The National Commission of Ukraine for Energy and Housing and Utilities Services Regulation (NCER) on March 31 decided to increase the end tariff for household heating by 67% on average from May 1, 2015, although the prices of gas and wholesale tariffs for heating have grown since April 1, 2015.
"On March 3 the NCER decided to increase the tariff for gas and heat (as a wholesale item by 71.8% on average) from April 1. It was planned to increase the tariffs for central heating and hot water supply although the Justice Ministry opposed their approval a month in advance… Yesterday the commission increased the tariffs for central heating and hot water supply, but from May 1, 2015… Companies will have losses for April," Director of the Heat Supply Regulation at the NCER Svitlana Chernykh said at a seminar in Zhytomyr on Wednesday.
Chernykh said that the losses incurred by heat supply companies which will have to pay for gas under the new tariffs and provide services under the old tariffs will be small.
"We checked out the companies, including the largest company – Kyivenergo – the losses will be small for hot water supply, and no losses will be incurred for central heating. These losses will be calculated at the end of the year, and we will decide on compensation," she said.
Kyivenergo CFO Tetiana Hriaznova said that losses in April will be large.
"Until the end of the heating season [which is defined by the authorities] we will have net loss for central heating and hot water supply of UAH 6.4 million every day, as the tariffs have not been revised. At the end of the heating season and before the new tariffs take effect, the companies' losses for hot water supply will be up to UAH 940,000 a day. In total, for April we will see net loss from the provision of central heating and hot water supply services of around UAH 110 million," she said.
She added that for comparison in February Kyivenergo saw net profit of UAH 5.9 million from budget-funded organizations thanks to the temporary reduction of the price of gas.
Hriaznova said that heat supply companies are to pay Naftogaz Ukrainy in full for gas consumed in April at the new price (without delays).
"Agreements on gas supply with Naftogaz Ukrainy contain fines in the size of double discount rate of NBU (30% plus 30%), a fine of 3% per day of delay and take into account inflation of 25% per annum. The price of delay in payment to Naftogaz Ukrainy today is minimum 63-70% per annum," she said.
She added that NCER did not say what funds the companies should use to cover losses and pay fines to Naftogaz Ukrainy.
