Kyiv with no hot water: Who is responsible and how to deal with it?

Author : Olena Holubeva

Source : 112 Ukraine

About 200 boiler stations in Kyiv, which heat the water for a third of the residential buildings in the city, have been left without gas since the beginning of May
10:55, 13 June 2018

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About 200 boiler stations in Kyiv, which heat the water for a third of the residential buildings in the city, have been left without gas since the beginning of May, and the residents of the houses connected to them have no hot water.

About 30% of residential houses in Kyiv remain without hot water. A number of social infrastructure facilities suffer from the lack of hot water too – kindergartens, hospitals, connected to these 200 boiler houses, which in early May from the balance of Kyivenergo were transferred to the balance of the municipal enterprise Kyivteploenergo. Naftogaz of Ukraine has not yet concluded a gas supply contract with the latter. "Kyiv never had anything like that before – 200 boiler stations re cut off from gas and 30% of the city stay without hot water for so long," head of the Supervisory Board of Kyivenergo Ivan Plachkov claimed.

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Boiler rooms were transferred to the city administration, as the authorities of Kyiv have decided to abandon the services of Kyivenergo, which has been providing the city with electricity and heat since 1995. At the same time, the owner of DTEK was not offended as well: the function of supplying the city's electricity for it was preserved and a separate company, DTEK, Kyiv Electricity Network, was created. The Kyiv authorities decided to transfer the heat supply function to Kyivteploenergo, a utility company specially created for this purpose. “Providing the city with heat has been unprofitable since 1995. Everything was compensated only through electricity," Ivan Plachkov explained.

It turns out that the unprofitable part of the business was taken by the city to its balance sheet, while the profitable part remained for DTEK.

The main reason why the city and Naftogaz cannot agree on gas supplies to the utility is Kyivenergo's debt to Naftogaz of about 0,15 billion USD. "In total, the debt of Kyivenergo is more than 0,15 billion USD, of which more than 0,03 billion USD are fines and penalties of Naftogaz." This amount includes both the people's debts and the difference in gas tariffs that the state did not compensate for Kyivenergo," said Ivan Plachkov.

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The city has some questions to the number of fines and penalties (0,046 billion USD), which, according to People's Deputy and associate of Kyiv Mayor Dmytro Belotserkovets, "are just controversial obligations between Naftogaz and Kyivenergo. The city considers this situation to be blackmail on the part of Naftogaz, because in this way (refusal to conclude a contract) they require the city to take the non-existent debt of a private company, and Kyiv residents would be forced to pay for it," Belotserkovets stated.

Kyivenergo is not going to pay the debt. Naftogaz believes that the city enterprise Kyivteploenergo should take over the amount of debt after Naftogaz concludes a contract for the supply of gas. "We do not demand immediate repayment of the debt for gas. Kyiv authorities do not want to set a lawful agreement," the company said in an official statement.

Naftogaz motivates its position with the requirements of Article 22 of the Law on Heat Supply, which says that Kyivteploenergo should become the legal successor of Kyivenergo's debts.

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"The head of the Naftogaz, Andriy Kobolev, took an extremely radical position in this situation. We did not manage to hold any dialogue with him. He demands payment of the entire amount of debt, including accrued penalties, and is not ready for any compromises. Kobolev manipulates Article 22 of the law, referring to the fact that the debt for energy generation is passing over. Penalties and fines have nothing to do with Article 22. This position is confirmed by international audit consulting companies," Belotserkovets claimed, noting that the international consulting companies are attracted to studying the situation, the conclusions will be submitted soon.

City authorities are preparing a lawsuit in the Economic Court of Kyiv. "The court must determine who should pay the debt to Naftogaz (Kyivenergo or Kyivteploenergo), and we will also ask the court to oblige Naftogaz to sign a contract with Kyivteploenergo. The suit has been prepared and will be submitted to the Economic Court by the end of the week," Belotserkovets said, adding that" consideration in courts can last for up to a year, so for this time a temporary contract (or limited in time) for the supply of gas must be concluded so that people living in Kyiv will not suffer. "

It is likely that Prime Minister Groysman has to really solve the situation. The meeting of the parties to the conflict with him was to be held on June 7, but due to the tight schedule of the head of government, it was postponed.

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Negotiations between Kyiv city administration and Kobolev with the participation of the Prime Minister Groysman should take place the other day, Belotserkovets confirmed: "We believe that the Prime Minister will help to find a compromise in this difficult situation."

Ivan Plachkov noted that if the city authorities were not that ambitions, the current situation might not have arisen. "We have offered various options for the city authorities, the deputies. We offered to transfer to the city Kyivenergo as an integrated company, offered to create joint management of the company, but the city authorities have chosen an option, which is the most painful for the consumers," said the head of the Kyivenergo Supervisory Board.

If the situation does not change before August 1, when Kyivteploenergo will take on the balance of CHP-5 and CHP-6, a number of houses and social infrastructure facilities might remain without electricity. "The government quarter might suffer from the power blackout too," said Belotserkovets.

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According to Ivan Plachkov, the process of replacement of heating systems and planned repairs stopped in connection with the transfer of assets. Among other things, the city is already unable to prepare for the heating season properly, and it is under threat of failure, said Belotserkovets.

At the same time, the city cannot now sign contracts with the private gas suppliers. According to the decisions of the Cabinet, Naftogaz is obliged to supply gas to the population on special obligations, in contrast to traders who sell gas at a market price, which will inevitably lead to an increase in the utility cost. For comparison, now gas is sold to the population at a price of 270 USD per 1 thousand cubic meters, and its market price reaches 423 USD per 1 thousand cubic meters.

"Naftogaz simply uses its monopoly position. As a way out of this situation, the Cabinet could adopt a resolution spreading the special obligations to supply gas to the population on private traders, or to allow the city utility to sign an agreement with UkrGasVydobuvannya," Belotserkovets noted.

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