The Nordic Environment Finance Corporation (NEFCO) has turned to Ukraine with a request for a speedy solution to the energy crisis.
The Nordic Environment Finance Corporation (NEFCO) is an International Financial Institution established in 1990 by the governments of the five Nordic countries, Denmark, Finland, Iceland, Norway and Sweden. In Ukraine, NEFCO's activities are governed by the Framework Agreement between the Government of Ukraine and NEFCO which was signed on 17 September 2009 and ratified by the Verkhovna Rada of Ukraine by Law of Ukraine No. 2533-VI on 21 September 2010.
“NEFCO currently has more than €125 million of investments into Ukraine. As we are planning future investments in Ukraine in addition to securing past investments, it is important for us that the energy crisis will reach a speedy resolution. Non-payments and retroactive cuts in tariffs of renewable energy projects has lead to freezing of investments before clarity on the legal situation is achieved from the government’s side, as well as our ongoing risk assessments.
We are pleased that there is progress with your negotiations with the industry. We recognize that a MOU has been signed and that the draft law No. 3658 "On Improvement of Terms and Conditions of Support of Alternative Energy Production" is with the Parliament. However, we also observe a critical issue for several of our projects within solar power: several international solar companies are unwilling to accept 15% FIT reduction without power purchase agreement (PPA) extension and are preparing to use legal means to enforce their contracts. We are now at risk of several foreign investors withdrawing from Ukraine and using legal means to ensure fulfilment of their contracts if the planned limitations are imposed by the Ukrainian government, unless some reprieve is given. This would in turn impact our ability and appetite to invest further into Ukraine.”
The solar investors have asked for an amendment to the draft law with at least 2 years PPA extension in case of 15% FIT reduction for solar power plants (SPPs) over 10 MW and 12.5 % reduction for SPPs under 10 MW.
With the PPA extension and limited reduction for smaller SPPs, there are more chances that companies will keep confidence in the country and will continue investing, which also will support maintaining NEFCO’s ability to continue investing into Ukraine at the current level.
As such, we respectfully ask you to consider the position of retroactive cuts with a balanced approach to the investors, to avoid potential highly negative consequences on the investment climate.”
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