Ukraine gets top money for Donbasenergo, only 8% of privatization plan

The State Property Fund of Ukraine (SPF) stated on September 4 it received in full its payment for the 61% stake it sold in electricity generator Donbasenergo (DOEN UK). Energoinvest Holding paid UAH 719 mln for the stake, the SPF reported.

Alexander Paraschiy: Donbasenergo is by far the SPF’s biggest deal this year, bringing 79% of its total YTD privatization proceeds. With payment for Donbasenergo received in full, the SPF has sold public assets for about UAH 911 mln YTD, we estimate (assuming that the earlier announced UAH 128 mln prepayment for Donbasenergo was made in August). Yet that’s only 8% of the SPF’s full-year privatization plan (UAH 10.9 bln).

Another possible state energy property to be sold this year, Kharkivoblenergo (HAON UK), could bring another UAH 0.4-0.5 bln to the state. Still another possible big privatization candidate (though less likely for this year) is chemical giant Sumykhimprom. Yet even if these two properties – and perhaps some smaller ones – were to be sold on time this year, we expect the SPF will fulfill its privatization plan by only about a third.

Nevertheless, the likely failure to fulfill the privatization plan won’t become a major headache for the government, which planned to use attracted funds to partially finance its budget deficit. That’s because fulfillment of the privatization plan has been a rare exception in Ukraine’s budget history anyhow.