Business news from Ukraine

UKRENERGO INCREASES ELECTRICITY TRANSMISSION IN Q1

National energy company Ukrenergo in January-March 2018 increased transmission of electricity through trunk power grids by 0.5% (by 145.197 million kWh) compared to the same months in 2017, to 30.224 billion kWh. According to a report on the company’s website, the cost of electricity transmission services for January-March fell by 28.8% (UAH 251.344 million), to UAH 1.087 billion.
Ukrenergo in January-March 2018 increased capital investments by 61% (by UAH 403.32 million), to UAH 1.065 billion.
Total expenses increased by 9.2% (by UAH 61.452 million), to UAH 728.505 million, in particular repair costs increased by 1.8% (by UAH 509,000), to UAH 28.045 million.
Ukrenergo operates trunk and interstate power grids, as well as centralized dispatching of the unified energy system of the country. The company is a state enterprise subordinated to the Ministry of Energy and Coal Industry, but will soon be transformed into a private joint-stock company

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NATIONAL ENERGY COMPANY UKRENERGO TO DISCUSS PLAN HOW TO DEVELOP POWER SYSTEM ON MAY 18

National energy company Ukrenergo on May 18, 2018 is to discuss the plan for developing the power transmission system for 2019-2028 in public, the company’s press service has reported. The draft plan has been posted on the website of Ukrenergo. The document contains a list of security measures for supplies of electricity, the list of facilities of the transmission system which should be built and reconstructed in coming 10 years, data on the projects to modernize the power transmission system being implemented or approved for the implementation.
Ukrenergo operates trunk and interstate power grids, as well as performs the centralized dispatching of the united energy system in the country. The company is a state-owned enterprise, it is subordinate to the Ministry of Energy and Coal Industry, but by the end of 2018 the company is to be reorganized into a private joint-stock company.

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GOVERNMENT DOWNGRADES UKRENERGO PROFIT EXPECTATIONS IN 2018 TO UAH 2.6 BLN

The Cabinet of Ministers of Ukraine has approved the adjusted financial plan of Ukrenergo for 2018 with a net profit of UAH 2.554 billion against UAH 3.296 billion previously set in the document. The relevant decision was made by the government at a meeting on April 25.
The net sales income of Ukrenergo in 2018 is now planned at UAH 7.877 billion, whereas the previous wording of the financial plan foresaw UAH 7.331 billion of income. The planned gross profit is UAH 5.108 billion, whereas before the adjustment the document it included a figure of UAH 4.793 billion.
The updated financial plan of Ukrenergo provides for the transmission by the company’s networks of 113.5 billion kWh of electricity in 2018, while previously it was planned to transfer 115 billion kWh. As reported, Ukrenergo operates trunk and interstate power grids, as well as performs the centralized dispatching of the united energy system in the country. The company is a state-owned enterprise, it is subordinate to the Ministry of Energy and Coal Industry.

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UKRAINE ANNOUNCES TENDER TO SELECT INDEPENDENT MEMBERS OF UKRENERGO AND UKRZALIZNYTSIA SUPERVISORY BOARDS

The Ukrainian government has posted the conditions for tenders to select independent members of supervisory board of Ukrzaliznytsia and Ukrenergo on its website. The documents for participating in the tender can be submitted before May 14. The tender will start on May 21, and its results will be published on the government’s website before July 3, 2018.
Candidates for an independent member of the supervisory board of Ukrzaliznytsia should have at least 10 years’ period of service in senior positions in companies or in the civil service, in particular in such areas as railway transportation, finance, engineering, accounting and audit, management, business administration or jurisprudence, but not limited to them; have an impeccable business reputation; fluent in Ukrainian or English.
In addition, the applicant must not be (including during the previous five years) a founder, shareholder, head, member of the supervisory board, an employee or a representative of a person to which Ukraine applies personal, special economic or other restrictive measures (sanctions), and also do not have a significant business relationship with this person. Candidates must have one or several professional competencies in the following areas: strategic management, rail transport, operational efficiency, finance and audit, corporate governance, compliance and risk management, international relations.
The similar requirements are put forward to the candidates for the position of independent member of the Ukrenergo: no less than ten years of experience in senior positions in companies or in the civil service in the electricity sector, regulation of energy markets, finance, accounting, engineering, management, business administration or law.
Potential members of the supervisory board of Ukrenergo must meet the criteria of independence in accordance with the requirements of the legislation of Ukraine and the EU, pay to the position at least 30 working days a year, be fluent in Ukrainian or English, have a basic understanding of the laws regulating the scope of activities of Ukrenergo and the EU energy market, trends and prospects of the industry.
Key competencies of the candidates for the position of a member of Ukrenergo’s supervisory board are the following: strategic management; management of the power transmission system; competitive electricity market; operational efficiency; finance and audit; corporate governance; compliance and risk management.
The advantage will be the experience of working in supervisory boards, international companies and international markets, the experience of attracting investors and experience in managing transformational processes and complex projects of organizational change.

