Bilateral business forums have already proved an effective
tool for the Ukrainian government to boost the economy. Following the success
of the U.S.-Ukraine business forum this summer, Yuzhny seaport in Odesa concluded
a $100 million agreement on the construction of a grain terminal. We expect
similar results from other trade missions.
We went to The Hague with the clear aim to showcasing our reform
achievements. We wanted to emphasize that the current sectoral transformations are
fully in line with European best practices and the expectations of savvy
international investors. To our great satisfaction, the Dutch businesspeople who
joined us on the energy panel commended the steady progress we have made in Ukraine’s
energy sector in recent years.
To create long-term rules of the game, Ukraine has worked
hard to bring our energy sector laws in line with the European Union’s Third
Energy Package. Thanks to support from experts and the European Union Energy
Secretariat, our new law “On the gas market” came into effect in October 2015. We
also appreciate that the lack of competition in energy generation is
destructive for Ukraine in the long run. As a result, we are reforming the
sector to eliminate price distortions, monopolies and over-regulation. The privatization
of one of the largest power generating companies, Centrenergo, and five
regional power plants in 2016 is expected to bring major world players to the
Ukrainian market.
The new electricity market law is also expected to bring
the sector into line with European standards. The new law will allow consumers
to choose private electricity suppliers, boosting competition and, as a result,
opening the market up to foreign investors. It will also allow producers to
choose a trader to sell their electricity. We hope that these provisions will
make our investment projects in power generation more attractive to
international businesses.
What interests Dutch businesses the most are investment
projects in renewable energy. Green energy today is probably one of the most underdeveloped
energy niches in Ukraine, which makes it especially attractive for foreign
direct investment. We plan to generate 11 percent of our energy mix from
renewable sources by 2020, and estimate the financing needs up until this time
to be 16 billion euros. The investments will be used for the construction of
plants for pellet production, biogas plants, hydro, wind and solar stations,
equipment production, and waste recycling plants. These measures will cut
Ukraine’s consumption of natural gas by more than 5 billion cubic meters per
year.
Ukraine
has already undertaken major steps to stimulate the development of renewables. For
instance, our legislation has fixed “green tariffs” for renewable energy in
foreign currency (euro) until 2030.
All
these steps make Ukraine’s renewable sector one of the most attractive in
Europe – high tariffs covering country risks, no currency depreciation risk,
infrastructure incentives, and sales guarantees.
Dutch
businesspeople at the forum also emphasized the importance Ukraine’s abundant
commodities, its world-leading agricultural sector (which boosts the
development of bioenergy), and prices of energy resources. They believe in our
risk management frameworks and significant ROI when it comes to Ukrainian green
energy, and we are ready to help them find suitable projects.
So-called cheap energy has actually come at a very high
cost for Ukraine’s economy for the last 25 years. Cheap gas and electricity tariffs
meant there were fewer budget for our hospitals, schools and roads. This has to
change. Last year we took a huge step forward in setting market-based tariffs.
Market prices for all households by 2017 are a key commitment in Ukraine’s
program with the IMF but, more importantly, it is something that we understand
we need to do in our fight for national independence.
In a very short period of time, we have turned Ukraine’s
energy sector from the worst example of shadow capitalism into a transparent
and increasingly well-managed sector. Yesterday, we encouraged our Dutch
partners to enter the energy market and the country as a whole, sharing
technologies, best practices and establishing business. And today, the
government’s doors remain open to all investors.
Yuliya Kovaliv is the first deputy minister of the Economic
Development and Trade Ministry in Ukraine.
