How much does electrical power in Ukraine cost? It is not at all easy to
answer this question, for everybody pays his electricity bills differently.
After all, the cost of electrical energy depends on who produces, transports,
and - what is more - who buys it. This is why the news that on December
24 the National Electrical Power Regulation Commission allowed the Poltavaoblenerho
(Poltava Oblast Energy) power company to set market rates for electric
power starting January 1, 1999, was of little interest to the rank-and-file
consumer, for it failed to answer such questions as whether prices in the
region rise or fall, or what will happen to the monopoly's insolvent consumers
monopoly, or will the energy sell in the region at less than monopolist
prices?
The decision does not apply to electricity payments by individuals and
agricultural facilities which had fixed rates imposed on January 1. Hence,
at least a third of all customers are being excluded from the market principle.
Moreover, it is completely unclear whether the new prices will entail new
rules for selling electricity to other consumers. For what has been happening
with electricity up to now? Everything (i.e., its production, delivery,
and sale) was actually in the hands of two types of structures - government
institutions and commercial intermediaries. The former would mainly identify
who was to receive so much energy when, while the latter (in league with
the former, of course) would pay, wherever possible, for the production
of a portion of the electricity. As a result, electrical power has never
been a market commodity in Ukraine and its price has never been determined
by effective demand. The price had the following formula: cost price, including
by far all expenses, plus a certain, usually 20%-30%, profit margin. But
nobody would actually buy electric power at this price, because, after
all, it simply did not cost so much.
Last summer the government, lured by the World Bank loan bait, accepted
the need to simultaneously liberalize electricity prices and deregulate
the electrical power industry. In particular, one of the principal market
liberalization conditions was to have been the state's obligation to force
into bankruptcy inefficient and loss-making energy consumers (i.e., every
second enterprise) instead of the current practice of coercing the electric
company to provide them with free energy. However, judging by the aforesaid
decision, the monopolist may have his prices liberalized, while deregulation
will hardly materialize. Consequently, the real motives behind the decision
must be quite different.
Interestingly, two suitors are vying for the hand of Poltavaoblenerho.
In 1998 the State Property Fund held an investment competition to sell
a 36% share of company stock won by Contrast Holding Ltd. Later the Prime
Minister of Ukraine received a letter laying claim to this packet by the
Investment Pool Co. formed by a group of offshore companies owning, according
to Interfax-Ukraine, large blocks of shares in at least eight oblast power
suppliers (there is word that even some rather influential politicians
on the President's team are worried by the offshore interests). Pool has
also announced that it owns another 23% stake in the Poltavaoblenerho.
Let us note that, in connection with ever more frequent instances of energy
company shares being bought by anonymous offshore representatives, the
Anti-Monopoly Committee refuses to register the purchase of shares unless
the buyer's true name is revealed.
Another circumstance always to be taken account in such a subtle thing
as granting exclusive price making powers is the current practice of relationships
in the electrical energy industry (for all other regional power suppliers
the National Electricity Regulation Commission has imposed uniform maximum
rates). For this is one of the most criminalized spheres of business. Electricity
in Ukraine is in fact a kind of capital, as is grain, coal, hryvnias, etc.
Electrical power is used for loan and payment purposes, it is being stolen
and exported (by being converting into metal, mineral fertilizers, etc.).
Thus, when somebody is granted the right to set market prices but told
nothing about the other components of this "market," even in one isolated
region, all this looks odd, to say the least.
By Iryna KLYMENKO, The Day






