The Kyiv commercial court has unblocked the process of privatizing state-owned energy company Centrenergo, which provides 15% of Ukraine’s electricity needs.
The State Property Fund on Feb. 6 won the right to privatize Centrenergo over controversial investment fund Ukrdoninvest, Ukrainian media reported on Feb. 10. The Fund will start preparing a tender to have Centrenergo and its largest facilities privatized, it said in a statement. It hopes to sell the energy giant within the next two years.
Centrenergo owns three thermal power plants – Trypilska, Vuglegirska, and Zmiivska – and the repair service Remenergo. The company powers the vast Kyiv, Kharkiv and Donetsk oblasts.
The Ukrainian government wants to privatize as many state-owned companies as possible, including Centrenergo, as Ukrainian President Volodymyr Zelensky aims to bring more foreign investors to Ukraine.
In November 2019, Prime Minister Oleksiy Honcharuk put Centrenergo on the top priority list for privatization.
Firm Ukrdoninvest tried to block the process, as the company was hurt during the previous privatization tender, which took place in October 2018. At the time, the Fund decided to stop the $220-million tender process midway, when there were two bidders, including Ukrdoninvest.
Ukrdoninvest opposed that decision and went to court, claiming it had a right to the energy giant.
“Who said that I won’t buy Centrenergo?” Ukrdoninvest founder, multimillionaire Vitaliy Kropachov, even said in a 2018 interview with Ekonomichna Pravda after the bid was canceled.
Kropachov won the case, and the Commercial Court of Kyiv then imposed a ban on the privatization process. That ban remained in place until the State Property Fund eventually reversed the decision.
Kropachev is an alleged ally of Ihor Kononenko, a businessman and former lawmaker close to former President Petro Poroshenko. Kropachev, however, has always denied any connections with either man.
In 2015, during Poroshenko’s presidency, Kropachev’s Ukrdoninvest took control of the supply chain of Centrenergo. It monopolized coal supplies to Centrenergo until 2019, allegedly thanks to support from Poroshenko’s team. At the time, all the coal supplied to the state-owned energy company was either produced or processed by Kropachev’s mines and refining plants.
Today, Ukrdoninvest’s financial results are weak compared to 2018: Its net profit experienced a 76% fall over the last year and the company brought in only $400 million in 2019.
Zelensky’s victory in the April 2019 presidential elections brought little change to the transparency of Centrenergo.
In July, after a change in the company’s management, it started to purchase coal primarily from enterprises controlled by controversial oligarch Ihor Kolomoisky. At the time, he was widely considered an ally of Zelensky, something the president has denied.
A July 2019 investigation led by Ukrainian media outlet Ekonomichna Pravda reported that Kropachev was replaced as a decision-maker in his own company by Donetsk businessman Vitaly Belyakov, a coal tycoon allegedly linked to Kolomoisky.
