Kiev estimates Ukrainian energy sector's total losses from crisis at $56 bln

MOSCOW. Aug 8 (Interfax) - Direct losses and indirect losses of Ukraine's energy sector exceed $56 billion due to the crisis, while the industry's needs for recovery exceed $50 billion, according to estimates by specialists of the KSE Institute (Kiev School of Economics).

These estimates are contained in the KSE Institute's presentation made at a meeting with the CEOs of energy companies on August 7, Ukrainian media reported.

Direct losses from physical destruction of energy assets total over $16 billion, while indirect financial losses, which include the revenue lost by energy companies and the costs of restoring damaged energy facilities, amount to over $40 billion, the KSE Institute said.

In terms of individual branches of the energy sector, the electric power industry suffered the most from the crisis, where direct losses exceeded $11 billion, while indirect losses amounted to over $18 billion.

As KSE Institute analysts said, as of April 2023, the available capacity of Ukraine's energy system has halved to 18 GW, which corresponded to the winter peak of consumption. However, since March 2024, more than 9 GW of capacity has been lost, some of which has been completely destroyed.

Significant losses have also been inflicted on the electricity transmission infrastructure, where more than half of the controlled high-voltage substations have been damaged, and distribution infrastructure facilities in a number of regions have been damaged.

Electricity consumption in Ukraine has fallen 30% since the crisis erupted. The country has turned from a net exporter into a net importer of electricity. According to estimates of the National Bank of Ukraine, the annual electricity imports may reach $1 billion, which, along with power outages and electricity shortage, causes an additional blow to the trade balance, currency stability and economic growth.

Moreover, the drop in domestic demand for natural gas and the ban on its export resulted in indirect losses of $5.4 billion for the gas industry. Direct losses of the sector are estimated at over $900 million.

Analysts estimated direct losses incurred by the oil sector at $2.4 billion, while indirect losses amounted to $13 billion since the crisis broke out.