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Ukraine: State Sells Energy Stakes

Kyiv, 10 December 1997 (RFE/RL) - Ukraine's State Property Fund (SPF) has announced a competition for selecting a foreign company to sell - in an international tender - a 24 percent stake in one of the country's largest energy companies. According to SPF Acting Chairman Volodymyr Lanovy, companies willing to participate in the competition are to submit their applications by December 19, when the SPF is to announce the winner.

Donbasenergo, an eastern Ukrainian energy giant, whose share package is slated for the first of a series of international tenders the SPF plans to conduct next year, accounts for 15 percent of electricity produced in Ukraine, and includes five large thermal-energy plants.

The SPF requires that companies willing to participate in the competition have more than two-million dollars of their own capital, at least three years' experience working at securities markets, and an audit report from a large, Western accounting firm.

Officials at CS First Boston in Kyiv said their company is going to bid for selling Donbasenergo shares.

Ukraine's President Leonid Kuchma signed the decree on international tenders for selling large stakes in most lucrative Ukrainian enterprises last month. Kuchma cited the urgent necessity to increase state budget revenues through cash privatization. The SPF is to finalize in the next week the list of enterprises slated for privatization through international tenders.

Experts say Donbasenergo, whose market value fell from $600 million last Summer to about $300 million today, currently needs $675 million in investment to regain its former capacity. Its total market value is predicted to rise to $2 billion after the investment is made.

The state will retain a 51 percent stake in Donbasenergo. Nineteen percent of the company belongs to employees, and six percent is traded on the stock exchange. However, the SPF's Lanovy says the company, which buys the 24 percent in Donbasenergo, can easily increase its stake to at least 26 percent percent by buying the shares on the exchange.