The foreign investors are not satisfied with the decree issued by the National Commission for State Energy and Public Utilities Regulation (NEPURC)
According to the NEPURC decree of February, 27, the tariffs on the energy supply produced by solar power stations are reduced by 55%. The tariffs on other types of the "green" energy are reduced by 50%.
This decree has been adopted due to the prolongation of a state of emergency in energetics, declared by the Cabinet of Ministers.
It is worth reminding that in January of the current year the National Commission on Energy has already reduced the "green tariff". For solar power stations this reduction amounted to 20%, for producers – 10%. Thus, the statuary bar on changes in the tariff by 2029 has been violated, which was the key requirement of the foreign investors.
Chang Unchgi, the chief director of the Chinese State Company CNBM New Energy Engineering declared that these decisions may influence the partnership of Ukraine with its foreign investors. Earlier the Company CNBM used to invest more than a milliard of dollars in the development of the Ukrainian alternative energy.
"Our Company is the major investor and the reduction of the tariffs proves to be the gross violation against the guarantees given upon our coming onto the Ukrainian market. I hope that the further decisions taken by NEPURC will be more sensible", remarked sir Unchgi.
This policy has already come under fierce criticism by the investors. In particular, in July 2014 the European and Ukrainian Energy Agency has appealed to NEPURC requesting to act under the legislation in their decision-making. According to the Agency representatives, this haste and inconsistency will shut the door on the foreign investments in the Ukrainian energetics.
This reaction was triggered off by the decision of the Cabinet of Ministers to reduce the peak time factor in the "green tariff" calculations from 1, 8 to 1, 01. The Association of Lawyers Arzinger to which the Agency appealed, considers that the above mentioned decree of the Cabinet of Ministers does not conform with the legislative acts, which have the legal validity, and consequently are regarded as the violation.
Sergey Kozlov, the leading analyst of Ukrainian Biofuel Portal pellets-wood.com considers that if these measures become permanent, it can put Ukraine in an embarrassing position, hence the foreign partners will show considerable reluctance to make their investments, moreover it can lead to judicial proceedings.
Earlier Argentine used to be in the same position, during the crisis of 1992 – 2002 it failed to meet with its obligations to the Company EDFI. Consequently it has been found guilty of breaking the investment contract and has paid back 136 millions of dollars. The penalty for the same violations has also been imposed to Guatemala, it violated the procedure of the "green tariff" review and had to pay back 21 millions of dollars. Taking into account a strong possibility of such consequences, NEPURC should enter into negotiations with the investors, for the volumes of the Ukrainian “green” energy constitute about 1% of the total production, which means that these decisions will not have a significant economic effect expected by NEPURC.
Author: Ivan Prokhorov
The foreign investors are not satisfied with the decree issued by the National Commission for State Energy and Public Utilities Regulation (NEPURC)
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