Making an Energy Bridge With Russia Fails So Far

The latest attempt to build an energy bridge between Ukraine and Russia, or energy island, as they also call it, has been postponed once again. The connection of the power supply system in Kharkiv, Poltava and Sumy oblast to the Russian one has long been discussed and debated not only by politicians but also by electric power engineers. The stumbling block was the settlements principle. Kharkiv’s people wanted to receive electricity and coal for their generating companies in exchange for electrical machinery products (which are actually needed in Russia), but the Russians insisted on payment in money. Returning from Moscow, where the negotiations had taken place, Deputy Head of the Kharkiv Oblast State Administration Anatoly Skydan said that certain progress has been achieved: a protocol was signed according to which the Ukrainian party will pay for Russian electricity with live money, while the Russians guarantee to buy with “the same money” the equipment produced by Ukrainian electrical machinery companies, which the Russians plan to use for the needs of their nuclear power plants.

However, the value of such guarantees is not high; they work only for a short period. Moreover, in Russia the scandal is remembered concerning the Bushehr contract, when under the US pressure Ukraine refused to supply Kharkiv- made turbines to the Iranian nuclear power plant, which is being built by Russia.

Mr. Skydan said that in the negotiations the possibility of targeted electricity supply to three oblasts, bypassing the energy market, was discussed. If Russian electricity is to be distributed through the Ukrainian energy market, its cost will rise, and Kharkiv enterprises will be forced to raise prices for their equipment in order to adjust their pricing policy. “With today’s price ratio, Russian power will be 20% cheaper,” he said. The Russian side has no objection as to targeted supplies. Mr. Skydan stressed that the legislation in Ukraine, which has long governed electrical power, is silent about the import and export of electricity. The problem, which has now become quite pressing, could be solved by amending the law on the electrical power industry. A new date for establishing the energy bridge has not been announced. Previously, the dates were announced as September 15 and October 1.