Regulators help Oblenergos that suffered from flood

At its extraordinary meeting yesterday, Council of the Wholesale Energy Market (WEM) voted to allow Prykarpatoblenergo (PREN: BUY) postponing payment of UAH 4 mln (USD 0.8 mln) for the purchased electricity on the WEM. This will secure the company with enough cash to start reconstruction of power lines damaged by the flood. In addition, the commissioner of the National Electricity Regulatory Commission (NERC) Yuriy Andriychuk said the NERC mulls upon upward revision of investment programs (i.e., tariffs for electricity transmission and supply) for Oblenergos which suffered from flood. According to Prykarpatoblenergo CEO Alexander Buben, preliminary estimation of the company’s damages is USD 5.1 mln – this number does not account part of low-voltage grids (we estimate total losses at USD 5-8 mln). Among all distribution companies Prykarpatoblenergo suffered the most from the flood. Alexander Paraschiy: Regulators’ statements support our expectations that Oblenergos’ losses from the flood will be compensated (expressed in our Aug. 31 note on Oblenergos). WEM is effectively lending money to the company to solve liquidity problem. We support our BUY recommendation on PREN.