Photo from UNIAN
The relevant issue is on the agenda of the NEURC meeting to be held on December 14.
Ukraine's National Energy and Utilities Regulation Commission (NEURC) may increase the electricity tariff due to the rising price of coal on European exchanges and the cost of its delivery from Rotterdam to Ukraine.
The NEURC has included the relevant issue in the agenda of its meeting set to be held on December 14, according the Ukrainian news outlet Hromadske.
In particular, the price of coal, which makes up part of the cost of electricity generation in Ukraine, is expected to be increased by 11.7%, while the cost of transporting coal from Rotterdam to Ukraine (included in tariff) may grow by another 6%.
Head of the Association of Consumers of Energy and Public Utilities Andriy Gerus says the adoption of these changes will lead to the fact that Rinat Akhmetov's DTEK, the actual monopoly in the market of thermal power generation in Ukraine, will earn an extra UAH 6.5 billion (US$233.6 million) over the next year.
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"Thus, our coal 'non-monopoly' DTEK owned by Akhmetov that produces 85% of all Ukrainian coal (about 24 million tonnes) will charge higher prices for coal in tariffs, earning an additional UAH 6.5 billion next year," the expert wrote on Facebook.
He added that DTEK's profit grew by 2.6 times over the past two years.
As was earlier reported, DTEK purchased in Rotterdam some 80,000 tonnes of coal for its thermal power plants (TPP).
According to a study by Carbon Tracker, the price of thermal electricity in Ukraine was one of the highest in the world. In particular, the electricity at Ukraine's TPPs is more expensive than that in the European Union, Russia, China, the United States, and the Republic of South Africa.
Noteworthy, the majority of Ukrainian TPPs are owned by Akhmetov's DTEK.
DTEK is one of the largest energy corporations in Eastern Europe. It owns nine out of 15 Ukrainian thermal power plants, as well as 17 mines and coal preparation complexes. In general, the company is the actual monopoly in the market for the generation of thermal electricity in Ukraine.
The cost of electricity generated by Ukraine's TPPs is regulated under the Rotterdam Plus formula, which was introduced in May 2016.
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The formula was introduced after Ukraine lost control over part of the Donetsk coal basin amid the war in Donbas. Almost all mines with anthracite coal, which is used by most of the Ukrainian TPPs, turned out to remain in the territory occupied by Russian proxy forces.
In order to ensure Ukraine's energy independence from the occupied territories, it was decided to buy coal delivered from South Africa and South America on the international exchange in the Netherlands.
The NEURC, which approved Rotterdam Plus, stated then that the application of the formula was supposed to eliminate manual price regulation, ensure independence from supplies from the combat zone, and provide Ukraine with enough coal to cover the heating season.
According to the said method, the cost of fuel was determined by the formula: the price of coal in the ports of Amsterdam-Rotterdam-Antwerp plus the cost of its delivery to Ukraine. The Rotterdam Plus formula is applied both to thermal power plants consuming the anthracite (deficient) group of coal, and to plants using gas group coal. The price of thermal electricity doubled from January to November 2016.
In July 2016, Ukrainian Prime Minister Volodymyr Groysman said he considered the Rotterdam Plus formula unacceptable. Ukrainian Prosecutor General Yuriy Lutsenko in 2017 said that the formula posed a threat to the state in terms of corruption. The Ukrainian president noted that Rotterdam Formula was a requirement of the International Monetary Fund.
On August 7, 2017, the National Anti-corruption Bureau of Ukraine (NABU) initiated criminal proceedings against NEURC because of the likely abuses during the adoption of Rotterdam Plus. NABU Director Artem Sytnyk stated then that the case investigating the introduction of the Rotterdam Plus formula is a priority for his Bureau.
On August 17, NEURC announced it planned to cancel the formula due to the transition to the new electricity market.