No enough gas ad coal: How Ukraine starts heating season

Author : Olena Holubeva

Source : 112 Ukraine

Ukraine has never entered the heating season with such disastrous results as it does now: trying to maintain the remnants of President Zelensky's rating, the authorities are trying with the last bit of strength to contain the rise in tariffs. Where possible, the problems are transferred to local budgets. Naftogaz was thrown on the sacrificial altar. The Security Service was even involved in solving the problem of tariffs
23:20, 26 October 2021

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Still, there is not enough gas for everyone - many cities start the heating season late. Due to low temperatures in the premises, kindergartens do not work, schoolchildren are sent ahead of schedule on vacation. At the same time, the coal warehouses are empty, and in the event of a cold winter, Ukraine risks not only freezing but also facing a power shortage.

Related: Naftogaz allowed to supply gas for heating for hospitals at fixed price

Most Ukrainian cities and Kyiv is no exception, with the onset of cold weather as they can delay the beginning of the heating season: despite the cold nights, they save gas and money so that they will be enough when the real frosts begin. In Kyiv, this year, heat is supplied to residential buildings not from October 15 (as many years in a row), but 10 days later - from October 25. A number of cities began to supply heat, but the supply was suspended due to an increase in temperature: for example, Lviv, where the heating season began on October 11 and Zhytomyr. A number of other cities are determined to hold out until early November - for example, Dnipro and Odesa. Local authorities explained that the average daily temperature has still not dropped below 8 degrees.

Heat tariffs for the city's population were left at the level of 2018, as recorded in the memorandum, which was signed in the presence of President Volodymyr Zelenskyy. In Rivne, tariffs for the population were increased to 100 USD / Gcal, but on October 18, the increase was canceled. “Representatives of the local parliamentary faction Servants of the People continue to use populist slogans to save people from the cold, telling that cities can now set tariffs themselves. At the same time, state-owned companies and enterprises have raised prices for all components - energy, gas. to take such huge funds to the local budget - it is not known?! The government does not provide compensation mechanisms in tariffs, and it is not known when it will do it and whether it will do it at all,” the city mayor wrote about this on his Facebook page.

Related: Ukraine to sale 700 million cubic meters of gas to Moldova in case of need

Mykolaiv mayor Oleksandr Senkevich also criticized the attempt to keep the tariff for the population for heat at the cost of any victims of local budgets. "It just blows me up from the inside, because I see in this, most importantly, social injustice. A large number of people live in the city of Mykolaiv, and only a small number use the services of centralized heating. It turns out that all of us together fill the budget of Mykolaiv, create a development budget.

Chernihiv mayor Vladyslav Atroshenko, who refused to sign Zelensky's memorandum, said that payers of local taxes pay them so that the local authorities provide food for children in schools and kindergartens, infrastructure development, public transport, and high-quality medical services. Consequently, compensation for the difference in tariffs from local budgets contradicts the very logic of dividing budgets into different levels. "According to the level of solvency, I would divide all communities in Ukraine into four groups. The first is the capital and cities with a population of one million. The second is other regional centers and large industrialized cities (for example, Kryvyi Rih or Kremenchuk). Third, cities of up to 100,000 people with average or low industrial potential. Fourth - other united territorial communities. According to this memorandum, compensation for the difference in tariffs to generating entities during the heating period will conditionally cost for the first group - 25-30% of development budgets; for the second group - 50-60%; for the third group - 70-80%, and for many local communities of the fourth group it will cost more than 100% of their development budgets. I think this is wrong and unfair," Atroshenko explained.

Related: Ukraine’s energy system is ready for heating season by 90%

And although the memorandum is not a binding document, not everyone dares to criticize it so openly, and even less so not to execute it. One of the market participants explain that the Security Service is interested in the issue of maintaining tariffs for heat for the population. We have no reason not to believe the words of this person, although his desire to remain anonymous is understandable. But is it really true that the Ukrainian authorities are ready to involve even security officials in solving the issue of tariffs for the sake of preserving the presidential rating?

The worst of all is the situation with the budgetary sphere. Back in September, the Association of Ukrainian Cities called on the authorities to solve the problem as soon as possible. For unknown reasons, this did not happen. A number of regions, due to a decrease in temperature, were forced to interrupt schooling and send children on vacation a week ahead of schedule. “Some local governments started their school holidays a week earlier. This is because they need time to hold tenders for the purchase of gas, which will be used to heat educational institutions. of the total number of new patients, up to ten percent are children, "said Sergey Tkachuk, deputy chairman of the Khmelnytsky Regional State Administration. In the regional center, school holidays also began a week earlier.

