Global power firms, mainly European and American, eye the assets of VSE in Ukraine. According to our eastern Europe coresspondence the most advance negotiation are held with one American company and with the Czech energy concern CEZ. If this deal materializes, CEZ, which ranks as one of the top ten largest European energy multiutilities, will make a further step in its strategic plan to become the leader of the electricity market in Central and Eastern Europe. Last year, the CEZ Group went international by acquiring a major equity in three Bulgarian distribution firms. Currently, CEZ is also negotiating a Polish power deal.
CEZ power company was established in 1992 by the National Property Fund of the Czech Republic, which still owns a major equity in the company. The core business activity of the CEZ is electricity production and sale, plus ancillary electrification services. In addition to this, the company cogenerates heat, which it also transmits, distributes and sells.
CEZ's interest in VSE is considered by market experts as "synergic, justified and correct" for the Czech giant's goals. Thanks to VSE's market position, senior energy market sources assess that VSE's assets in Ukraine worth between US$490 to US$540 million.
VSE, together with an American energy firm AES, were the big winners of the second wave of privatization of Ukrainian power distribution firms, which commenced in 2000. This process was considered the most effective and transparent in Ukraine's business history; Illustrating this, it should be mentioned that the State Property Fund hired investment bank Credit Suisse First Boston to act as advisor on the sale of seven Ukrainian power firms. US Agency for International Development provided support to the privatization process by hiring the consortium of Deloitte Touche Tohmatsu and INEKO-Management.
Tender conditions were approved by the Cabinet of Ministers and included specific terms on debt restructuring, tariff increase, disconnection of non-paying customers, etc. The anecdotal point is that at the time of that process, Viktor Yushchenko, now the Ukrainian president, served as the Prime Minister and closely supervised the process and its management.
In December 2000, the State Property Fund qualified seven investors to take part in tenders for sale of six distribution firms (Oblenergos). The shortlist included AES Corporation, EDF International, Union Fenosa International, VSE, Kansai Electric Power, Bewag, and Cinergy. However, among those 7 companies only two won the bid. AES Corporation purchased two Oblenergos and Slovak VSE acquired another four Oblenergos. Later, these four Oblenergos were transferred to the Dutch company VS Energy International.
