into a
single holding, according to its Nov. 10 statement. For this reason, the
Cabinet decided to restore Energy Company of Ukraine (NC ECU), which had been
non-functional for seven years. According to PM Denys Shmyhal, this merger
“will allow to secure uninterrupted supplies of coal for Centrenergo, clear
demand for coal mines and possibilities for modernization.” Shmyhal highlighted
that this step does not mean the government is giving up on the Centrenergo
privatization plan. Instead, the government will offer for privatization 100%
in NC ECU.

NC ECU was created in 2004 by the Cabinet of then-PM
Viktor Yanukovych. It held the state’s stakes in all power generation and
distribution companies, most of which are now in private hands. In 2014, the
government decided to liquidate NC ECU.

Centrenergo’s government stake of 78.3% has been in
privatization lists for many years. It was very close to selling it in December
2018. In 2020, the Cabinet initiated a merger of Centrenergo
with some state coal mines, but this process has not been completed yet.

Alexander Paraschiy: The idea to resurrect an old company that proved inefficient looks
strange, and we see no ways for an improvement in the efficiency of
state-controlled coal and power assets as a result of their uniting into NC
ECU. A new problem is those state coal mines which won’t be merged into NC ECU
will have no prospects in Ukraine – and this will become apparent. The
government has been delaying the closure of inefficient mines for decades as it
is afraid of social tensions in coal regions which could spoil the government’s
reputation and electoral ratings. As such, we believe the process of creating a
new state coal and power holding can last many years.