Ukraine Markets Daily (April 13, 2017)

Market news

  • The Cabinet of Ministers extends the emergency measures on the electricity market by another month

Market comment

The UX index decreased by 1.6% Yesterday and the PFTS index was down by 0.4% (in UAH terms). The WIG-Ukraine index was down by 0.9%. On the interbank exchange market, the USD/UAH was down by 0.1% to UAH 26.85 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 26.89

 

The Cabinet of Ministers extends the emergency measures on the electricity market by another month

On April 12, 2017, the Cabinet of Ministers enacted to extend for another month the term of the decree on “Temporary Emergency Measures on the market for electric power”, introduced on February 17, 2017 and due to expire on April 16, 2017. The decision should ensure the safe functioning of the United Energy System of Ukraine, Igor Nasalik, energy and coal Minister emphasized following the government meeting. A delay in the adoption of the Law on “The market for electric power” by the Parliament prevents electricity generating companies from attracting loans in order to purchase and import coal. The adoption of the legislation should allow the electricity producers to use borrowed funds for fuel purchase and secure the stable functioning of the wholesale electricity market, the Minister stressed. Due to deficient supply of anthracite coal as a result of the ban on energy coal import from the territories temporarily beyond control of the government, the energy generating companies use all means to secure the import of anthracite coal. The delivery of the coal to Ukrainian ports lasts about 45 to 60 days, the Minister emphasizes. In an earlier statement, Mr Nasalik reported that the government together with power generating companies is negotiating the import of anthracite coal from the USA, South Africa and other countries. The country should secure the coal delivery by May in order to secure the stable functioning of the electricity grid, the Minister maintains

Our view:

The Government’s decision is NEGATIVE, indicating that the issue of coal delivery to the power generating facilities of Ukraine is far from resolved, threatening to undermine the stable functioning of the country’s electricity grid and the frail industrial recovery. The uncertainty with the sustainability and integrity of the country’s power grid during the low power consumption seasons is especially concerning. The risk of disruption in the functioning of the power system is moreover heightened by escalating political infighting around the energy ministry and the government, the management of energy-related agencies and institutions, as well as the Government’s energy policy.