The privatization of the nation's electricity companies was in jeopardy until the government listened to the concerns of potential bidders. Now, there may be interest
At least one prospective investor has agreed to bid on a regional electricity distributor scheduled to be privatized this month in the wake of government concessions to make the process more financially rewarding.
Ignasio Ibara, country director for Spain’s Union Fenosa ACEX in Moldova, said April 9 that his company would bid on one or more of Ukraine’s electricity distribution companies, known as oblenergos, but declined to disclose which oblenergos his company was interested in. Union Fenosa owns three power companies in neighboring Moldova.
Ibara’s comment followed an April 7 government resolution that stipulated to a series of measures that prospective investors had been requesting for months.
The government guaranteed full payment for electricity purchased by state-owned enterprises and granted oblenergos the right to disconnect customers who fail to pay. Further, oblenergos would not be liable to Energorynok, the wholesale electricity market, for debts incurred by state-owned companies should they occur.
The government also agreed to restructure debts owed by oblenergos as of the date of purchase. Retail electricity rates would also be allowed to increase by about 11 percent under the deal. Oblenergo operators will be permitted a 17 percent net margin.
Kamil Goca, head of research at the Dragon Capital investment bank, said the government’s chances of attracting multiple bids have increased now that it has fulfilled the potential buyers’ key requirements.
Union Fenosa’s Ibara called the government’s decision “extremely necessary and timely.”
Representatives of Electricite de France and the United States’ AES Silk Road were closemouthed on their companies’ plans. Mikhail Malyovany, the head of the AES representative office in Ukraine, said the company’s experts were still analyzing the government’s resolution.
Ukraine’s sale of oblenergos is seen as a chance to change the country’s poor image among international businesses. The deadline for submitting bids for the first three oblenergos – Kyivoblenergo, Zhytomyr- oblenergo and Rivneoblenergo – is set for April 17. A tender for three more companies – Kirovohrad- oblenergo, Khersonoblenergo and Sevastopoloblenergo – expires on April 24.
Five foreign firms have expressed interest in the sale.
