Representatives of Ukraine’s business community launched an appeal to the Verkhovna Rada to support a law aimed at solving a rampant crisis in the energy sector.
The American Chamber of Commerce (ACC) published the appeal on its website on July 18, calling it a “critical step toward resolving the renewable energy crisis in Ukraine,” and urging the parliament to vote on it before a three-week summer recess.
The draft law No. 3658 would secure a memorandum of understanding signed on June 10, between the Cabinet of Ministers and two out of three major renewable industry associations.
According to the memorandum, solar tariffs would be cut by 15% while wind tariffs would be cut by 7.5%. The Cabinet also promised to pay back all debts to green producers and to establish energy quotas.
Under the terms of the green tariff deal introduced in 2008, Ukraine set up special tariffs for renewable energy companies to expand the green power production.
It also pledged to buy all the energy produced.
However, the state, which faces recession caused by the coronavirus epidemic, doesn’t have enough money to buy the green energy it promised to acquire.
According to the appeal, the government has not paid green energy producers since March.
The state-owned Guaranteed Buyer of Electricity, supposed to buy energy and redistribute it on behalf of the state, owes half-billion dollars to green producers, and investors are up in arms against the government.
In a press conference on June 9, the founder of wind energy company Vindkraft Ukraine Carl Sturen said investors would be forced to sue the Guaranteed Buyer if the government does not find a long-term solution, Ukrainian media outlet Interfax reported.
“Now, due to long delays in payments, many companies have nothing to pay interest on loans, salaries. We only pay taxes, and then we won’t be able to do this for long,” he said.
Investors also reportedly sent a letter to the International Monetary Fund (IMF) to complain about the government’s plan to lower energy tariffs, saying the move would deter foreign investments and threaten Ukraine’s reforms, Reuters reported on June 1.
Solving the situation would also help Ukraine move towards long-delayed green auctions, where green producers bid on the prices at which they can supply energy to the state buyer.
It is a common model in most countries with developed renewable energy sectors, but the standoff between the government and the green producers pushed them back, as the auctions cannot take place until the government sets specific yearly quotas on renewable energy.
