One More Energy Company In Kiev?

Yesterday the Kiev City Council created a municipal enterprise, Kievteploenergo, with the stated purpose of managing the city’s heating infrastructure which is currently leased by Kievenergo (KIEN: HOLD). Kiev mayor Leonid Chernovetskiy earlier announced that the city was considering ending a lease agreement between Kiev and KIEN. Alexander Paraschiy: Kievteploenergo is the third candidate that has been put forward to operate the city’s heating infrastructure in addition to the current operator KIEN and Kievenergoholding (created five months ago). It looks like Kievteploenergo was created by the city council as an alternative to the mayor’s choice Kievenergoholding. Still, we believe KIEN will continue to operate Kiev’s heating infrastructure (networks, boilers and power plants), as it has the support of the NC ECU (which has a 50%+1 share) and the World Bank the main creditor of city’s heating infrastructure upgrade. We also expect a compromise between Kiev city and the NC ECU – possibly with the NC ECU allowing the city to manage 50% of KIEN. We expect KIEN’s October 10 EGM to somewhat clarify the situation.