Government Adds 60% Stakes in Four GenCos to 2008 Privatization List

Ukraine’s Cabinet of Ministers today posted on its website a resolution, passed on March 19, amending the 2008 privatization list to include 60% stakes in four electricity generation companies: Centrenergo (CEEN: HOLD), Dniproenergo (DNEN: HOLD), Donbasenergo (DOEN: BUY) and Zakhidenergo (ZAEN: HOLD). Alexander Paraschiy: Privatization of these four generation companies in 2008 looks unlikely. To complete it, the government needs to work out a strategic plan for their privatization. The most crucial question is the distribution of privatization proceeds: the Ministry of Fuel and Energy is likely to insist on partial redirection back to the companies, while the Ministry of Finance is apt to insist on allocating 100% to the state budget. Additional uncertainty that must be clarified before privatization relates to the size of the state’s stake in Dniproenergo: after its AGM approved its additional share issue in August 2007, the state’s stake effectively dropped from 76% to 50%. However, since new shares have not been officially registered, de jure the state still controls 76%. The cabinet’s resolution ordered privatization of 60% of the company’s old (pre-issue) shares.