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Eastern Europe
December 14, 2018 www.intellinews.com I Page 20
Ukraine cancels privatisation auction of power company Centrenergo
bne IntelliNews
Ukraine has cancelled the auction for a control- ling stake in state power producer Centrenergo, the head of the State Property Fund, Vitaly Tru- barov, said on December 11. The auction was ex- pected to be won by insiders with ties to President Petro Poroshenko.
In what should have been the biggest privatisation auction of the year, the government was to offer 78.289% stake in the company that supplies power to Kyiv and the surrounding region with a starting price of UAH5.98bn ($215mn).
The auction was already controversial after it emerged that the most likely winner was going to be Kyiv-based Ukrdoninvest that is controlled by businessman Vitaliy Kropachev, a businessman connected to Poroshenko. The State Property Fund cancelled the auction after throwing out two bids, including Ukrdoninvest’s bid, because of insider ties.
“The participants of the tender, and these are Ukrdoninvest LLC and the production unitary enterprise Oil Bitumen Plant, are not allowed to participate in the tender, since the documentation submitted by them does not meet the require- ments of the legislation, in particular, paragraph 5.7.14 of the regulations on the procedure for holding tenders for the sale of shares of joint stock companies, on the provision of information and copies of documents regarding persons con- nected with a potential buyer,” Trubarov said.
Kropachev is a close associate of Poroshenko and, as bne IntelliNews reported, had locked up the coal supplies to the power company.
Ukraine has cancelled the auction of a controlling stake in state power producer Centrenergo
Kropachev is also reportedly close to Ihor Kononen- ko, who is a close associate and long-time business partner of Poroshenko as well as the first deputy head of the Poroshenko Bloc faction in parliament.
Earlier, the Ukrainian cabinet approved a starting price for the sale of the 78.3% stake in Centren- ergo of UAH5.98bn ($210mn).
In a separate resolution, the Ukrainian government approved the conditions for the sale of the company. Specifically, the conditions provide for Centrenergo’s payment of dividends to the national budget in the amount of 30% of net profit for 2018, while the draft resolution contained the text on the payment of dividends in accordance with the standard approved by the government, which in 2017 was 75%, and 2016 50%.
It was reported earlier that a total of five companies had submitted bids. Previously Trubarov said the pri- vatisation would go ahead despite the imposition of martial law on November 25. According to Trubarov, bids had been received in November, after which the bidding companies must pay a guarantee fee.
"The introduction of martial law will not affect
the privatisation processes (procedure), both for large and small enterprises. At the same time, an investor will take into account the relevant fact," Trubarov said on his Facebook page at the time.
Amongst the companies that announced an inten- tion to bid were Ukraine’s largest private gas pro- ducing companies Ukrnaftoburinnia that is con- trolled by Ukraine’s richest man Ihor Kolomoisky.