You're reading: DTEK retains interest in privatization of Ukrainian power generating and supply companies

The largest private energy holding in Ukraine – DTEK – is still ready to participate in the privatization of Ukrainian power generating and supply companies and expects that the state will present the concrete conditions for their sale, DTEK CEO Maksym Tymchenko has told Interfax-Ukraine.

“We’re still interested in Ukrainian power generation. We have a chance to increase the generation share in line with antimonopoly restrictions,” he said on the sidelines of events organized by the Victor Pinchuk Foundation as a part of the World Economic Forum in Davos.

Tymchenko said that the company expects that the privatization conditions of the state will be distinct.

“This is same story as with the regional power supply companies: a lot of talk, but no concrete steps. When we see concrete steps, we’ll express our interest at once,” he said.

Commenting on the plans of the holding in the oil and gas area, he said that this quarter DTEK plans to declare an orientation towards its oil and gas assets and its participation in Vanco Prykerchenska.

DTEK was established in 2005 to manage the energy assets of the System Capital Management group, owned by businessman Rinat Akhmetov. DTEK is a vertically integrated company involved in the production and enrichment of coal and the generation and sale of electricity.

The company has divisions that distribute power and are engaged in repair work. From late 2011 through H1, 2012 the holding won privatization tenders on the sale of heat generating companies Zakhidenergo and Dniproenergo, and power supply companies Kyivenergo, Krymenergo, Dniproenergo and Donetskoblenergo.

In addition, DTEK includes a power generating company – Skhidenergo created on the basis of three thermal power plants Donbasenergo and power supply companies Energovuhillia ENE and Service-Invest (Donetsk region).

Ukraine in 2012 said that the state plans to privatize two out of five state-run heat generating companies: Centrenergo and Donbasenergo. The State Property Fund of Ukraine has confirmed its plans to sell them in 2013. The fund expects that UAH 2.3-2.5 billion will be paid for the two companies.

In addition, six power supply companies will be privatized: Kharkivoblenergo, Zaporizhoblenergo, Khmelnytskoblenergo, Ternopiloblenergo, Mykolaivoblenergo and Volynoblenergo.

Vanco International, fully owned by Vanco Energy Company (the United States), in April 2006 was declared the winner of a tender to sign a product sharing agreement for extraction of hydrocarbons on the Black Sea shelf within the Prykerchensky oil and gas field. In October 2007, Vanco International assigned its rights and liabilities for PSA to Vanco Prykerchenska created in August 2007. The owners of Vanco Prykerchenska on a parity basis are Vanco International, DTEK, Shadowlight Investments Limited of Russian businessman Evgeny Novitsky and Integrum Technologies Limited.

Yulia Tymoshenko’s government in 2008 left the PSA agreement and Vanco appealed to the international arbitration still offering the Ukrainian government to resume cooperation under the PSA agreement. When Viktor Yanukovych became Ukrainian president the new government of Mykola Azarov in April 2011 approved an amicable agreement with Vanco Prykerchenska, instructing to amend the agreement in distribution of hydrocarbons. However, the amicable agreement has not yet been signed. According to well-informed sources, one of the reasons of the delay is the establishment of relations between the co-owners of Vanco Prykerchenska.