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STATE-OWNED UKRENERGO SEES 42% FALL IN NET PROFIT IN 2017

State-owned enterprise Ukrenergo saw a 42% fall in net profit in 2017 (by UAH 1.264 billion) compared with 2016, to UAH 1.748 billion.
According to a company financial report, net revenue last year rose by 15.2% or UAH 1.09 billion, to UAH 8.264 billion, and gross profit grew by 17% or UAH 849.257 million, to UAH 5.838 billion.
As reported, national energy company Ukrenergo in 2017 increased transmission of electricity through the backbone power grids by 2.4% (by 2.616 billion kWh) compared to 2016, to 113.837 billion kWh. The cost of electricity transmission services rose by 13.7% in 2017 (by UAH 965.217 million), to UAH 8.022 billion.
Ukrenergo operates trunk and interstate power grids, as well as performs the centralized dispatching of the united energy system in the country. The company is a state-owned enterprise, it is subordinate to the Ministry of Energy and Coal Industry, but by the end of 2018 the company is to be reorganized into a private joint-stock company.

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UKRENERGO HEAD: BATTERY AND GAS RECIPROCATING POWER PLANTS OF 2.5 GW CAPACITY SHOULD BE BUILT BEFORE 2025

National energy company Ukrenergo believes that in the conditions of rampant development of renewable energy, highly maneuverable balancing facilities (battery and gas reciprocating power plants) with a capacity of 2.5 GW should be built in Ukraine before 2025, Ukrenergo Head Vsevolod Kovalchuk said at the presentation of the respective study in Kyiv on Tuesday.
“Quick maneuverable balancing facilities should cover 30% of the installed capacity of facilities using renewable energy. Based on the forecasts of how the total capacity of solar power plants and wind farms will increase, by 2025 we need to build maneuverable facilities with a capacity of 2.5 GW – energy storage facilities with lithium batteries and gas reciprocating plants,” he said.
Kovalchuk said that the cost of building these facilities is about UAH 55 billion.
The head of Ukrenergo said that if Ukraine does not build highly maneuverable facilities, then with an increase in the share of renewable energy, it will have to limit production of nuclear power plants (operating in the basic mode) and increase the share of coal-burning thermal power plants (TTPs capable of maneuvering). This will raise the total cost of electricity generated in the country by 57.7%.
Another alternative scenario is to limit the operation of solar power plants and wind farms in the peak periods. This will cost the country even more, as it will have to pay for both operation of nuclear power plants and TPPs, as well as compensate for under-generated electricity of solar power plants and wind farms. In this scenario, the total cost of electricity generated in the country will increase by 99%.
“Out of the three possible scenarios, the construction of highly maneuverable balancing facilities leads to the least increase in the cost of electricity – by 48.7%. The investment of UAH 55 billion in their construction will save UAH 65 billion in comparison with the scenario of limiting the operation of renewable energy,” the head of Ukrenergo said.
The head of the company said that, in his opinion, the construction of energy storage facilities with lithium batteries should be stimulated either by introducing a special tariff (following the example of ‘green’ energy) or through the mechanism of auctions.
“We will initiate the introduction of a feed-in tariff, or other mechanisms that would make it possible to make the profitability of these highly maneuverable facilities no lower than for facilities consuming renewable energy,” Kovalchuk said.
The head of the company said that a pilot project can be organized through Ukrenergo, when the Ukrainian power grid operator itself holds an auction for the construction of energy storage facilities.
At the same time, he said that it would be impossible to delay the solution of the problem. The first 500 MW of highly maneuverable facilities should begin to operate in 2020.

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