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October 5, 2018 www.intellinews.com I Page 2
Vested interests threaten Mysterious 'coal king'
to capture Ukraine’s Centrenergo privatisation
pany is considered one of the most attractive in the government’s portfolio of assets to be sold off.
The SPF and the nation's economy ministry are going to complete preparation of privatisation conditions in three days, Trubarov said, and will make an official announcement to launch the process in mid-October.
Alexander Paraschiy at Kyiv-based brokerage Concorde Capital believes that "at first glance, the starting price of Centrenergo looks feasible for potential investors". However, market experts agree that the company will likely be sold to the Ukrainian businessman Vitaliy Kropachev, who in recent months has monopolised coal supplies to Centrenergo.
According to information supplied by the company, coal companies controlled by the businessman
— the Chervonolymanska coal mine based in the southeast of Ukraine, as well as three coal clean- ing facilities — accounted for 83% of supplies (1.9mn tonnes) to Centrenergo in January-August.
Ukraine has a long tradition of local oligarchs manoeuvring to prevent the fair and open sale of state-owned assets. The government has tried to privatise Odessa Port Plant (OPP) three times already but it has proven impossible to sell partly because of a debt of UAH193mn owed to Ukrain- ian oligarch Dmytro Firtash's company Ostchem.
At the same time, another oligarch Ihor Kolomoisky has threatened to challenge any privatisation sale as his company Nortima says it would regard any sale as the purchase of stolen assets following a 2009 tender in which Nortima outbid two rivals with an offer of $600mn at the exchange rate at the time, but was rejected by the Ukrainian authorities.
Kropachev is close to Ihor Kononenko, who is a close associate and long-time business partner of Poroshenko. Kononenko, the first deputy head of the Poroshenko Bloc faction in parliament, is regarded as a 'grey cardinal' on the Ukrainian political scene for his leading role in unofficial ne- gotiations with other parliamentary factions, and together with Poroshenko owns various business- es and funds as bne IntelliNews described in a detailed investigation “LONG READ: Poroshenko’s empire – the business of being Ukraine’s presi- dent” published in August 2016.
Kropachev’s three coal cleaning facilities were added to his portfolio in 2016, after he reached arrangements on their purchase with representa- tives of Mako Group run by Oleksandr Yanukovych, the eldest son of the former Ukrainian president, who fled the country in 2014.
Meanwhile, Chervonolymanska was acquired
by Kropachev’s conglomerate in late 2017. Igor Humeniuk, a former member of the pro-Russian Party of Regions, acted as the seller of the asset: his companies were listed as the official owners of a majority shareholding in Donbasenerho, which went private serving Oleksandr Yanuko- vych’s interests, according to the Ekonomichna Pravda online outlet.
In February, Ukraine's leading energy conglomer- ate DTEK, controlled by fellow oligarch Akhmetov, complained that Centrenergo cancelled coal sup- ply contracts and refuses to purchase its coal any more, buying from Kropachev's coal companies instead.
The Centrenergo-DTEK agreements were broken in late 2017, when Chervonolymanska launched its production of hard steam coal and started pursuing this niche on the market. In late January, a company related to Chervonolymanska won an open tender to supply 0.1mn tonnes of hard coal to Centrenergo at UAH2,400 per tonne, which is less than the prevailing market price.