Business news from Ukraine

STATE-RUN UKRENERGO SIGNS EUR 19.4 MLN CONTRACT WITH CHINESE COMPANY TO RECONSTRUCT SUBSTATION

National Energy Company Ukrenergo has signed a contract with Xian Electric Engineering Co. Ltd. (China) to reconstruct the 330 kV Brovarska substation with the installation of an autotransformer, the press service of the company has reported. The press service said that 11 companies from eight countries took part in a tender under the rules of the European Investment Bank (EIB), which finances the project. The cost of the project fell by 25%, to EUR 19.4 million.
Reconstruction of the Brovarska substation envisages the installation of modern complete switchgears with SF insulation and the modernization of relay protection and emergency control systems.
In addition, an additional 330/110/35 kV autotransformer with a capacity of 200 MVA will be installed at the substation. This will ensure the reliability and security of energy supply to consumers of the Kyiv energy hub – Brovary, Boryspil and Baryshivka districts of Kyiv region, including the Boryspil airport, as well as expand opportunities for their further economic development.
“Modernization of the Brovarska substation is one of the strategic projects of Ukrenergo. In two and a half years, this substation will be fully automated in accordance with international requirements for reliability and safety,” Deputy Director for Investment Volodymyr Kudritsky said.
Ukrenergo operates trunk and interstate transmission lines, as well as centralized dispatching of the country’s integrated power grids. It is a state-owned enterprise managed by Ukraine’s Finance Ministry. The company will be soon reorganized into a private joint-stock company.

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UKRENERGO PRESENTS PLATFORM FOR NEW WHOLESALE POWER MARKET

National Energy Company Ukrenergo has presented the Market Management System platform for two new segments of the wholesale electricity market (the balancing market and the ancillary service market), which has been functioning in the test mode since December 2018. “Now we are trying to organize the schedule of our work in such a way as to create minimally sufficient functionality for launching a new market on July 1,” Ukrenergo CEO Vsevolod Kovalchuk said at the presentation on Tuesday.
He recalled that the platform developers intend to suspend work due to slippage in the payment schedule: the Energy and Coal Industry Ministry stopped agreeing on payments after the reassignment of Ukrenergo to the Finance Ministry.
Kovalchuk expressed hope that the problem will be resolved in March. To this end, the Finance Ministry and the Justice Ministry will prepare draft amendments to a resolution of the Cabinet of Ministers and the contract of Ukrenergo with a consortium of contractors. Approval of the changes will allow transferring the payment approval functions of Ukrenergo from the Energy and Coal Ministry to the Finance Ministry, which will unblock the payment process for software being developed for the new wholesale electricity market, the head of the transmission system operator said.
Currently, the Market Management System platform operates in test mode. The players of the energy market – producers, electricity suppliers and distribution system operators – are being registered. Data on consumption and transmission of energy is collected for the development of mathematical models that will allow forecasting misbalances in the market of electricity (the difference between predicted and actual consumption).
According to Ukrenergo, today the level of filling the platform with data is insufficient, so the indicators in it are not relevant.

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UKRENERGO SIGNS CONTRACT WITH SWISS LAW LALIVE TO PRESENT COMPANY’S INTEREST IN COURT IN CRIMEAN ASSETS CASE AGAINST RUSSIA

National Energy Company Ukrenergo has signed a contract with Lalive S.A. (Switzerland) to present the interests of the company in a case on compensation of losses due to annexation of Crimea by Russia. According to a company report in the ProZorro e-procurement system, the contract on the provision of legal services worth EUR 1.537 million (or UAH 49.9 million without VAT) was signed on February 6, 2019.
Covington & Burling, Hughes Hubbard & Reed, and Quinn Emanuel Urquhart & Sullivan UK also took part in the tender.
Lalive will provide Ukrenergo with the services of preparing and sending a notice of arbitration to the dispute, determining the nomination of arbitrators and shaping the composition of international arbitration, drafting a claim and applying to arbitration, representing the interests of the company in arbitration tribunal and obtaining the award.
As reported, Lalive represented the interests of the following companies in disputes against the Russian Federation regarding lost investments: Ukrnafta, Stabil, and Yukos Capital.
In April 2018 Ukrenergo officially notified the Russian Federation about the start of an investment dispute over the company’s assets seized in Crimea. According to estimates by Ukrenergo, only the cost of the company’s power grids in the peninsula is about $1 billion.
Ukrenergo operates trunk and interstate transmission lines, as well as centralized dispatching of the country’s integrated power grids. It is a state-owned enterprise, which was managed by Ukraine’s Energy and Coal Industry Ministry.

