Cabinet approves Donbasenergo privatization

Ukraine’s Cabinet of Ministers approved the transfer of the state’s 60.77% stake in power GenCo Donbasenergo (DOEN UK) from the state utility holding NAK ECU to the State Property Fund, the SPF head told journalists on Feb 20. The SPF may announce a privatization tender as soon as April, he said. Following the announcement, DOEN stock surged 8% intraday before closing at a 4.4% gain.

Alexander Paraschiy: The Cabinet’s decision is a clear step towards Donbasenergo’s eventual privatization. This move was expected a year ago when the company stood in SPF’s 2012 privatization list with an asterisk explaining that “it’s subject to Cabinet approval.” However, we do not share the market’s optimism on Donbasenergo, at least not until we see the conditions for privatization and list of potential bidders. We also are disappointed by the fact that the government is not going to sell its entire stake in the company, which is 85.77%. It intends to retain a 25% block, contradicting earlier announcements that state stakes in electricity companies would be privatized fully.