Ukrenergo hopes to raise money from int'l organizations to pay off debts on the market

MOSCOW. April 5 (Interfax) - Ukrenergo expects to resolve debt issues on the balancing market during the current year, partly by raising money from international partners to repay the debts, in order to put the conditions in place for investment in decentralized generation, the company's CEO Vladimir Kudritsky said.

"We're giving ourselves the task, together with other participating institutions, to close the debt issues on the balancing market in their entirety this year. And the sooner we do this, the sooner the first projects for the construction of distributed generation will appear," Ukrainian media quoted him as saying at a briefing on Thursday.

He said the solution to this issue consisted of two parts - first, stopping the build-up of debts in the balancing market, mainly by state-owned and utility enterprises (state-owned regional power companies, mines, municipal water utilities, heating and power plants), and after that repaying the remaining debt by raising money from international financial organizations.

According to Ukrenergo, the debts of industrial consumers on the balancing market to the company amount to more than UAH 31 billion, and the company itself owes UAH 19 billion for generation as a result.

As for stopping debt from building up, he said it was necessary to compile a certain list of ring-fenced consumers and supply them with electricity under a special arrangement that would make it impossible to amass debt, "and everyone else must either pay or risk being disconnected."

He explained the need for external financing by the fact debts accumulated over decades cannot be expected to be repaid in a short time.

"Consequently, we will hold talks with international partners so that after the build-up of debts on the balancing market has been stopped, we will as a one off attract financial assistance in one form or another for the debt that will remain and be stable, and pay it off in order to create a financial opportunity for investors to start investing in distributed generation," he said.

Kudritsky said financial assistance will be attracted in such a way as not to increase pressure on Ukrenergo's tariff and, in general, the credit burden on the company.

"We will look for effective financial instruments to do this without influencing the industrial consumer," Kudritsky said.