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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Candlelight Talk About Reform "Successes"

29 December, 1998 - 00:00

To the Ukrainian in the street the word crisis is primarily associated
with the absence of central heating and electricity cutoffs. Most residents
of Ukraine know this from their own experience as rotating blackouts are
not practiced only in the capital. Yet the word paradox seems to best describe
the condition of Ukraine's power industry, originally the most powerful
sector, capable of steady most liquid output, currently on the verge of
uncontrollable and irreversible processes.

The first paradox is that the power industry is being used to the advantage
of persons (or entities) other than those generating, transmitting, and
allocating all this energy. Here money revenues are accumulated not along
the logical power-station-National-Dispatch-Center-regional-heating-companies-consumer
chain, but somewhere in between its links where countless intermediaries
are busy stuffing their pockets. These intermediaries use several principal
techniques, trading in highly (and not very highly) liquid products received
under barter deals in return for electricity supplies; negotiating consumers'
and distributors' bonds of obligation in return for generating companies'
cut rates - actually, there must be as many techniques as there are smart
operators. This business remains the most rewarding in Ukraine; small joint
stock companies and limited liability partnerships are calmly manipulating
hundreds of millions of dollars. And access is rigidly controlled by authorities.

Another aspect of this paradox is that an industry considered the most
profitable one all over the world must ask the state for handouts. Last
week, when discussing Parliament's resolution On Urgent Measures to Stabilize
the Fuel-and-Energy Sector, the pressing need to make budget injections
was stressed by the Energy Minister and a number of acknowledged experts
in the field. "Non-allocation of such funds may result in tragedy." This
is a real threat. At present, the aging ratio at the generating facilities
amounts to 30-40%, mostly at thermal power stations that are two-three
times older than the nuclear ones and have never basked in such nationwide
esteem.

The following aspect of this paradox is that the country with Chornobyl,
whose Parliament, ruled by a majority of voters eage to eventually wipe
nuclear power engineering off the face of the earth, has turned out completely
dependent on this very hazardous industry. The question is what role Ukraine's
nuclear power units play. Do they threaten Ukraine's very existence or
should be they regarded as a guarantee that its energy system will become
stable? No one can answer, not at the present stage. One thing is clear:
while the thermal power stations, being so ruthlessly exploited, will die
a quiet death, the nuclear ones will go out with a bang hazardous to everyone's
health.

There are many aspects to this paradox, just as there are ways to correct
it. Apparently, a revolutionary situation has developed in the Ukrainian
power industry. Except that not people but equipment will rebel against
the barbarian exploitation and the "revolution" will cost Ukraine as much
as the one bringing the Bolsheviks to power did, if not more.

FROM THE DAY'S FILES

Before 1991, Ukraine's power industry was developed as part of the USSR
power grid. Ukraine's total generating capacity was estimated at 54,600,000
megawatts, with a yearly output of 300 billion kWh; approximately one-tenth
of this energy was exported. By and large, its energy system was self-sufficient
even during Soviet times, although certain regions registered a misbalance
of generating and consuming capacities - e.g., Kharkivenerho, uniting Kharkiv,
Sumy, and Poltava oblasts - but lack of energy was made up for by supplies
from Russia. In contrast, the Donbasenerho and Dniproenerho systems had
excess generating capacities, supplying electricity to Russia and Ukraine's
central and southern territories. The worst shortcoming of the national
energy system is the lack of maneuverable capacities, constituting 9% (e.g.,
the Dnipro hydropower chain). Nuclear power capacities cannot be maneuvered
and to secure their stable performance their share in the nationwide output
had to be raised from 27% (in the USSR) to 49%. Using thermal power stations
for such maneuvering resulted in a tangible drop in their technical and
economic indices due to wear and tear and lower profitability. Average
fuel consumption has increased by 40% over the past eight years, with the
capacity utilization factor dropping by 43.4%. Finally, as under Soviet
rule, Ukraine has no rational energy use policy, even in terms of energy
conservation, let alone a systematic approach to the extraction of energy
resources and power consumption.

 

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