Ukraine: Fuel and Energy Crisis--Government Has Reached Maximum Payment Level for Electricity, Ministry Believes

KIEV, Sep 27, 2000 -- (Kiev Post) Fuel and Energy Minister Serhy Yermilov said at a press conference on Monday that the government has reached the highest possible rate of cash payment for electricity and that it will be impossible to significantly raise the rate further, Ukrainian News reported.

"Now that we have reached the limit of cash payment, the Fuel and Energy Ministry understands that we have a crisis in the fuel and energy sector, a systemic crisis with regard to certain categories of consumers," Yermilov said. Consumers paid cash for 70 percent of the electricity supplied to them in August and 55-60 percent in September. Yermilov said that communal enterprises - the boiler houses that generate electricity for the population and water and sewage enterprises - are unable to pay the full cost of electricity supplies to them.

Furthermore, agricultural enterprises and certain industrial enterprises for which disconnected electricity supplies may result in an ecological disaster, are also unable to pay for electricity, the report said.

"[There are] enterprises whose electricity supplies may not be disconnected, but the demand for their products is insufficient to allow them to pay for electricity.

For example, the Lviv-based Sera," Yermilov said.

According to Yermilov, the Cabinet of Ministers is considering the possibility of lowering electricity tariffs for these enterprises as well as involving local budgets in the payment for electricity supplies to these enterprises.

The cabinet intends to set up a special working group to solve this problem.

"We need to consider those categories of consumers that are unable to pay cash today and make the necessary decisions about them," Yermilov said.

According to Yermilov, electricity debts of communal enterprises have now reached UAH 1.5 billion while the debts of agricultural enterprises have reached around HUAH 1 billion.

Agricultural and communal enterprises account for 12-15 percent of all electricity consumed in Ukraine.

In related developments, Yermilov said that the Fuel and Energy Ministry plans to hold talks on Wednesday with Anatoly Chubais, president of the United Energy Systems of Russia (UESR), on the import of Russian electricity to the eastern regions of Ukraine under the Energoostrov (Energy island) project, according to the report.

"Our group will depart for Moscow on Wednesday to conclude this issue," Yermilov said. Yermilov did not provide further details.

Between late August and early September this year, the ministry held talks with UESR on the import of electricity under the Energoostrov project.

Following these talks, UESR held further talks with the leadership of the Kharkiv, Sumy, and Poltava regions of Ukraine on the terms for the import of the electricity, but those talks did not result in a signed agreement, the report said.

First Deputy Fuel and Energy Minister Vitaly Hayduk said last week that connecting the Sumy, Kharkiv, and Poltava regions to the Russian power grid was being delayed by the lack of a mechanism for paying for the electricity.

Information from the Kharkiv regional administration, however, states that the two sides have reached preliminary agreement on payment for 40 percent of Russian electricity supplies through delivery of equipment to Russian nuclear power stations.

The regions expected to receive 800 Megawatts of Russian electricity at a price of USD .012 per kilowatt/hour, including VAT.

The regions had planned to connect to the Russian power grid during the night of September 15-16, but this connection did not take place, the report said. ((c) 2000 Kiev Post)

http://www.russiatoday.com/news.php3?id=203715§ion=default

-- Carl Jenkins (Somewherepress@aol.com), September 27, 2000