Ukraine draws nearly UAH 46 bln in external financing to cover debts on electricity market

MOSCOW. Oct 30 (Interfax) - The Ukrainian national power grid operator Ukrenergo has issued green bonds and drawn loans from state and international banks totaling UAH 45.79 billion to cover its debts on the electricity market, Ukrainian media have reported with reference to the company's website.

State banks have provided UAH 11.4 billion and international banks UAH 12.93 billion, in addition to UAH 21.4 billion the company issued in green bonds, it said.

The funds from state banks and the bond issue financed the special obligations totaling UAH 32.86 billion, including compensation for the difference between the market price of electricity and the green tariffs of industrial renewable energy facilities, the coverage of grid losses (UAH 0.43 billion), the payment for the limitation of renewable energy (UAH 3.2 billion), and the payment for reserve or extra services (UAH 9.3 billion).

Ukrenergo said it had to draw loans because the system operator's rates for dispatching and transmitting electricity, which are supposed to cover its essential expenses, are too low.

"Ukrenergo's efforts and ability to draw financial support in such amounts has enabled the electricity market to avoid a financial collapse," it said.

The company's receivables currently amount to about UAH 60 billion and payables UAH 50 billion, it said.

Ukrenergo has disagreed with a statement made earlier by the National Commission for State Regulation of Energy and Utilities that the 2023 power transmission rates fully covered the cost of renewable energy services. Revenues from power transmission services were the only source of settlements with the Guaranteed Buyer state enterprise, which is supposed to use these funds to compensate for the green tariffs, it said.

According to Ukrenergo, market players have owed UAH 19.8 billion (VAT included) in debts for power transmission, including for previous years, while the company itself owed to Guaranteed Buyer UAH 31.2 billion as of October 24, 2023, as per the National Commission for State Regulation of Energy and Utilities.

"This indicates that the transmission rate is at least UAH 11.4 billion underfinanced," Ukrenergo said.

Having audited Ukrenergo's operations over the past several years, the commission found that the transmission rate was underfinanced UAH 4.3 billion (VAT excluded) and dispatching rate UAH 3.2 billion (VAT excluded), it said.

"The commission documented its conclusions in its resolutions dated June 25, 2021, November 25, 2022, and July 5, 2023. However, the commission failed to take into consideration even those sums in reviewing and setting rates," Ukrenergo said.

Two days before, the commission said the problem of debts in the electricity market had to be solved not through setting a new transmission rate as insisted by Ukrenergo, but through more efficient business operations. In particular, by improving the company's claims and debt collection work to make debtors pay their debts for power transmission, dispatch management, and services on the balancing market, which amounted to UAH 48.8 billion as of the end of September.

As reported, Ukrenergo's transmission rate was UAH 380.28/MWh in Q1 2023, UAH 430.25/MWh in Q2 2023, and UAH 485.1/MWh in H2 2023 (VAT excluded).