Ukrenergo introduced to the public THE new reduced rate for 2018
Public discussion of the company’s new electricity rate for 2018 took place at UKRENERGO on 29th August.
For the first time ever, the tariff has been discussed at UKRENERGO in such a public format, involving comprehensive price reasoning.
The 2018 tariff proposed by UKRENERGO will be as high as UAH 6.24 kopecks/KWH, which decreases the price of company’s services provided to consumers by UAH 800 Mio. “We decrease the tariff load first of all due to the new investment policy’s principles, which is to finance the new construction and comprehensive modernization using 100% of IFI’s funds”, – emphasized Mr. Vsevolod Kovalchuk, Head of UKRENERGO when presenting the company’s new tariff concept.
UKRENERGO is currently one of largest beneficiaries of international financial institutions in the energy branch, with the credit portfolio around USD 1.5 Bln. Moreover, the company is within the top-ten most profitable businesses in the energy branch, which enhances the confidence of international institutions.
When presenting the new tariff for 2018, UKRENERGO’s Head Mr. Kovalchuk gave detailed explanations of the tariff shaping principles. He emphasized that in the tariff-based investment’s structure, UKRENERGO preserved only those projects and activities, which are critically important for consumers and networks’ operation reliability and which require prompt implementation. In particular, these include construction of 500 kV Kreminska substation, which is critical for providing reliable power supply to consumers on the controlled territory of Luhansk oblast, modernization of the alert-state equipment and cyber-security measures.
To implement the resource-intensive and long-term projects, such as comprehensive reconstruction and capital construction of energy facilities, UKRENERGO will involve credit funds from international donors. This would allow for high tempos of engineering innovations for power equipment and networks by not raising the tariff. The particular challenge for UKRENERGO’s top-management will be to maximally attract the IFI’s credit assets, which are substantially cheaper compared to commercial credits offered by the Ukrainian financial market, and to efficiently utilize those credits.
Mr. V. Kovalchuk emphasized that the offered tariff is a balanced one. Apart from the investment policy, the tariff decrease was possible due to the decrease of operating costs and increase of company’s other revenues by nearly four times, which makes about 5% of income from basic activities. This includes revenues resulting from introducing new tender rules related to accessing the interstate networks throughput capacity, on-line sales of scrap metals, payments for reactive energy etc. “Above that, organizational restructuring of the company and production processes implemented in 2017, savings of energy resources allowed approximating employee’s salary level to the market level without increasing the 2018 salary fund. This indicates so far the efficiency of changes related not only to the grid, but to personnel as well”, – mentioned V. Kovalchuk. – “UKRENERGO will keep the trend to decrease the tariff also in the future, assuring at that the high quality and reliability of energy transfer, as well as modernizing grids according to European standards”, – emphasized UKRENERGO’s Head.
During the discussion, a question was raised concerning UKRENERGO’s claim for compensating losses to the company, which result from the annexation of Crimea.
In this context, UKRENERGO has envisaged UAH 1 Mio. in 2017 for attracting an international adviser to draft and file a claim with respect to the company’s asset-grabbing in the Autonomous Republic of Crimea. “Now, a so-called list of claims is already set up, qualification requirements to the advisor have been determined following MFA recommendations, and negotiations are on-going. For supporting claimant’s activities in 2018, UKRENERGO has envisaged UAH 20 Mio.” – observed Mr. V. Kovalchuk.
Results of the open discussion have been recorded in protokol.