Ukraine May Attract Additional $10 Billion by Introducing Regulatory Asset Base (Rab)

November 30, 2018

One should bear in mind that current "cost plus" tariff setting system does not offer incentives to the energy distribution companies for investment. Quite the contrary, these companies tend to overestimate costs artificially instead of investing in infrastructure modernization. The average lifetime of electricity grids in Ukraine is 40 years with the wear and tear amounting to roughly 70%. If the current tariff setting method is preserved, Ukraine’s energy system will soon be unable to provide reliable energy supplies to consumers.

Low solvency of consumers is the biggest obstacle to implementing the new tariff setting in Ukraine. Obviously, tariffs may increase significantly at the initial stage, but their introduction will be very beneficial for the country in macroeconomic context.

By their nature, the power grids are the blood vessels of the economy. In the absence of economic incentives to invest in their reconstruction and modernisation, any investments in the country’s infrastructure would be meaningless due to unreasonably high risk of interruption of energy supply.

Volodymyr Omelchenko

Director, Energy Programmes


Born in 1967 in Kyiv.

Education: Kyiv Politechnic Institute, Department of Chemical Engineering (1992).

Author of over 50 scientific works and op-ed publications. Took part in development and implementation of international energy projects and scientific research in international energy policy.

Employment:

1992–1996, worked in different positions in the mechanical engineering industry;

1997–1998 — head expert of the division of oil, gas and petroleum refining industry of the Ministry of Economy of Ukraine;

1998–2003 — Naftohaz Ukrayiny National Joint-Stock Company, in charge of oil transportation section;

2004–2007 — chief consultant at the National Institute of International Security Problems of Ukraine’s NSDC;

since February, 2007 — Leading Expert, Razumkov Centre. Director since 2013.

(044) 206-85-02

omelchenko@razumkov.org.ua

volodymyr.omelchenko