16:16 30.11.2021

World Bank recommends that Ukrainian energy regulator include almost UAH 11 bln for settlements with RES in Ukrenergo transmission tariff for 2022

3 min read
World Bank recommends that Ukrainian energy regulator include almost UAH 11 bln for settlements with RES in Ukrenergo transmission tariff for 2022

The tariff of NPC Ukrenergo for the transmission of electricity, which is approved by the National Energy and Utilities Regulatory Commission of Ukraine (NEURC), should fully reflect the company's costs for compensation of the cost of electricity production from renewable sources, excluding 20% compensation from the state budget.

This opinion is contained in a letter from World Bank Regional Country Director for Eastern Europe (Belarus, Moldova and Ukraine) Dr. Arup Banerji to Minister of Energy Herman Haluschenko, Minister of Finance Serhiy Marchenko and Head of NEURC Valeriy Tarasiuk, the text of which is available to Interfax-Ukraine.

The World Bank recommended that NEURC reflects the lack of 20% budgetary support for RES in the transmission tariff for 2022 to ensure the financial sustainability of the sector and Ukrenergo. The World Bank said that it would be very grateful for immediate action on this important issue. The World Bank looks forward to continuing close cooperation in the energy sector, Banerji said in the letter.

At the same time, the World Bank regional director expressed serious concern that the proposed tariff for 2022 is still well below the cost recovery level of Ukrenergo to meet the obligation to support the development of renewable energy. According to him, the fact that NEURC did not take into account 20% of the forecast cost of green electricity in 2022 in its proposal for the tariff, referring to Law No. 810-IX, which provides for state support for RES generation in such a volume, leads to a lack of funds for payments of RES next year in the amount of UAH 10.8 billion.

At the same time, Banerji said that the position of the World Bank, like the Ministry of Finance, regarding the lack of the ability to finance renewable energy generation from the budget was previously clearly stated in a letter dated September 21, 2021. The World Bank and the Ministry of Finance clearly stated that there is no possibility of such budget support and that the transmission tariff should fully reflect the costs of meeting special obligations for the development of green energy. The bill on the state budget corresponds to the specified letter of the Ministry of Finance and does not include 20% for payments of renewable energy sources, the regional director of the World Bank said.

At the same time, he said that Ukrenergo at the end of October, following the discussion of the tariff, informed the World Bank that it would reflect all the necessary costs. According to Banerji, this became the basis for his refusal to initiate legal proceedings regarding the non-observance of the terms of the eurobond issue by Ukrenergo. As a result, it have been agreed on an exceptional ground for non-application of remedies in respect of Ukrenergo's failure to comply with the financial conditions specified in the loan associated with the issue of eurobonds by the company, he said in the letter.

Banerji said that the default situation will have a negative impact on Ukrenergo's ability to secure new loans or issue bonds.

As reported, at the meeting of the regulator on Wednesday, December 1, a draft resolution on the approval of the Ukrenergo's tariff in the amount of UAH 356.90 per MWh, which is 20% higher than the current one, will be considered. Ukrenergo proposed setting a tariff of UAH 458.83 per MWh.

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