Should Kyivvodokanal be reprivatized?

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Should Kyivvodokanal be reprivatized?

  1. 1. Should “Kyivvodokanal” bereprivatized?
  2. 2. “Kyivvodokanal” now• 4 126 km of water supply network• 73% of worn-out equipment• Losses in 2011 = UAH 124 483
  3. 3. FINANCIAL ANALYSIS2011:• Return on assets = -13.5%• Return on equity = -12.4%• Acid-test ratio = 2.5%• Working capital = -1 719 787 UAH
  4. 4. PAIN POINTSPoor financialconditionIncreaseefficiencyWorn outsystemsAttractprivateinvestment
  5. 5. PRIVATE = EFFICIENT ?2151115133Case Studies Econometric testingPositive influenceof private sectorNo differencePositive influenceof public sectorSource: Peard (2007, 2008)
  6. 6. 0,532,653,09Price(USD)Prague NewYork KyivINCREASE EFFICIENCY6 5655 6001 045Employees4 12610 5004 322Network(km)
  7. 7. INCREASE EFFICIENCY. PRAGUEMain facts:• PPP enterprise• Profit: UAH 151.5 mln.• Gold certificate for its integrated management system23,821,420,8 21,021,621,1 21,32006 2007 2008 2009 2010 2011 2012%Water loss 2006-2012, %
  8. 8. INCREASE EFFICIENCY.SOLUTIONNegativeprofitOptimizepriceReduce laborintensityImprovemanagementthrough PPP
  9. 9. SOURCES OF FINANCING. EBRD• Is interested in water supply. Projects in: Kyrgyzstan, Bosnia and Herzegovina Russia, Armenia• Drawbacks:• Maximum amount of loan - EUR 88 mln.;• Strict profitability requirements;
  10. 10. SOURCES OF FINANCING. BONDSEurobonds• “Ukrzaliznytsia”: USD 500 mln - 9,5%• “Financing of Infrastructural Projects”: USD 690 mln - 7,5%• Kyiv: USD 250 mln – 8%• Drawbacks:• Credit rating requirements;• State guarantees may be needed
  11. 11. CONCLUSIONEliminate RaiseReduce Create• Inefficientorganization• Labor intensity• Efficiency• Capital investment
  12. 12. THANK YOU!

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