Ukrnafta raises tax payables as Centrenergo may cease to be public JSC

The tax obligations of Ukraine’s largest crude oil
producer Ukrnafta (UNAF UK) reached UAH 15.7 bln, according to a Sept. 22
statement of the State Tax Service. This is 1.2x more than its tax payables as
of end-1H17 and more than the company’s revenue for 1H17 (UAH 13.9 bln).

In other news, another “blue chip” of the Ukrainian
local stock market, power GenCo Cenrenergo (CEEN UK), announced an EGM for Oct.
11 with plans to vote for a reorganization from a public joint stock company to
a private joint stock company. For private joint stock companies, legislation
stipulates a preferred right of existing shareholders to purchase any shares of
other holders.

Alexander Paraschiy: Such news
flow reflects the utter misery of Ukraine’s local stock market. Out of five
remaining “blue chips” (components of the Ukrainian Exchange Index), Ukrnafta
is on the verge of bankruptcy, and Centrenergo is going to reorganize itself in
a way that its shares are unlikely to be freely traded.

In light of the recent case of a 41% stake in
another UX component, Motor Sich (MSICH UK), being frozen – with the risk of the company’s other shares also
being banned from trading – we see little chance for the local stock market to
become resurrected from the brink of death. That utterly undermines the
proposal by some lawmakers to introduce compulsory pension accounts in Ukraine
as part of ongoing pension reform.