16:28 12.01.2021

RES associations urge regulator to abandon distribution of Ukrenergo loans, set out their position to EU, IFIs

4 min read
RES associations urge regulator to abandon distribution of Ukrenergo loans, set out their position to EU, IFIs

The position of the National Energy and Utilities Regulatory Commission of Ukraine (NEURC) on the issue of distribution of NPC Ukrenergo's loan funds provided for repayment of its debt to the state-owned Enterprise Guaranteed Buyer contradicts the norms of the current legislation and the powers of the regulator, according to the profile RES associations.

This is discussed in the letter of the Ukrainian Wind Energy Association, the Ukrainian Association of Renewable Energy and the European-Ukrainian Energy Agency (EUEA) dated January 12 to Head of NEURC Valeriy Tarasiuk, as well as Chair of the Dispute Resolution and Negotiation Centre of the Energy Community Secretariat Dirk Buschle, EU Ambassador to Ukraine Matti Maasikas, World Bank Regional Country Director for Eastern Europe Arup Banerji, EBRD Managing Director for Eastern Europe Matteo Patrone, and IFC Regional Manager for Belarus, Moldova Ukraine Jason Pellmar.

Heads of specialized associations ask the addressees of the letter to take into account their position and consider it necessary to remove from consideration the issue of making additions to the previously adopted resolutions on approval of loans to Ukrenergo in state-owned Oschadbank, Ukrgasbank and Ukreximbank for a total amount of UAH 10.25 billion "to use these funds to pay off debt to electricity generation, except for debt to renewable energy sources accumulated as of August 1, 2020 (about UAH 22.5 billion).

The signatories of the appeal consider the position of NEURC, set forth in the materials to the draft resolution, according to which the regulator proposes such a solution, as unjustified, since the repayment of the debt as of August 1 is envisaged by issuing government bonds in accordance with law No. 810-IX on the conditions for supporting renewable energy sources.

Arguing their opinion, they draw attention to the fact that law No. 1006-IX, adopted on November 17, grants the Cabinet of Ministers the right to provide government guarantees to attract loans by Ukrenergo and ensure the fulfillment of its debt obligations. At the same time, in the explanatory note to bill No. 4119, which became law No. 1006-IX, it was determined that it was adopted to regulate settlements with "green" energy producers at the legislative level, they said in the letter.

"Neither the purpose of the adoption of the act, nor the forecast of socio-economic and other consequences of its adoption determine the repayment of debts to other economic entities, except for producers of electricity from renewable energy sources," the authors of the letter said.

They also said that in pursuance of law No. 1006-IX, the government adopted resolution No. 1203 dated December 9, 2020, in an explanatory note to which the Ministry of Finance indicated that the funds borrowed under government guarantees will be used to pay off Guaranteed Buyer's debts to renewable energy generation.

"The Verkhovna Rada, realizing its own sovereign powers to adopt laws, by law No. l006-IX actually determined an alternative (additional) method previously defined in law No. 810-IX to compensate the debt of SOE Guaranteed Buyer to renewable energy producers," the associations said in the letter.

At the same time, its authors insist that, in accordance with the theory of law and the procedure for applying its norms, in the event of a conflict, an act issued later is applied, even if the previously adopted act is valid.

In addition, the adoption by the parliament of an alternative way to pay off Guaranteed Buyer's debt to renewable energy generation does not contradict the general principles of lawmaking and is legal, the leaders of the associations said.

Regarding their position on exceeding the authority of the regulator in making the planned decision, the authors of the letter said that the funds that Ukrenergo will send to Guaranteed Buyer are not "other receipts" in the meaning of the methodology for forming the budget of the SOE, requiring appropriate approval from NEURC.

According to the stated position of the profile associations, these funds will be transferred to Guaranteed Buyer as repayment of the debt for the service provided by it to increase the share of electricity production from alternative sources, the amount of which has already been approved by NEURC in the respective settlement periods in the prescribed manner.

"As a result, these funds are receipts established by budget items, in respect of which only Guaranteed Buyer exercises control over their use on the basis of payment documents," the authors of the letter said, adding that NEURC is not given the authority to establish the direction and priority of funds transferred to Guaranteed Buyer as a debt for the provided service.

As reported, on January 6, the regulator postponed making the decision to distribute the Guaranteed Buyer's funds received from NPC Ukrenergo.

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