Ukraine considers speeding up privatization of power generators

The State Property Fund intends to speed up the privatization of the state’s remaining stakes in Ukraine’s power generation companies (GenCos), SPF head Oleksandr Ryabchenko said at a press conference yesterday. Ryabchenko added that there is no consensus yet on the privatization schedule. The state owns controlling stakes in four of five coal-fired GenCos: 50% in Dniproenergo (UX: DNEN UK), 70.1% in Zakhidenergo (UX: ZAEN UK), 78.3% in Centrenergo (UX: CEEN UK) and 85.8% in Donbasenergo (UX: DOEN UK). Yegor Samusenko: Earlier Ryabchenko said either Dniproenergo or Zakhidnergo would be privatized first, and that an official announcement could be made in 4Q10. We think there is a reasonable chance both Dniproenergo and Zakhidenergo will be privatized in 4Q10-1Q11, since the state looks unlikely to privatize Ukrtelecom by year-end while the state budget accounts for UAH 6 bln in privatization proceeds. This figure is close to the combined market capitalization of the state’s stakes in the two aforementioned GenCos. Moreover, there is a local bidder, DTEK, that appears ready to buy the stakes. We note that the stock market appears to have priced in the likelihood of privatization for Zakhidenergo, but we do not yet see a reaction on Dniproenergo to these expectations (refer to our note dated August 19 for details).