Will the state receive less 300 million because of the reduction of production in ZFP?

14:33, 17 October 2011
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Following the results of the financial year 2011 financial losses because of  reduction of the production at PC "ZaporozhyeFerroalloy Plant " (ZFP) can reach more than 300 million UAH.

This was announced today at the All-Ukrainian protest action "Trade Unions Against Poverty", held in Kiev, said the former master of smelter workshop № 4  of ZFP Igor Litvinov.

According to him, after the reduction of 1400 plant workers and the general wage cuts in the company by 20%, the wage fund of ZFPwill reducedthefollowing yearat 93.6 million UAH. "This will reduce taxes to the city budget by 8.6 million hryvnia for the year. Reducing contributions to the Pension Fund will be 31.2 million hryvnia. However, the burden on the social fund for employment for required payments will bу33.6 million hryvnia for the year ", - said I. Litvinov.

He also stressed that as a result of reduced production at ZFP, the plant will not consume electricity in the current year for a total amount of about 625 million UAH. "The resulted surplus of electricity power will be forcedly exported by state power-generating companies, but at a price 40% lower than for the industrial enterprises of Ukraine. As a result, the state will not get about 235 million hryvnia, "- said I. Litvinov.

In his opinion, the benefit that the state received from the increase of the price of electricity for the ZFP will be completely neutralized by losses from the forced reduction in the enterprise. "If the expected return of power generating companies for the year amounts to 184 million hryvnia, the loss will exceed 300 million", - he said and added: "I, like other employees of the 4th smelter  workshop of ZFP, got laid off due to the stoppage of the shop . The main reason for the stop ofshops – is theenterprise transfer on January 1, 2011 from the 1st to the 2nd class of power consumption. As a result, the cost of a kilowatt of electricity for the plant is about 1 hryvniaincluding VAT. To work with such a price of electricity is impossible, since it does not allow to run the production of ferroalloys in the level of profitability. Management of the plant was forced to reduce production, which led to reduced almost 40% of the employees. "

I. Litvinov said that the situation with the resumption of supply of electricity to ZFP under the 1st class of consumption in the past few months has not changed. "All our appeals to the Ministry of Energy and Mines, the Cabinet, had no effect. We are told that our problem is being considered, and that, the way it’s going now it should not be. But, in fact, to reduce the cost of electricity for ZFP for 9 months nothing has been done. The situation at the plant is still very complicated. Imports of ferroalloys in Ukraine has increased significantly and now makes up about 50% of the total ferroalloys consumed by metallurgical enterprises. Especially a lot of ferrosilicon isimported, which was smelted in the 4th workshop  of ZFP. In the future this situation may lead to the situation when Ukrainian steel industry will fall into complete dependence on imported ferroalloys, "- he concluded.

As UNIAN reported earlier, on June 14 smelter workshop workers of PC "Zaporozhye ferroalloy plant" wrote an open letter to President Viktor Yanukovych and the people's deputies of Ukraine, who were asked to intervene in the situation with the size of tariff for ferroalloy plants. Employees of ZFP asked senior government officials to assist in setting fair electricity rates, not higher than those of competitors, namely 0.32 UAH per kilowatt, which corresponds to the status of the largest energy-consuming enterprises.

The company has reminded that ZFP for many years belonged to the 1st class of consumers. However, from 1 January 2011 the plant was transferred to the 2nd class of power consumption, according to which the electricity tariff for ZZF has increased almost twice - up to 0,83 UAHper 1 kW (without VAT). Besides, since the January 1, 2011 NSC "Energy Company of Ukraine" severed with ZFPthe lease agreement for power substation "F-2" located inthe territory of the plant, resulting inZFP was unable to obtain at least part of the necessary for productive use electricity under the 1st class of consumption.


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