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UKRENERGO TRANSFERRED UNDER FINANCE MINISTRY’S CONTROL

The Ministry of Finance of Ukraine has been authorized to manage national energy company Ukrenergo, the ministry’s press service has said.
A corresponding acceptance statement was signed on February 4 by the commission created by the ministry on the transfer of the company’s property and assets.
“After the signing of the document, Ukrenergo was transferred from the Ministry of Energy and Coal Industry to the Ministry of Finance,” it said.
Strategic management and control over the activities of Ukrenergo will be carried out by the supervisory board of the company, which, as reported, chaired by ex-head of the EBRD representative office in Ukraine Sevki Acuner. Earlier, a number of independent members with international experience in the field of energy, as well as state representatives entered the supervisory board.
“The Finance Ministry’s task is to accelerate Ukrenergo’s corporatization. This will make significant progress in implementing the electricity market legislation, make it possible to certify Ukrenergo as an independent transmission system operator for electricity transmission, and will split control over electricity generation and transmission,” the ministry said.
This issue is a condition for Ukraine to receive a disbursement worth EUR 500 million under the Memorandum of Understanding with the European Union, it said.
Ukrenergo operates trunk and interstate transmission lines, as well as centralized dispatching of the country’s integrated power grids. It is a state-owned enterprise, which was managed by Ukraine’s Energy and Coal Industry Ministry.

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UKRENERGO SEES 1.4-FOLD RISE IN PROFIT IN 2018

National energy company Ukrenergo saw UAH 2.5 billion in net profit in 2018, which is 1.4 times more than in 2017 (UAH 1.75 billion), Ukrenergo CEO Vsevolod Kovalchuk said at the presentation entitled “10 Steps Towards Europe” late on Thursday.
He said that earnings before interest, taxes, depreciation and amortization (EBITDA) margin of Ukrenergo last year was 58.2%.
In addition, Ukrenergo paid UAH 1.3 billion of taxes to the national budget.
As reported, Ukrenergo in 2017 cut its net profit by 42% or UAH 1.264 billion compared with 2016, to UAH 1.748 billion.
Ukrenergo operates trunk and interstate transmission lines, as well as centralized dispatching of the country’s integrated power grids. It is a state-owned enterprise, but it will be transformed into a private joint-stock company soon.

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FRANCE TO FINANCE JOINT PROJECT OF UKRENERGO AND RTE FOR BUILDING PILOT ENERGY STORAGE

The Ministry of Economy and Finance of France has allocated a grant of EUR 560,000 to Ukraine to finance a joint project of Ukrenergo and RTE International for the implementation of Ukraine’s first energy storage system, the press service of the Ukrainian company has reported. According to its data, in the next six months, RTE International plans to implement the first phase of the project: a feasibility study and technical assignments for further work. At the second stage, the possible cost will be determined, a model of the future storage system and a roadmap will be created with a list of all necessary measures for the implementation of the joint project.
Ukrenergo notes that the project is of a great importance for the future development of the Ukrainian energy sector and the integration of the domestic energy system into the energy system of continental Europe, since one of the requirements is to ensure the required amount of primary frequency control.
In addition, over the past few years, there has been an increase in wind and solar power generation in Ukraine, which will require the construction of additional highly maneuverable capacities that meet the environmental requirements of European countries.
“The start of cooperation with RTE, the leading player in the European market, the implementation of a complicated and innovative energy storage project is a significant step towards our European integration and the strengthening of Ukraine’s energy security,” Ukrenergo Head Vsevolod Kovalchuk said.

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