Economy

If energy companies see excessive profits on new market, Ukraine could introduce windfall tax – Energy Community

If electricity generating companies see excessive profits after the liberalization of the Ukrainian electricity market, Ukraine could take them via the introduction of windfall tax, the Energy Community Secretariat has said in response to a request of the market players on the possibility of imposing public service obligations (PSO) to supply electricity to households on private companies.

The tax may be applicable both to nuclear power plants (NPPs, according to the Secretariat's information, this option was proposed by the regulator), and hydroelectric power plants (HPPs, according to the Secretariat's information, this was proposed by the Ministry of Energy and Coal Industry), as well as to other manufacturers (including private ones) who will receive an unexpected profit in the new market.

As it is known, the United Kingdom in 1997 introduced the windfall tax for companies that have participated since 1984 in the privatization of state-owned enterprises operating in the telecommunications sector, utilities, air and rail services. According to the British government, privatization was carried out at below-market prices, which allowed buyers to get significant profits.

As reported, the Ministry of Energy and Coal Industry of Ukraine, in order to meet public interests amidst the operating conditions of the new wholesale electricity market, proposes imposing PSO on Energoatom and PrJSC Ukrhydroenergo to supply electricity for the needs of the population until December 31, 2020.

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