Ukraine to sell four DisCo stakes after RAB regulation implementation

Ukraine’s State Property Fund (SPF) will put for sale the controlling stakes in four power distribution companies only after the sector’s state regulator implements regulatory assets base (RAB) policy for them, SPF Head Ihor Bilous told journalists on Oct. 11. The new approach to calculating the profits of DisCos (based on their RAB, not their one-year budget) could be approved in a couple of weeks, Bilous estimated, which may allow the SPF to offer the four companies for privatization already this year. Bilous identified them as Ternopiloblenergo (TOEN UK, 51%), Kharkivoblenergo (HAON UK, 65%), Khmelnytskoblenergo (HMON UK, 70%) and Mykolayivoblenergo (MYON UZ, 70%).

Alexander Paraschiy: We welcome the decision of the SPF to wait until the approval of RAB regulation as it will significantly raise interest in these DisCos and secure much better tender prices as compared to what the sales would draw before the such regulation is introduced. The RAB regulation is what we earlier deemed as a necessary precondition for their sale. 

The new regulation will enable DisCos to boost their profits, and, more importantly, will allow investors to see how much profits/value the companies can generate in the long term. Now it has become clear that the four DisCos won’t be sold in October (as the SPF’s recent plan stipulated), and they are also not likely to be offered by the year end. But in this case, the delay looks well-grounded.