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Underfunding of Ukrenergo from tariff reaches UAH 40 bln – company head

KYIV. Sept 23 (Interfax-Ukraine) – Starting from 2020, the total amount of underfunding of NPC Ukrenergo from the electricity transmission tariff and the tariff for dispatch control services is approaching UAH 40 billion.

This was announced by Board Chairman of Ukrenergo Volodymyr Kudrytsky at a roundtable "Ukrainian State-Owned Enterprises in Wartime" organized by the USAID State-Owned Enterprises Reform Activity in Ukraine (SOERA) on Thursday.

"Since 2020, the regulator [the National Energy and Utilities Regulatory Commission of Ukraine (NEURC)] has systematically not covered our costs with the tariff. This, first of all, concerns those PSO that the law imposes on our company. This is the compensation of the feed-in tariff, but not only. And the volume of such lost compensation is already approaching UAH 40 billion," he said.

According to Kudrytsky, Ukrenergo managed to cover part of the deficit by attracting loan financing, including the placement of eurobonds in 2021, but the final deficit has not yet been covered.

"This leads not only to a financial deficit of Ukrenergo itself, but also to the accumulation of a chain of debts throughout the market," the head of the company said.

As he explained, in particular, the underfunding of Ukrenergo translates into its debt to the participants of the balancing market and the Guaranteed Buyer state-owned enterprise with a further extension of the debt chain for renewable energy generation and universal service providers.

"Therefore, this regulatory gap must be corrected, because a stable operating operator is a necessary critical part of the functioning of the industry as a whole. It is impossible to have a financially unbalanced operator and a well-functioning electricity market," Kudrytsky said.

According to SOE Guaranteed Buyer, as of September 7, Ukrenergo’s debt for compensation of feed-in tariffs reached about UAH 14.5 billion.