DTEK won’t participate in Donbasenergo tender

Ukraine’s largest utility holding DTEK (DTEKUA) has no plan to participate in a tender to privatize Donbasenergo (DOEN UK), the holding’s CEO Maxym Tymchenko told the InvestGazeta newspaper in an interview published on July 22. The holding’s share in Ukraine’s power production is close to 30%, which is close to the 35% benchmark establishing DTEK’s monopoly position on the market. For this reason, DTEK has limited room for growth and the holding is willing to increase its remaining share within its limit by investing into wind or hydropower, Tymochenko said.

The tender for privatizing a 60.77% stake in Donbasenergo is scheduled for August 2013.

Alexander Paraschiy: Among the companies that may qualify for the Donbasenergo tender are Kharkiv CHP-5, a heat and power producer that was privatized in November 2012 by a company with unknown partners, Ukreastgas Ltd. It perfectly meets the requirements to produce and sell power to the wholesale market of not less than 15% of Donbasenergo’s production and sales figures (CHP reached 15.03% in 2012).

Given this mathematic coincidence (and overall strange qualifying number of 15% set by the government), we see the new owner of Kharkiv CHP-5 as the main candidate to buy the Donbasenergo stake. As for Ukreastgas’s owners, some media speculate the company is related to Deputy Prime Minister Yuriy Boyko, some attribute it to Boyko’s close ally Dmytro Fritash, while others believe the owner to be Vadym Novinskiy of Smart Holding.

Among the other companies that may meet the tender’s qualifying requirements (those having mined coal in the amount of at least 15% of Donbasenergo’s consumption) are private miners of steam coal – Zhdanovska Mine and Coal Energy (CLE PW) – as well as the producers of coking coal, Pokrovske Mine (SHCHZ UK), Zasiadko Mine and Krasnolimanske Mine. Yet we do not see any hypothetical interest in Donbasenergo among them, based on their business models.