Debts across the gas market will lead to massive bankruptcy of thermal power enterprises in July – Ukrteplokommunenergo

Intersectoral association for the development of heat supply systems "Ukrteplokommunenergo" informs that in July a massive bankruptcy of heat power enterprises is expected due to the imperfection of the gas market.

The total debt of district heating companies for natural gas used for heat production exceeded UAH 50 billion.

Since 2016, the government's debt to compensate for the difference in tariffs for heat energy exceeded UAH 27 billion. The provisions of the Memorandum of Understanding signed with the Association of Ukrainian Cities are not being met, particularly in terms of compensating for the difference in the cost of gas included in the tariffs for heat energy the actual cost of gas in the last heating season.

So, in the last heating season, a Memorandum of Understanding was concluded between the Cabinet of Ministers of Ukraine and the Association of Ukrainian Cities, according to which heat tariffs do not increase until the end of the 2020/2021 heating season, but will remain at the level of the 2019/2020 heating season. The state has undertaken obligations to compensate for the difference in gas prices and to resolve the issue of compensating for the difference in tariffs for thermal energy.

District heating companies switched to work in the conditions of the gas market. And the price of natural gas in the tariffs of thermal companies is still almost 30% lower than the actual price offered by Naftogaz to district heating companies for May of this year.

“Due to economically unjustified tariffs for heat energy, a protracted crisis of non-payments by the population for heating and hot water, as well as unresolved issues of paying off debts for consumed gas, the work of all district heating companies is actually blocked by numerous litigations on claims of gas suppliers to collect debts, additional inflation charges, fines, penalties and annual interest, arrests of business accounts. The total amount of penalties that are already being levied on court decisions in favour of gas suppliers exceeds UAH 10 billion,” the statement said.

The Association also noted that to prevent the disruption of preparations for the new heating season 2021/2022, it is urgent to adopt legislative acts that would ensure the restructuring of the district heating companies’ debts accumulated due to economically unjustified tariffs over the past 5 years.

"The cancellation of the PSO and the transition of enterprises to work in the gas market in conditions of colossal debts will lead to a collapse in the industry in the coming months and a disruption of the heating season," said Serhii Dunailo, Vice President of the Association for the development of heat supply systems Ukrteplokommunenergo.

Ukrainian heat producers and suppliers predict an increase in gas debts and a complete cessation of gas supply to enterprises by regional gas companies in early July this year.

As reported, the debt of the population for utilities is more than UAH 79 billion.

Tags: The Cabinet of Ministers, Naftogaz, legislation, debt, heating season, Gas market, negotiations, price, gas supplies, natural gas,

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