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DTEK's brief on key business issues #38, 2020
DTEK, Kyiv, Ukraine,
Nov 17, Tue, 2020
Debts on the RES market
Eleven ambassadors to Ukraine call for the attention of the Ukrainian state and emphasize the necessity to fulfil the terms of the Memorandum of Understanding (MoU) between the Ukrainian government and RES investors which was signed in June 2020 and ensured voluntary restructuring of the Feed-in Tariffs (FiTs) regime for wind and solar power plants under the mediation of the Energy Community. Following the signature of the MoU, Law 810 was adopted that envisaged a schedule for repayment of accumulated debts in the RES sector. In their joint letter, the ambassadors draw attention to current non-fulfilment of the MoU and Law 810. The ambassadors reiterate that there is an obligation to allocate funds in the state budget, such as “20% co-financing of FiT payments from the State budget and the issuance of government bonds to repay the Guaranteed Buyer’s accrued debt to renewable energy producers.” The letter is addressed to the Prime Minister of Ukraine, the President’s Office, Verkhovna Rada and the Ministry of Energy. It is signed by the Ambassadors of the United Kingdom, Canada, France, Germany, the Netherlands, Norway, Sweden, Turkey, Denmark, Belgium, and South Korea.
Earlier last week the Ukraine Business News informed (in its issue of November 13th) that “Wind and solar investments account for one quarter of the EUR 49 bln of foreign direct investment in Ukraine since Independence in 1991. However, EUR 660 mln in unpaid electricity bills is forcing foreign investors to renegotiate bank loans, mull bankruptcy and to pursue international litigation against Ukraine, participants told an Energy Talk webinar organized last week by the European Business Association. One Norwegian company, Scatec, is preparing litigation against Ukraine in London. Carl Sturen, the Swedish managing director of wind power developer Vindkraft, said: “We are lagging behind on our payments and we definitely can’t wait.” Sergii Shakalov, CEO of Kness Group, a solar panel production plant launched in 2019 in Vinnytsia, says he has already lost USD 10 mln due to non-payments. “One of the biggest problems of Ukraine is that it doesn’t comprehend that agreements should be fulfilled in any situation,” complained Shakalov”.
The Guaranteed Buyer has published information on the current status of payments to RES producers. As of November 11th, the Guaranteed Buyer’s debt to RES producers reached UAH 26 bln. The level of debt settlements since the beginning of the year stays at 40.6%. At the same time, the debt of NEC Ukrenergo to the Guaranteed Buyer amounted to UAH 22.98 bln. Please kindly see more details in the chart below: