Energy experts see enormous opportunities in Ukraine
Nataliya Boyko, a deputy energy minister, was upbeat on investment opportunities during a New Ukraine Investment Conference in Parkovy Center in Kyiv on May 17.
“If you check any sector in energy, you will find a lot of opportunities,” Boyko said. She predicted that there would be an increase in renewable energy investment this year and said the government is in the process of finalizing a new energy strategy based on “pro-European views with a big potential for investment.”
She also argued for increased privatization in the energy sector, saying that with a few strategically important exceptions, most companies should be privatized. “Ukraine should be a normal, pro-European country with a transparent business climate, and only then we will have a success story.”
Vladimir Kutsev, managing partner at Kutsev Kirzner, said there is enormous potential in the energy sector as the country comes into line with International Monetary Fund recommendations, but that much government optimism was “just words, blah blah blah.” Kutsev praised the Regulatory Asset Base tariff system and took a hard line on privatization, saying it is vital that companies be privatized—even if they are sold at low prices. He argued that the Ukrainian natural gas pipelines used to transport Russian gas to Europea, need to be modernized and privatized, and that the Ukrainian government must recognize that energy policy realities had informed Putin’s calculus in gas transit strategies and that “it’s a fight between Gazprom and the whole world.”
Richard Spinks, CEO of Active Energy Group PLC, advocated a shift from gas to biomass in Ukraine. “Gas it too expensive for the population at the moment, and coal is too dirty.” He said biomass energy has not yet been leveraged adequately and could lead to a significant reduction in coal usage, noting that the conflict in eastern Ukraine and Russian meddling there has precipitated a coal crisis, which has, in turn, has provided a stimulus to focus more on biomass energy. “I think coal is finished, and I think the timing of coal usage being decreased in Ukraine couldn’t have come at a better time,” he said.
Aram Spartalian, general manager at RECOM—a manufacturer of solar cells and modules–delivered a short presentation on the potential for investing in solar energy in Ukraine. Spartalian said that, despite risks, RECOM is dedicated to investing in Ukraine and argued that challenges can be overcome if companies follow a good risk management policy. “We are convinced that Ukraine is a stable market, that it is a market that is going to become better, and also that it is important for the government to understand that the success of solar energy investment will attract investment in other sectors,” Spartalian said. He said that regulatory risks in the solar sector were not overly burdensome. He said the cost of solar panels—the biggest expenditure in setting up a solar operation—in Ukraine is in line with other countries. He conceded that currency instability creates significant risk but argued that companies can mitigate these to some extent by using strategies such as forward contracts and currency options.
By Will Cohen