Less than two months before the start of the heating period, Ukraine’s storage levels of natural gas and coal are below what they were last year at the same time.
The Cabinet of Ministers has already ordered the health and regional development ministries to consider decreasing the minimum winter temperature in houses with central heating from 18 to 16 Celsius.
There is 14.5 billion cubic meters of gas in storage as of Sept. 1, according to Gas Storage Europe, a non-profit group representing gas storage system operators based in Brussels. There was 2.1 billion cubic meters more on hand during the same period last year.
However, Energy Minister Volodymyr Demchyshyn says there are no reasons to worry.
“We will be ready for the heating season… I want to reassure [the public] that there won’t be rolling blackouts this year,” he said at a government meeting on Aug. 28, cited by Interfax news agency.
Demchyshyn still has to accumulate 17 billion cubic meters of gas and 3.2 million tons of coal before the start of the heating season, but experts are afraid that this might not be enough.
Depending on winter temperatures, the coal shortage may range from 7 to 21 million tons, lawmaker Nataliya Katser-Buchkovska, who heads the parliamentary subcommittee on sustainability, said on Aug.26.
There was 1.5 million tons of coal in electric stations as of Aug. 10, compared to 3.11 million tons on the same day last year. Coal supply from war-torn Donbas has been disrupted and Ukraine has struggled to replace the shortage with imported coal from Australia, South Africa and Russia.
However, Infrastructure Minister Andriy Pyvovarsky said at the Cabinet meeting on Sep. 2 that for the last ten days three corridors from the occupied territories of Donbas have been working, allowing to transport and accumulate additional 200,000 tons of energy coal from there.
Historically dependent on Russia’s energy sources, Ukraine stopped buying electricity from Russia in August and the gas contract between the two countries expired on July 1. The new deal has not been reached yet, while Demchyshyn is counting on a discount of up to 16 percent to fetch $210 per 1,000 cubic meters.
Alexey Miller, CEO of Russia’s state-owned Gazprom, stated on Sept. 1 that Ukraine could expect to pay $252 for 1,000 cubic meters in the last three months of the year, adding that it’s too early to start talking about discounts.
Ukraine over the last five years has bought Russian gas at a discount of $100 for every 1,000 cubic meters. It has been in effect if the discount doesn’t exceed 30 percent of the regular price.
Kyiv and Moscow are scheduled to discuss a gas deal on Sept. 7 in talks that the European Union will mediate, according to Ukrainian trade representative Nataliya Mykolska.
Meanwhile, the European Bank for Reconstruction and Development intends to lend Ukraine’s Naftogaz $300 million in the next few weeks to purchase gas on the European market, the financial institution’s director in Kyiv, Sevki Acuner, told the Kyiv Post on Aug. 31.
European gas via reverse flows is coming at price of $255 per 1,000 cubic meters. While coal from Russia via occupied Donbas is cheaper than African imports at $77-80 per ton, coal from eastern Ukraine and Russia spurs political debate.
“I believe there are alternative options for buying coal and now it’s better to diversify, from other sources, other countries,” Katser-Buchkovska said
Although Ukraine has cut energy consumption this year, the downward is attributable to a decline in industrial output, not energy efficiency.
Manufacturing fell by 19.5 percent in the first 7 months of 2015 over the same period last year. For same period, electricity consumption declined by 19.6 percent to 29.7 billion kilowatt-hours.
According to Regional Development Minister Hennadii Zubko, the residential sector consumes 200 kilowatt-hours per square meter per year and should aim to cut that by half. By comparison, the United Kingdom’s residential sector сonsumed less than 64 kilowatt-hours in 2013 based on the same parameters.
Overall, Ukraine uses 3.8 times more energy than the European Union average. Ukrainian households, particularly multi-story apartment buildings, hog energy, encouraged by subsidized prices and usage that is still often not metered. Only 41 percent of buildings have gas meters, according to Zubko. Five thousand meters need to be installed in Kyiv alone.
However, with the gradual price hikes taking effect to reach cost-recovery levels by 2017 households are expected to start saving more. Parliament currently is preparing a law on heat regulation and metering to give the public the ability to decide how much heat to consume.
“Citizens themselves should be able to decide what temperature they want in their dwellings,” and how much they want to spend on that, Katser-Buchkovska said.
“It’s felonious to raise tariffs without giving people the opportunity to consume less,” said Oleksiy Ryabchyn, head of parliament’s subcommittee on energy savings and efficiency. He believes only a complex approach ensuring complete meter coverage for water, gas and heating, not mere administrative measures, will solve the problem.
However, Demchyshyn at last week’s government meeting complained of meeting resistance from both households and industry to the rising energy prices. In the first seven months of this year, 81 percent of gas and 92 percent of energy bills had been paid. The gas debt equals Hr 8 billion, which would be enough to buy an additional 1.8 billion cubic meters, according to the energy minister.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected]
