Ukraine's antitrust watchdog rejects Energoatom's claim on "Rotterdam Plus" formula

Photo from UNIAN The Antimonopoly Committee of Ukraine (AMCU) has rejected the claim by Ukraine&#39;s state-owned Energoatom to start the investigation into possible violation of competition law by the National Energy and Utilities Regulations Commission (NEURC) regarding the adoption of Resolution No. 289, dated March 3, 2016, "On Approving the Procedure for the Formation of the Projected Wholesale Electricity Price," known as the "Rotterdam Plus" formula. The AMCU on April 17, 2019, sent a relevant letter to Energoatom, a copy was posted by the Nashi Groshi ("Our Money") investigative project. Energoatom in his appeal pointed at the anticompetitive actions by the NEURC in providing certain business entities with advantages that put them in a privileged position relative to competitors. According to the document, from March 2016 to April 2019, Energoatom&#39;s share in the electricity generation market increased from 53% to 54%. At the same time, the tariff for nuclear energy increased only from 47 kopiykas to 57 kopiykas per kWh, that is, less than a quarter. Over the same period, the share of thermal generation fell from 32% to 30%, while the tariff increased from 88 kopiykas to 177 kopiykas per kWh, that is, doubled. Thus, the increase in the thermal generation tariff, amid a drop in its share, turned out to exceed the increase in the "nuclear" tariff more than tenfold. Read also"Rotterdam Plus" case: NABU explains why it conducts raids on NEURC offices The AMCU concluded that, during the said period, there was no redistribution of shares among the participants in the electricity generation market. The watchdog also noted that Resolution No. 289 determines the indicative price of coal based on the average market price at the ports of Amsterdam-Rotterdam-Antwerpen for 12 months. The methodology approved by Resolution No. 990 sets the price of uranium-containing raw materials based on long-term and short-term quotes. Therefore, the Antimonopoly Committee concludes, the aforementioned resolutions apply the same approaches and principles to form the share of the fuel component in the tariff for electricity generated by producers working under price bids. Consequently, despite the varying tariff growth rates for different electricity producers, the AMCU concluded that there was "no negative impact of Resolution No. 289 on economic competition," therefore rejecting Energoatom&#39;s claim. Journalists say it was First Deputy Head Mariya Nizhnik who signed the Antimonopoly Committee&#39;s decision. She also supervised the case related to the abuse of the monopoly position by Rinat Akhmetov&#39;s DTEK companies, which, at Nizhnik&#39;s suggestion, was rejected by the Committee&#39;s decision in December 2018. At that time, Authorized Government Official at AMCU Svitlana Panaiotidi was the only person, who voted against the decision at the Committee meeting. In April, Panaiotidi and another Authorized Government Official at AMCU Ahiia Zahrebelska also voted against granting permission to DTEK to acquire Kyivblenergo and Odesaoblenergo, as this would have made Akhmetov&#39;s group the owner of the largest number of power distribution facilities in Ukraine. Moreover, the power supply companies associated with regional energy distribution companies (oblenergos) are serving more than 11 million people who live in the regions served by DTEK&#39;s oblenergos. Read alsoNABU: Buyers of electricity from thermal stations overpay US$536 mln due to illegal Rotterdam Plus formula Nizhnik is close to Oleksiy Filatov, who was dismissed from the post of Deputy Head of the Presidential Administration last week. In 2016, Head of the Antimonopoly Committee of Ukraine Yuriy Terentyev agreed on AMCU draft decision No. 289, which introduced the so-called Rotterdam Plus formula, which takes into account in the thermal generation tariff the cost of coal delivery from Rotterdam. In fact, almost all coal is delivered to Ukraine&#39;s TPPs from Donbas and Russia, that is, at significantly shorter distances. Therefore, the "plus" in the formula is net profit of the thermal generation industry. More than 80% of thermal generation in Ukraine belongs to Rinat Akhmetov&#39;s group, journalists stress. Noteworthy, immediately after the introduction of the Rotterdam Plus formula, DTEK eurobonds, which were bought by ICU, rose in price. The co-owner of the latter, Makar Paseniuk, is a financial advisor to Ukrainian President Petro Poroshenko. At the time when the Rotterdam Plus formula entered into force, the NEURC was headed by Dmytro Vovk, who had worked for ICU and Poroshenko&#39;s Roshen prior to his assignment. Volodymyr Demchyshyn, Minister of Energy and Coal Industry at the time of the development of Rotterdam Plus in 2015-2016, was also ICU&#39;s co-owner. In April 2017, the National Anti-corruption Bureau of Ukraine (NABU) reported it had launched a pre-trial investigation into the abuse of official position by NEURC officials over the Rotterdam Plus formula. At the same time, the National Energy and Utilities Regulations Commission is concealing from NABU the actual data that was applied in the formula for calculating the coal price.

Ukraine's antitrust watchdog rejects Energoatom's claim on "Rotterdam Plus" formula

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