Ukraine’s electricity sector is in urgent need for investments. To improve matters, the Ministry of Fuel and Energy (MinF&E) proposes attracting strategic investors by privatizing significant parts of state-owned generation and distribution companies and using the revenue to finance additional investments.
Our evaluation of this proposal starts by characterizing the present situation of the electricity sector as a vicious circle where low profitability and competition levels have distracted investments so that assets have depleted and efficiency has declined for many years. As a result, investment needs have reached dramatically high levels. A proposal to develop the sector must be evaluated against its ability to attract urgently needed investment.