Electric chair. For Ukraine’s energy security?

The electric power industry of Ukraine has held a leading position in the power of the former USSR in terms of reliability and organization of the energy system, the development of new equipment and introduction of new technologies, staff training. In the difficult formative years of independent Ukraine, it was thanks to the stock of its strength when the country’s energy supply is not stopped even when the non-payment of 40%, has managed to keep the national economy afloat, and then bring to a stable level.

These years would not affect the reliability of the equipment of power plants, electric and heat networks, which have not been repaired in the required quantities. Not to mention the replacement of equipment, exhaust their resources, as well as reconstruction and modernization carried out only in a few cases.

Currently, more than 50% of thermal power plants and networks have fulfilled their service life. Power industry in dire need of investment. To this end, in the early 90-ies of Energy of Ukraine, first among the republics of the disintegrated Soviet Union developed the industry reform program, which included the restructuring of enterprises, the introduction of market mechanisms and rules through the establishment of the wholesale electricity market, the establishment of an independent regulatory body and state entities regulatory mechanisms electricity.

The ultimate goal of reforming was to create transparent rules in the market of electric energy and the environment for attracting investment in the facilities, including non-state. This privatization of enterprises considered as an essential element of creating a favorable investment climate for attracting significant capital into the revival of the Electricity Sector.

As a result of organizational and structural changes in the power industry for Ukraine reached an unprecedented level, especially noticeable on the background of slabokontroliruemyh monopolies in the oil and gas sector, transport and communications.

However, since 2001, after the departure of Viktor Yushchenko as prime minister transformation stalled. The dominant factor in this brake was the reluctance of officials of various ranks miss the opportunity to “manual” impact on the industry’s actors and control of financial flows. The consequence of this was the emergence of a number of new problems and aggravation of old:

– NERC could not create a common, transparent rules and methods of formation of tariffs, which led to a completely inexplicable distortions in terms of generating companies and power companies;

– As a result of ill-conceived the commissioning of two new nuclear units in the western regions of the country where, in the absence of adequate consumption of increased imbalances in load generation capacity;

– Most state of the industry, including NAEC “Energoatom”, went into a state of permanent financial bankruptcy;

– Due to wear and tear of equipment continued to decrease the reliability of the power system.

After the election of the President of Ukraine Victor Yushchenko at first there was hope that the market reforms in the energy sector will continue. However, the reality was somewhat different.

For unknown reasons (probably due to lack of awareness of the country’s president) update the managerial personnel of electric power was such that all the functions de facto were concentrated in the hands of a corporate group. “The electric wing” of the current government is represented exclusively come from AK “Kyivenergo” (state package – 50% plus 1 share) – the company that has unprecedented preferences on the part of the state, and from the Kiev authorities.

Ivan Plachkov again became Minister of Fuel and Energy Yuriy Prodan – his first deputy and part-time president of the “Energy Company of Ukraine” (NAK “ESC”), Valery Kalchenko NERC took over as chairman. Although each of the three officials referred to under the old regime for quite a long time occupied key positions in the energy sector (which is evident from the table) and fully responsible for the problems of the industry.

After that was a matter of technique to establish full control over the board of the Wholesale Electricity Market. This government agency is designed to align the interests of all participants in the WEM. As he performs this task at the present time, it is not difficult to guess, given that eight administratively subordinate to the president of NAC “ESC” out of ten voting board.

What marked the first six months of the “new” command in the government?

1. In fact, eliminated the market principles of the formation of electricity prices in the wholesale electricity market, stimulating the decline in producer costs. The artificial constraints have led to the fact that the number of “foreign” generating companies with the best technical and economic parameters were downloaded less than expensive, but TPP “their”.

2. terminated the supply of Russian electricity produced in nuclear power plants. The corresponding reduction of NAEC “Energoatom” Revenue was immediately offset by the increase in electricity sold in the wholesale market of NPP prices.

3. After the Cabinet literally “pushed through” the idea of ​​the implementation of the administrative set by “common” electricity tariffs against which expressed the overwhelming majority of experts. The result of such tariffs will be another price hit by major budget-industries and unpredictable imbalance in the calculation of the wholesale market. ‘Uniform’ rates actually put an end to a decade of distance traveled by energy from the price list approved by the State Planning Committee to market rates.

