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The Ukrainian Ministry of Energy Presented Complex of Steps to Get the Power System of Ukraine out of the Crisis

Please be informed that in accordance with information at the website of Ministry of Energy and Environmental Protection of Ukraine (the “Ministry”), on 29 April 2020 during the meeting of the Anti-crisis Energy Staff, which was arranged by Prime Minister  Denys Shmyhal and the Acting Minister of the Ministry Olga Buslavets, the Ministry presented complex of steps to get the power system of Ukraine out of the crisis. Information in Ukrainian is available at https://menr.gov.ua/news/35219.html.

In accordance with provided information State Enterprise “Guaranteed Buyer” (the “GB”), which is the offtaker of all RES producers under “green” tariff has the following debts as of 30 April 2020:

  • RES producers – UAH 7.5 bln;
  • State Enterprise “Energoatom” (Energoatom) – UAH 4 bln.

In turn, GB and Energoatom have not received UAH 11.1 bln from PrJSC “Ukrenergo” (the “TSO”) and the TSO has not received UAH 5.3 bln from its consumers. There are other debts in the markets but they are much smaller.

In order to resolve the situation the Ministry suggests the following steps:

  • execution of memorandum of understanding with investors on decrease of “green” tariff;
  • ban on construction of new solar and wind power plants under “green” tariff and transfer to auctions;
  • increase of the share of nuclear power generation;
  • the right of the TSO to curtail RES producers within the determined number of hours (not yet determined and will be agreed with investors);
  • review of fuel balance of Ukraine on the basis of the renewed power balance;
  • elimination of administrative restrictions in the electricity market so producers will not suffer because of distorted prices;
  • improvement of the PSO mechanism in view of transfer to the European mode to support population;
  • adoption of laws which will resolve the above mentioned indebtedness.

The Ministry expects suggestions and proposals regarding the proposed plans on steps to tackle the crisis in the electricity market.

Please note that the Ministry adopted on 28 April 2020 Forecast Balance of Electricity for Unified Power System of Ukraine for 2020. The decrease of power production/consumption in Ukraine for this year is expected by 6%. The total volume of electricity produced by solar power plants is 6670 mln. kWh, for wind power plants – 3858 mln. kWh and for all other RES – 847 mln. kWh. The balance is available in Ukrainian at https://menr.gov.ua/news/35215.html.

This information does not constitute legal advice and is merely the opinion of the author.

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