Archive for April 16th, 2011

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Oi Oi Gov’ner, wanna buy a second hand………energy supplier?

April 16, 2011

Well dear readers, having escaped from the energy arena yesterday briefly, it seems I am forced to return.

Ukrainian Energy Minister Yuri Boyko has announced that a number of regional energy firms will be put into the private sector.  Eleven of them to be exact.

Quite why only eleven of them and not all of them, I am unsure.

If the government is going to throw regional energy supply companies into the private sector, surely it would be wise to throw them all in and allow the free market……a free market.

Almost all  regional companies are in debt to Naftogaz Ukraine or its state owned subsidiaries.  Who will want to buy a company in debt unless for tax write-off reasons?  Who will want to buy a company who could subsequently be asked to help fund the energy transport systems upon which it inherently relies?  Who will want to buy an energy provider that struggles to get paid by its consumers?  Who will want to go into competition with other energy suppliers that are not sold off but remain State owned and overtly or covertly subsidised?  Who will want to take on the inevitable requirements to meet EU parity environmental standards?  Who will want to buy an entity that will forever be at war with its regional administrations over non-payments or legislative issues?  Can you grow your market share if you are limited to your Oblast as the existing State entities are, is company growth dependent upon the number of end users only within current boundaries…..or are we talking about a truly free market concept where customer chooses supplier based on tariff?  Can the privatised company set the tariff?

It’s a bit of a hard sell to mention it to people and then not be able to answer any such very basic questions.

You can already see the opposition stating that in the absence of much (if any) foreign interest, it is an oligarchy auction, even if it is as transparent as a pain of glass and as open as  yesterday mornings postal delivery.  Unless  European players like E.on or EDF come in, either directly or part of an ESCo, despite the need to privatise such regional entities, this has all the makings of another “political scandal”……even though those who would claim it were talking about similar privitisation of the same entities back in 2007.

Meanwhile, until answers to questions become known, be on your guard for a dodgy salesmen in a bar trying to flog you a second hand energy company…….just don’t cramp their style and ask too many questions…….caveat emptor!

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