Ukraine’s three top oblenerhos sell for $100 million

On April 17 Kyiv hosted a tender selling shares of Ukraine’s top three oblenerho [regional power distribution companies] of six to be privatized in 2001: Kyivoblenerho, Zhytomyroblenerho, and Rivneoblenerho. Four investors reached the home stretch: EDF (France), AES Washington Holdings BV (US), Union Fenosa Aces (Spain), and Vychodoslovenske enrgeticke zavody (Slovakia). Previously, parliamentary privatization oversight committee chairman Oleksandr Riabchenko suggested that the two EDF and AES giants would compete for Kyivoblenerho, with the Slovaks picking the leftovers (courtesy of www.for-ua.com). Union Fenosa most likely had a special plan concerning generating companies, the lawmaker added. Mr. Riabchenko believed that the bidding rules were geared to make foreign companies’ the sole bidders, yet selling six Ukrainian companies, most of them money losers, would remain far from simple.

Blitz tender’s results in a way confirmed the forecast. Kyivoblenerho’s block of shares was indeed vied for by the US and French companies. EDF bid UAH 208.52 million, but AES beat it with UAH 248.68 million, winning the tender. The Americans were the only bidder for Rivneoblenerho and bought the shares for UAH 125.695 million (a sum still to be confirmed by experts under the bidding rules). Zhytomyroblenerho’s block went to the Slovak company bidding UAH 190 million. In all the Ukrainian budget received about $100 million after selling three electric companies.

After the tender, First Vice Premier Yuri Yekhanurov and State Property Fund Chairman Oleksandr Bondar seemed less than overjoyed; both made no secret of having expected more bidders and larger proceeds. Mr. Yekhanurov added philosophically (apparently with an eye to current political risks): “Nothing passes without a trace. We must put up with the fact.”

Officials speaking at the press conference did their utmost to bypass the issue of boosted electricity rates because of oblenerho privatization, stressing the tender’s transparency. The turnout makes it clear that the $250 million officially expected from selling shares of Ukraine’s six electricity-supplying companies will never come the budget’s way, meaning that this year’s privatization returns schedule will have to be updated. The next energy tender, involving Sevastopolenerho, Kirovohradoblenerho, and Khersonoblenerho, is scheduled for April 24.