The government’s decision stimulates an artificial increase in demand at auctions for the distribution of interstate sections and is a prerequisite for a speculative increase in prices, market analysts believe.
The decision of the Cabinet of Ministers to import 80% of electricity for business will lead to the loss of competitiveness of businesses and a shutdown of Ukrainian industry. This was stated in an analytical review on the GMK Center website published the previous day.
“Ukrainian business met this decision with an unpleasant surprise, because it was made without any discussion And it already leads to a large number of additional problems that complicate the difficult activities of industrial companies of Ukraine in conditions unrelated to critical infrastructure and the defense industry. It hit energy-intensive industries,” the analysis said.
Analysts point out that raising the quota forces the industry to increase the amount of electricity imports, which stimulates an artificial increase in demand in auctions for the distribution of interstate sections and a prerequisite for in a speculative increase in prices.
“In practice, this may lead to an artificial, even imaginary increase in demand for imported electricity, the price of which may rise to any level. But for the sake of not closing it, only businesses that there is little electricity cost in the cost structure of their products can and will pay for it.” , – Interpipe said in the publication.
Also, the increase in the price of electricity supplies inevitably leads to a decrease in the competitiveness of products in the domestic and foreign markets and, as a result, a forced reduction in production levels.
“Under such conditions, further production becomes significantly unprofitable and the plant cannot be competitive in the global market of metallurgical products. The enterprise will be forced to significantly reduce production and lay off approximately 1,200 employees,” said of the letter sent by Arcelor Mittal Krivoy Rog. to the authorities.
In addition, when importing electricity, it is necessary to spend additional funds for its transportation, pay duties and excise taxes.
“This leads to a loss of competitiveness for our energy-intensive businesses For example, the price of imported electricity for Arcelor Mittal Krivoy Rog, taking into account transmission costs, is more than twice the price of electricity compared to in the price of electricity paid. of their competitors in this industry in Western European countries,” said Olga Buslavets, energy expert, Minister of Energy (2020).
As it is known, in the fall of 2023, the Cabinet of Ministers approved a provision according to which enterprises are guaranteed the stability of energy supply if the amount of electricity imports in the consumption structure is at least 30% from May to September and 50% from October to April. But at the end of May, the Cabinet of Ministers defeated the conditions and set the minimum import quota at at least 80%. Meanwhile, business representatives called on the authorities to reconsider this decision.
We remind you that from June 1, 2024, the Cabinet of Ministers significantly increased electricity bills for the population – up to 4.32 UAH/kWh. At the same time, Ukraine increased the maximum price of electricity for businesses.
Source: korrespondent
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