October 24, 2011 / 3:00 PM / 8 years ago

INTERVIEW-Ukraine's DTEK mulls buying new assets

* DTEK produces 27 pct of Ukraine’s thermal power output

* Borrows $1 bln for new acquisitions

* Plans to boost energy exports in 2011

By Pavel Polityuk

KIEV, Oct 24 (Reuters) - Ukraine’s largest private electric power company DTEK is considering taking part in upcoming privatisation tenders in a bid to boost its market share and raise energy exports, DTEK CEO Maksim Tymchenko said on Monday.

DTEK, part of the empire of Ukraine’s richest businessman Rinat Akhmetov, accounts for about 27 percent of the country’s thermal power generation. It also controls about 28 percent of Ukraine’s coal production and about 20 percent of power distribution.

Ukraine plans to sell 13 energy companies this year, and Tymchenko said DTEK was considering buying stakes in power producers Zahidenergo ZAEN.PFT ZAEN.UAX and Dneprenergo DNEN.PFT DNEN.UAX and in two energy distributors Kievenegro and Donetskoblenergo. [ID:nLDE75T15H]

The government has said the sell-off should help it finance its budget deficit and at the same time attract fresh investments needed to upgrade the former Soviet republic’s ageing energy infrastructure.

“These companies are interesting to us because we are their biggest private shareholders. It is interesting, but the conditions (of tenders) are an issue,” Tymchenko told Reuters in an interview.

The starting price for a 45.1 percent stake of Zahidenergo is $242 million, while bidding for 25 percent of Kievenergo will start at $54 million. The tenders are set for Nov. 25, 2011.

DTEK owns 25.06 percent of Zahidenergo, 39.98 percent of Kievenergo, 30.06 percent of Donetskoblenergo and 47.55 percent of Dneprenergo.

Tymchenko said that conditions of the tenders were “tough” and the winner must invest up to 6 billion hryvnias ($750 million) in Zahidenergo alone.

“I think that the price is surprisingly high in current conditions, taking into account such a high volume of investment obligations. This is why... the final decision (on bidding) has not been made yet”, he said.

He added that the final decision could be taken on November 10-11.

But Tymchenko said DTEK had a clear strategy on future development of Zahidenergo, Ukraine’s only energy producer which could export power to Europe.

“The prospect of the development of Zahidenergo is active reconstruction, upgrade of the present units and construction of new units,” he said.

Tymchenko said DTEK planned to boost its energy exports to about 6 billion Megawatt-hours (Mwt/hrs) in 2011 from 1.21 Mwt/hrs in 2010 and hoped to maintain the sales at the same level in 2012.

According to data provided by the Energy Ministry, Ukraine exported 4.2 billion Mwt/hrs in the first nine months of 2011 against 2.7 Mwt/hrs in the same period in 2010.

“We are exporting to all possible directions except Russia. We export to Belarus, Moldova, European countries,” he said, adding that DTEK could increase the capacity of export generator Zahidnergo by 25-30 percent if the company “dares” to buy it.

FUNDS

Tymchenko said DTEK, which also plans to participate in concession tenders for two large coal producers, had already collected significant funds for future acquisitions.

Tymchenko said DTEK had borrowed about $1 billion in the last three weeks, including $500 million from Russia’s Sberbank and $340 million from another Russian bank VTB.

“These funds are meant for future privatisations and other acquisitions, and they offer some buffer against a possible crisis,” Tymchenko said.

DTEK’s revenue jumped 74 percent to about 18.5 billion hryvnias ($2,3 billion) in H1, 2011 against the same period in 2010. Net profit rose 71 percent to 2.2 billion hryvnias ($275 million) in January-June 2011.

($1 = 8.0 Ukrainian hryvnias)

(Reporting by Pavel Polityuk; Editing by Andrew Callus)

((pavel.polityuk@thomsonreuters.com)(+380 44 2449150)) Keywords: UKRAINE COMPANY/DTEK

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