Kyivenergo to receive USD 280 mln in compensation from Kyiv
27 June 2012
The city of Kyiv will repay Kyivenergo (KIEN UK) UAH 2.23 bln (roughly USD 280 mln) to compensate for losses from its heating supply business, the deputy head of the Kyiv City Administration said yesterday. The city will receive UAH 2.52 bln from the state budget to partially cover the accumulated losses of utility companies from low tariffs, and will start repayment in mid-July. Kyivenergo claimed UAH 2.24 bln in accumulated compensation arrears from the city of Kyiv as of end-2011.
Alexander Paraschiy: The news is in line with our expectations that Kyivenergo might receive about USD 250 mln this year (refer to our news of April 11 and 26). The amount would allow Kyivenergo to post profits in 2012 (vs. a UAH 1.34 bln net loss in 2011) and benefit the consolidated 2012 financials of DTEK (DTEKUA), Kyivenergo’s controlling shareholder. On the downside, the municipal representative suggested heating tariffs in Kyiv are unlikely to increase, which keeps Kyivenergo’s future profits highly dependent on further budget compensations.