4. Consistently implemented the idea to force the current owners of energy companies to sell their businesses in order to create some “public” joint-stock companies that are not controlled by shareholders and government officials. At the same time as an unfortunate misunderstanding silenced by the fact that all indicators privatized companies is incomparably more efficient work than the state-owned energy companies.

5. actively promoted the concept of energy development, the emphasis which is made on the further growth of energy intensity of production. This highly controversial vision of the priorities of the national economy allows to develop multi-billion dollar budget investments, the source of which is the investment component in the wholesale market price for electricity (the proportion of the allowances in the price already exceeds 10%).

6. exacerbate the practice of backstage decision. This approach is grossly contrary to the declared government openness in the activities of public authorities and deprives society of the information objectively necessary for the stable functioning of the economy, the creation of a healthy social climate, especially if we are talking about fundamental changes in the “rules of the game.”

The results of the above-mentioned “innovation” is not long in coming. Particularly indicative of a significant increase in wholesale market prices of electricity (more than 15% over the last six months) and a corresponding increase in retail tariffs for consumers. Drastically reduce the technical and economic indicators of the generating companies. Suffice it to say that the consumption of fuel for electricity production (one of the main indicators of thermal power plant operation efficiency) has risen to the worst in the history of the energy level of Ukraine. Increased accident rates. TPP Units for seven months of 2005 went down 1258 times – once in 1078 against the same period last year.

These problems are largely the result of ill-considered personnel policy, in which the mid-level skilled personnel are forced out, and in their place appointed easy to manipulate people. An eloquent illustration of this is the recent shift of Vladimir Redin, chief dispatcher united energy system of Ukraine and undisputed authority in this area, and the appointment in his place politically loyal employee. As the new chief manager for only three years (from 2002 to 2005-th) led the dispatcher “Kyivenergo” service is likely to cause such a substitution did not outstanding professionalism and belonging to “their” category in relation to the people the Minister.

In this connection it is appropriate to recall the massive power outage in the United States and Italy, as well as recent incidents in Moscow and Crimea, where the effects of power outages experienced by millions of people. Largely fault in system failures lies with the dispatching service. Therefore, we would be worth to remember that the appointment of key technical positions on the basis of political considerations poses a real threat to sustainable power supply for the consumers, and therefore the security of the state.

For a better understanding of the consequences of such a policy, it is appropriate to turn to the experience of JSC “Kyivenergo” – the alma mater of current energy management. Even a cursory analysis of the performance of the company raises serious questions about its management and, above all, to Ivan Plachkov – the permanent chairman of the board for the past decade (with a short break in 1999). Despite the huge gross income of nearly 2 billion UAH in the year, the profit of “Kyivenergo” was always a few million hryvnia. It is not provided by current assets Accounts payable to suppliers and banks have already exceeded 600 million UAH. In “Kyivenergo” unprecedented high energy transmission companies for this level of complexity the loss of electricity networks, reaching up to 1 billion. KWh per year. Bad debts of consumers, according to the chairman of the supervisory board “Kyivenergo” Ivan Fomenko, has passed for astronomical milestone of 1 billion UAH, which is comparable to the cost of state and municipal property, free of charge transferred to the company’s management.

Information about the failure of the investment program, credited by the World Bank under the guarantee of the state, the threat of the winter shutdown of electricity and heat in Kiev (due to the system of non-payment for gas companies) did not create the bright prospects for the “flagship of the Ukrainian energy sector.” Obviously, all the financial problems of “Kyivenergo”, which are very strong position of businessmen and officials of the capital, will be decided by a substantial increase in tariffs for electricity and heat to consumers Kiev.

The above analysis suggests that implemented in the power policy is based on administrative-command approach, Energy management, full non-acceptance of dissent and obedience to the middle management level, it is not ready to answer for the consequences.

To establish conditions under which the seats which occupy the current officials of the energy can be transformed into an electric chair for the whole country, as we all know at the moment when it will be too late to correct. Obviously, the country’s leaders should think about it.

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