Ukrainian Expert on the Kiev Energy Crisis: A State Company Is Blackmailing the City, and the Government Does Nothing

Translated by Ollie Richardson & Angelina Siard

20:45:12
01/08/2018

alternatio.org

Since August 1st “Naftogaz of Ukraine” stopped to supply gas to the 5th and 6th combined heat and power plants in Kiev, which provide half of the Ukrainian capital’s electricity and heat.

The deputy mayor Petro Panteleyev stated at a governmental conference meeting that several thousands of apartment buildings in Kiev don’t receive hot water anymore. As a result, the Kiev city administration decided to buy gas that will cost the Ukrainian capital twofold more than from the State company.

Several days prior the department of healthcare of the Kiev City State Administration sent instructions to hospitals and other medical institutions concerning the preparation of independent power supplies.

The essence of the conflict is that “Naftogaz of Ukraine” didn’t sign contracts for gas supply, since combined heat and power plant managers didn’t pay off debts of 5 billion hryvnia. Previously, the combined heat and power plants were managed by “Kievenergo”, which belongs to the oligarch Rinat Akhmetov. This year the capital’s administration created the municipal enterprise “Kievteploenergo” and regained control over the combined heat and power plants. The authorities of the capital thus refused to pay back 1.2 billion hryvnia, as it is a penalty fee for the previous manager’s non-payment of debts. Judicial proceedings reached an impasse in court, however the State company didn’t make any concessions.

“‘Naftogaz’ continues to demand from Kiev to pay the penalties of a private company. This is more than 1.2 billion hryvnia. I am not able to afford to gift someone, for example, 10 new kindergartens or 150 kilometers of roads,” stated the mayor Vitaly Klitschko on the morning of August 1st on the air of the “1+1” TV channel. “‘Naftogaz’ is turning us inhabitants of Kiev into hostages of the situation”.

The day prior the government allowed the capital’s administration to buy gas from private companies. And if “Naftogaz of Ukraine” is obliged to sell gas to heat-supplying companies at the preferential price of 4942 hryvnia per 1,000 cubic meters, the others supply it at market prices. So, in July the Ukrainian Energy Market recorded an average price of 10,300 hryvnia.

“We will suffer straight losses of about 130-140 million hryvnia every month. All traders who are now ready to deliver gas in the volume needed by us, (about 60 million cubic meters per month) with an estimated cost of about 600 million hryvnia, can’t deliver it under the terms of payment as ‘Naftogaz of Ukraine’ does, according to the results of the month,” stated the acting director of “Kievteploenergo” Vyacheslav Bind.

As a result, “Naftogaz of Ukraine” reported on August 1st about an agreement that Kiev and the company reached during negotiations in the Presidential Administration: the state administration will buy gas from private traders until an amicable settlement is reached in court. Concerning when it was concluded, “Naftogaz of Ukraine” didn’t report.

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The head of energy programs at World Economy and International Relations Center of the National Academy of Sciences of Ukraine Valentin Zemlyansky speaks about the full collapse of the administration: “The State company blackmails a city of two million people, and neither the Cabinet of Ministers, nor the Kiev City State Administration is able to change the situation and find a solution”. The expert noted that Kiev could transition to extreme economisation and rely on the Tripolskaya thermal power plant, however it still wouldn’t be a way out, especially taking into account the costs of increased coal consumption.

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