Ukraine electricity companies expect higher Russian imports but concerns persist

LONDON (ICIS)–Ukrainian energy companies are expecting to ramp up electricity imports from Belarus and Russia in November after off-takes resumed following a four-year hiatus.

Electricity imports from Russia restarted this month, when five companies booked a total of 1.1GW cross-border capacity from Russia.

Meanwhile, the Ukrainian gas incumbent Naftogaz said last month it started importing electricity from Belarus under a long-term contract with state company Belenergo.

Maksim Dmitruk, CEO of Ukraine-based TAS Energy, one of the five outfits which booked 249MW to import volumes from Russia in October, said even more capacity may be booked for November, when the Ukrainian vertically-integrated electricity incumbent Ukrenergo holds an auction on 21 and 22 October.

He said some 600MW of capacity may be offered from Belarus to Ukraine and the Baltic countries and added that more than 1.1GW could be made available from Russia.

“There is a need for cheap electricity. For example, we [TAS-Energy] have a number of companies for which we need to supply this electricity,” he said, explaining that TAS-Energy was delivering volumes to companies such as TAS-Agro or SZK in the agricultural sector, TAS Logistics operating in the railway transport sector or Stark LLC, which is active in sand mining.

Imports from both Belarus and Russia restarted last month. The companies which booked capacity from Russia included D.Trading (199MW), DE Trading (301MW), ERU (250MW), TAS-Energy (249MW) and United Enregy (100MW).

Concerns

Despite the interest in electricity imports from Russia, many other companies have expressed concerns at the resumption of off-takes from Russia.

Ukraine stopped electricity and gas imports from Russia in 2015 after the latter annexed Crimea and engaged in a simmering war with Ukraine in its eastern Donbas and Luhansk provinces.

Several Ukraine-based companies said the imports were raising questions about Ukraine’s willingness to reach a compromise with Russia even at a time when an armed conflict is ongoing.

They also pointed out that the import of potentially cheaper Russian electricity or gas volumes into Ukraine may crash prices charged by local producers.

However, Dmitruk said under the electricity market law adopted in 2017, electricity imports may be allowed.