On 15 January 2022, Ukraine’s State Enterprise Guaranteed Buyer published on its official website that 100 per cent of payments were done to renewable energy producers in Ukraine for the first 10 days of January 2022. However, green electricity producers seem to be still waiting for debts payments for 2021 and it is not clear why these funds are being delayed.
A real detective story could be written on this topic. On 3 November 2021, [the electricity transmission system operator] Ukrenergo issued a 5-year green and sustainability-linked Eurobond for an 825 million US dollar size at 6.875 per cent yield, under State guarantees provided by the Cabinet of Ministers of Ukraine. According to the Cabinet of Ministers’ Resolution from 11 October 2021, the Ministry of Energy together with Ukrenergo and the Guaranteed Buyer had to ensure the direction of funds on borrowings to repay the debt that arose under the green tariff.
Actually, the story of Eurobonds issuing was a successful one, taking into account that a high professional team worked on the preparatory process, as Rothschild & Cie and FinPoint acted as financial and sustainability advisors to Ukrenergo. BNP Paribas, Deutsche Bank and Goldman Sachs International acted as joint lead managers and bookrunners as well as joint ESG structuring agents on the transaction and Ukreximbank served as co-manager. Even, Volodymyr Kudrytskyi, Chairman of Ukrenergo commented that the transaction marked a critical step towards the resolution of the electricity market imbalances in Ukraine in line with Ukraine’s obligations to renewable energy producers and that this was the largest debut international bond offering ever done by a Ukrainian non-sovereign issuer as well as the largest green Eurobond so far out of Ukraine and the CIS region.
The reputation of current policymakers and governors never let energy market participants, especially, renewable energy producers to calm down and wait for payments, as at any minute could appear new scenarios of how the money could be transferred or used. For example, in January 2021, the Guaranteed buyer instead of paying RES producers debts in the amount of about 11 billion hryvnias [approximately, 340 million euros] divided the settlement 50/50 between RES producers and [Ukrainian State enterprise] Energoatom.
Worries of RES market players were reasonable. When it was known that the Guaranteed Buyer had received a transfer from Ukrenergo in the amount of 19,3 billion hryvnias (out of 21,6 billion hryvnias) [approximately 620 million euros out of 690 million euros] on 11 November, unclear policy manipulations started: after signing the payment orders to cover debts to RES producers on 12 November, the next day the Director of the Guaranteed Buyer, Konstiantyn Petrykovets was fired. On Monday, 15 November, the Euroepan-Ukrainian Energy Agency together with other renewable energy associations organised a press conference where Mr Petrykovets was also invited. Mr Petrykovets shared that the day in which he signed the payment orders to RES producers in the total amount of 19,3 billion hryvnias he received phone calls from the Cabinet of Ministers ordering him not to pay anything to RES producers. At the same press conference the European-Ukrainian Energy Agency, the Ukrainian Association of Renewable Energy and the Ukrainian Wind Energy Association expressed worries about the risks that Ukraine as a State was taking, if the payments would not be done to RES producers immediately, violating the use of proceeds of issued Eurobonds by Ukrenergo.
The same day, on 15 November and the next one, 16 November, almost 16,3 billion hryvnias [approximately 525 million euros] were paid to RES producers covering in full the debt for 2020 and partly the debt for 2021. Three billion hryvnias [about 93 million euros] were left on the accounts of the Guaranteed Buyer, which had to be addressed to group of RES producers of [the largest private investor in the energy industry] DTEK RES. Since that time, more than two months have passed, but DTEK RES didn’t receive their proportional payments from the Guaranteed Buyer. Finally with more than two months of delays, on 21 January 2022, DTEK received proportional payments. It means, that the debt for 2020 is paid in full and the total debt to RES producers for 2021 now is about 10 billion hryvnias [about 320 million euros].
The discrimination in payments to RES producers, intransparency on the electricity market and not sound governance of the Guaranteed Buyer makes the investment climate weaker and more unpredictable, which leads to higher policy risks and again, higher value of capital for Ukraine.
Meanwhile, the Guaranteed Buyer, a week after firing Mr Petrykovets, appointed a new Director, Vadym Ulyda, who resigned in a week by his own initiative. A few days later, a new Director was appointed for this position, Andrii Pylypenko hoping that we will find out soon when the rest of the sum will be paid to all the market players without discrimination.
Another news would be appropriate, that on 1 December 2021, the State Regulator of Energy Policy (NEURC) approved a TSO tariff 25 per cent lower than it was requested by Ukrenergo. Taking into account, that the TSO tariff is the major source for the FiT payments, it means that in 2022 new debts will be accumulated to RES producers. That is why, the European-Ukrainian Energy Agency applied to NEURC asking to revise the TSO tariff as soon as possible.
Just as a reminding, this is a transition period of the old RES support scheme FiT to the new one such as FiP, auctions, corporate PPAs and requiring energy storages capacities development and so on. However, to let RES develop further, the current problems have to be solved.