Ukraine may split Centrenergo before privatization

Ukraine’s State Property Fund (SPF) is considering a proposal to sell power generator Centrenergo (CEEN UK) not as a single asset, but as three separate power plants, SPF Head Ihor Bilous told journalists on June 13, as cited by Interfax-Ukraine. Centrenergo operates three thermal power pants (TPPs), including Trypilska TPP (1.2 GW of anthracite-fired capacity, located near Kyiv), Zmiyivska TPP (2.2 GW of anthracite-fired capacity, located near Kharkiv, Ukraine’s second-biggest city) and Vuhlehirsk TPP (1.2 GW of coal-fired capacity, located in the Donetsk region about 20 km from the war zone).

The Trypilska and Zmiyivska TPPs will be in demand among potential investors, while it’s doubtful that the Vuhlehirsk TPP will be attractive for potential investors, Bilous said. The potential division is subject to additional analysis and discussion, he said. Earlier, Bilous stated that Centrenergo won’t be sold this year, only possibly in 1H17.

Alexander Paraschiy: The division of Centrenergo into three parts does not look like a trivial task, given that the company has some additional assets besides power plants. The division offers no benefits for the minority shareholders of Centrenergo: 1) it will destroy what little is left of the liquidity of its shares, 2) and it will lead to increased overhead costs of its new units. The division can indeed simplify the sales of two out of the three business units (mentioned above), but only if the potential buyers have a vision on how to secure supplies of scarce anthracite coal to them. Such a move won’t necessarily lead to the maximization of government proceeds from Centrenergo’s sale. So far, the SPF’s new idea looks like a dressed up attempt to further postpone the company’s privatization.