Six Oblenergos Getting Prepared for Privatization

According to the Minister of Economy Anatoly Kinakh, 25-27% stakes in six Oblenergos have been excluded from the charter fund of National Energy Company of Ukraine (NC ECU). Privatization of these stakes is in the preparation stages, and is scheduled for 2007-2008. Alexander Paraschiy: All six are “conflict” Oblenergos: Privat and Energy Standard are battling for 36-40% stakes in Prykarpatoblenergo (PREN: U/R), Lvivoblenergo (LVON: U/R), Poltavaoblenergo (POON: U/R), Chernihivoblenergo (CHEON: U/R) and Sumyoblenergo (SOEN: U/R). According to the newspaper Kommersant, recently Privat lost its case in the London Arbitrary Court against Energy Standard, and the conflict is now being studied in Cyprian courts. In Odesaoblenergo (ODEN), there are conflicts between VS Energy, the main shareholder, the State Property Fund and the AvtoKRaZ group. If Privat wins the privatization tender for five Oblenergos, it will obtain full control (more than 60%) over Prykarpatoblenergo, which will give significant leverage to Privat in its conflict over the Oblenergos. In any case, privatization will be a big step toward solving the conflicts, as privatization winners will have good chance to become winners in the conflicts.