Due to the lack of gas for delivery to the boiler houses of budgetary institutions in Ivano-Frankivsk, an emergency was declared. A similar situation is in the Lviv region, Dnipropetrovsk, and a number of other regions.

As reported, budget-funded institutions that are heated by autonomous boiler houses cannot buy gas at tenders, since Naftogaz Trading with a preferential price fixed in a memorandum (0,64 USD with delivery and VAT) does not come to them, but at a market price of 1,5 USD / cubic meter they cannot buy gas. The problem began to be resolved only on October 12th. There is no information on how many agreements have already been concluded.

Almost all cities, including Kyiv, budget organizations that are connected to the central heating system are forced to significantly increase the tariff in proportion to the increase in the gas price to 0,64 USD / cubic meter. This has become an additional burden for local budgets.

Related: Gazprom threatens to cut off gas supplies to Moldova

In a particularly difficult situation today, thermal workers who work in the cogeneration mode (working on gas, produce gas and electricity). In winter, they provide up to 10% of the total electricity generated and perform a balancing function in the market.

Blashchuk explains that Naftogaz is ready to supply gas to companies at a reduced price, only in the amount necessary for heat production. And this is only half of the gas used by CHPPs and cogeneration plants - the rest that is necessary for the production of electricity, they must buy in addition at the market price. At current market prices, the cost of electricity will be at least 0,19 USD per kWh. That is, you will have to choose - either to work with a load of 50%, without generating electricity or to sell it below the cost price. How not to twist - and in one, and in the other version of the company will receive losses.

The problem was announced by "Kyivteploenergo", which manages two gas CHPPs (CHPP-5 and CHPP-6), which provide about 70% of Kyiv's demand for heat and 60% of the demand for electricity. "As a result of the rapid rise in prices for blue fuel, gas-fired CHPPs have become uncompetitive. The market price of electricity does not cover the cost of fuel for electricity production," the company said in a statement. It is noted that in connection with the establishment of price fuses (price caps), price limits, focused on the cost of cheaper coal generation, the production of electricity at gas cogeneration facilities led to a forced shutdown of power units, except for the production of electricity for centralized heating and hot water supply systems.

If the National Commission for State Regulation of Energy and Public Utilities meets companies and increases price caps, this will inevitably lead to an increase in electricity prices for industry, which already increased by 70% in August after another increase in the bar of restrictions as part of the PSO system change. By giving Ukrainians a discount on electricity from October 1, the authorities pushed up the price cap, which allowed Energoatom and other generations to raise significantly more funds from the sale of electricity. In the bottom line, now Ukrainians pay for electricity less in payment, but more through the rise in prices for food, services, rent.

Related: Gas tariffs in Ukraine not to grow during this heating season, - minister

Ukrainian underground storage facilities have accumulated 18.5 billion cubic meters. m against 25 billion cubic meters. meters of gas last year. How much of this volume belongs to "Naftogaz", and how much to private companies, is not reported - a commercial secret.

Naftogaz notes that in 2016-2018 Ukraine entered the heating season with less gas reserves - about 14 billion cubic meters. m with a ponytail, and everything was fine. True, they forget to say that the situation with coal was not nearly as sad as it is now. In warehouses in Ukraine, there is three times less coal than is needed according to the plan approved by the Ministry of Energy. As of the morning of October 18, coal reserves in the warehouses of thermal power plants (TPPs) and combined heat and power plants (TPPs) amounted to 752.9 thousand tons. In addition, against the background of record-high prices, it is almost impossible to buy it on the world market due to high demand.

Due to the lack of coal, on the morning of October 19, only three of the 23 blocks of state-owned thermal power plants were in operation.

Related: Ukraine ready for heating season by 99%, - PM

They also forget in Naftogaz that in the years when Ukraine entered the heating season with low reserves, gas was much cheaper than a thousand dollars per thousand cubic meters. m, and besides, there was no threat in the form of "Nord Stream - 2", if launched, the pumping of physical volumes of gas through Ukraine could be reduced to a minimum, which would exclude the possibility of reverse deliveries.

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Naftogaz has already started importing gas to Ukraine, although at what price it has not been disclosed. With the termination of Russian gas supplies through Ukraine towards Hungary, the reverse is now available only from the directions of Poland and Slovakia.

What's next? After all, Ukraine will leave the heating season with empty coal warehouses and empty gas storage. In the spring, the collapse of prices for these resources is not expected, however, as the growth of their own production by state-owned companies. What will the authorities do? Will they continue to artificially restrain tariffs, ruining the budgets of cities and OTGs, destroying the country's energy economy, which requires investment in modernization, or will they give up on everything? In the second case, tariffs will skyrocket, at once and for everything. Ukrainians will face a real shock.

Related: Average heating season subsidy size in Ukraine in 2021-2022 to make $75


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