Sevastopoblenergo to pay USD 3.2 mln in dividends in 2008

Sevastopoblenergo (SMEN: U/R) shareholders decided at their AGM yesterday to pay UAH 15.7 mln (USD 3.2 mln), or 100% of 2007 net income, out in dividends. Alexander Paraschiy: DPS is USD 0.12, dividend yield 2.2%. Not surprisingly, Sevastopoblenergo is going to pay a higher dividend than the other state-controlled Oblenergos combined. After privatization in 2001, the company was granted privileged tariffs for seven years, which allows its main shareholder (VS Energy) to receive a 17% annual return on money spent on privatization. VS Energy is using this privileged period to get back invested money and has made a 100% dividend payout in the last couple of years. We believe 2008 will be the last year the company will pay out a large dividend due to termination of its privileges, and the expected introduction of a new tariff policy will likely to force private owners to invest more in fixed assets.