Ukraine government to offer 61% stake in Donbasenergo in August

The State Property Fund of Ukraine (SPFU) declared in a June 1 release a new wave of electricity company privatizations in 2H13, which includes a planned August announcement of a sale of a 60.7% stake in power GenCo Donbasenergo (DOEN UK).

In August-September, the SPFU will also offer the state’s stakes (46% to 75%) in seven regional power distrbution companies. The list includes two large companies: Zaporizhiaoblenergo (ZAON UK), in which the state will offer its 60.3% stake via tender, and Kharkivoblenergo (HAON UK), in which a 5% stake will be sold via stock exchnages and 60% via an open tender.

The SPFU’s list expectedly does not include Centrenergo (CEEN UK), which lost its investment attractiveness after fire-related damage at one of its three power stations in late March 2013.

Alexander Paraschiy: This year, the SPFU is lagging unusually in meeting its privatization revenue targets: the full-year plan is UAH 10.9 bln, while the Fund raised less than UAH 0.2 bln in 5M13. The announced sale of eight electricity companies will not help much to meet the plan: the aggregate stock-market price of the stakes to be offered is UAH 0.9 bln, while we estimate the maximum revenue the Fund can get from their sales is UAH 2.0 bln.

Given the SPFU will have to catch up somehow its “privatization performance” year-to-date, we see a high chance that privatization of the announced energy companies will happen in 2013. Moreover, there is some probability that Ukraine will offer a 53%-78% stake in Centrenergo later this year, providing the state succeeds in restoring its damaged Uglegorsk TPP.