on the flip side

From Ukrainian energy 29/4/11


http://ukrainian-energy.com/news/gas/141/


Presidential decree order approves gas and electricity price increase

President Viktor Yanukovych?s economic reform action plan for 2011 released earlier this week calls for the National Energy Regulating Commission to approve further household electricity tariff hikes in April and December and finalize a schedule of gas price increases in November.

Dragon Capital comment on the news: The news implies two unspecified electricity tariff hikes in May 2011 and January 2012. The previously announced schedule provided for increases of 15% in April (already enacted) and 15-20% in June. An earlier tariff hike would be positive for GenCos, entailing higher tariffs for power producers already in 2Q11 rather than in 2H11. However, it remains unclear if the NERC will act quickly in the remaining days of April to comply with the presidential decree.

The decree on bringing gas prices to an economically justified level is expected to be issued in November. Ukraine?s earlier agreement with the IMF stipulated a 50% gas price hike in April, which was later revised to 20% for April and another 10% for June. Still, even those tariff increases were postponed, which led the IMF to suspend its lending program among other reasons.