Ukraine to freeze power tariffs for 2014

Макроэкономика 20.12.2013 In setting benchmarks for power, gas and coal tariffs for 2014, the Ukrainian government does not foresee any increase in wholesale electricity tariffs, the Interfax-Ukrayina news agency reported on Dec. 19, citing a statement by NERC (National Electricity Regulatory Commission) officials. Based on this, as well as Cabinet’s order to keep tariffs for natural monopolies non-increasing, the NERC decided not to apply a new, RAB-based, tariff regulation for domestic electricity distribution companies in 2014. Earlier, the RAB-based regulation was planned to be introduced for nine power distribution companies as of January 2014. Alexander Paraschiy: The news looks discouraging for the whole Ukrainian energy sector, as stable wholesale electricity tariffs imply the government plans no growth for any of the cost components of electricity, including coal prices. Most likely, non-increasing tariffs for electricity will be warranted by an expected decrease in retail gas prices (about 7% of power is produced from gas in Ukraine), which is negative for domestic gas producers like JKX Oil&Gas (JKX LN), Serinus Energy (SEN PW) and Regal Petroleum (RPT LN).