Parliament to direct USD 0.6 bln to cover heating losses

Ukraine’s Cabinet of Ministers proposed directing UAH 4.58 bln (USD 0.57 bln) from the state budget to local budgets to compensate for the losses of heating companies from low heating tariffs. This amount was included into a draft law to amend the state budget for 2012 that will be up for approval by parliament, possibly as early as next week.

Alexander Paraschiy: We believe the aforementioned allocation was lobbied by DTEK, whose Kyivenergo (KIEN UK) suffers the most from inefficient heating tariffs. According to Kyivenergo, its accumulated difference between heating costs and tariffs amounted to UAH 2.24 bln as of end-2011. We believe the budget amendments, if approved, will allow Kyivenergo to receive at least UAH 2 bln in compensation this year, which will allow the company to report a positive bottom line (vs. a net loss of UAH 1.34 bln in 2011).