The American Chamber of Commerce in Ukraine expresses its concern over the plans of the National Energy and Utilities Regulatory Commission (NEURC, Regulator) regarding adoption of the tariff for electricity transmission services for JSC Ukrenergo for 2022. It is envisioned to be adopted on the level, which will not ensure stable payments to the renewable energy sources (RES) producers under “green tariff.”
The Draft Resolution published on the Regulator's website, which is planned to be adopted on December 1, envisages a lower tariff rate compared to the reasoned proposals of JSC Ukrenergo.
The budget item for repayment of “green tariff” provided by Part 3 of Article 8 of the Law of Ukraine “On Alternative Energy Sources” was absent both in the State Budget of Ukraine for 2021 and in the Draft State Budget of Ukraine for 2022, passed in the first reading on November 2. Therefore, this tariff understatement proposed by the NEURC may lead to the accumulation of new multibillion arrears on payments under the “green tariff” during 2022.
If such a decision is made, it will violate many of Ukraine's international obligations and ultimately may harm the state's interests.
First, following clause 4.2 of the tripartite guarantee agreement on the issuance of state guarantee bonds by JSC Ukrenergo (Sustainability Linked Bonds), the NEURC committed to maintain the tariff for electricity transmission services at the level of cost recovery for payments to RES electricity producers.
Secondly, according to clause 32 of the last memorandum with the International Monetary Fund, Ukraine is obliged to repay debts to electricity producers from RES by increasing the tariff for electricity transmission services. The violation of one of the terms of the mentioned memorandum one week since its publication may make it significantly more difficult for Ukraine to continue receiving international financial assistance. It will not have a positive impact on the macroeconomic situation in the country.
Third, in August 2021, Ukraine declared an increase in its Determined Contribution to the Paris Agreement from 40% to 65% by 2030. In order to achieve this ambitious goal, Ukraine needs to attract investments in the development of the RES industry by providing a predictable business environment.
The American Chamber of Commerce in Ukraine will continue to monitor the situation with the adoption of a new tariff for electricity transmission services for JSC Ukrenergo for 2022. It will advocate for the proper implementation of the state's commitments to maintain a stable and predictable business climate in the country.
The Chamber will welcome measures aimed at improving payment discipline in the electricity sector and stands ready to partner with the authorities and support further the development of adequate regulation to improve the financial situation of the Ukrainian electricity market.
