The Condition, Problems and Development Prospects of the Modern Energy Supply Companies in Ukraine

Economic Annals-ХХI: Volume 148, Issue 1-2(2), Pages: 55-58

Citation information:
Pavlov, V., & Levytska, I. (2015). The Condition, Problems and Development Prospects of the Modern Energy Supply Companies in Ukraine. Economic Annals-XXI, 1-2(2), 55-58. https://ea21journal.world/index.php/ea-v148-14/

Volodymyr Pavlov
D.Sc. (Economics),
Professor,
National University of Water Management and Nature Resources Use
75 Pryhodko Str., Rivne, 33002, Ukraine
kaf_financy@nuwm.rv.ua

Iryna Levytska
External PhD Student,
National University of Water Management and Nature Resources Use,
Chief Economist of Tariff Policy Department,
PJSC «Rivneoblenergo»
71 Kn.Volodymyr Str., Rivne, 33023, Ukraine
i.levitska@yandex.ru

The Condition, Problems and Development Prospects of the Modern Energy Supply Companies in Ukraine

Abstract. Introduction. The problem of natural monopolies (including energy entities) effective functioning becomes a privileged issue of governmental regulation, reformation and reflation. The search for the solution of a technical inferiority of the electricity branch proves the necessity of further investigation on the way to reforms implementing.

Purpose is to clarify the basic issues of finance and managerial reforms in the energy sector, their impact on the service level of business (legal entity) and household (residents) consumers.

Results. The ability for stable Ukrainian energy provision of economics is limited by a number of the following problems: moral and physical wear out of the main facilities; a huge debt between the energy market entities; «cost plus» method of energy transmission and supply tariffs setting; imperfection of contractual relations system on the wholesale energy market of Ukraine etc. One of the most crucial problems is the households’ tariff for the electrical energy which covers only about 25% of economic price for electricity, and this difference is re-financed by so-called subsidies for suppliers. Energy Strategy of Ukraine (was adopted in accordance to obligations of Ukraine under the accession to Energy Community in 2006 year) stipulates the change of government’s priorities in energy sector towards the efficient provision of sustainable economic development. Implementation of the Strategy means minimization the governmental interference into the work of energy markets, elimination of the present system of subsidies functioning, the cross-subsidy cancelling.

Conclusion. The current situation demands taking a decision about electrical power tariffs increase for household consumers to the level that would allow covering losses without using subsidies, to guarantee the rate of investment return into improvement of worn out energy generating and transmission facilities. A strong targeted support of the most vulnerable electricity consumers provided by the government is a privileged issue of a balanced social and economic as well as ecologic development. Implementation of the Strategy is aimed at Ukraine’s energy sector restructuring from the difficult one, requiring a constant governmental support, into up-to-date, efficient and competitive sector of the national economy.

Keywords: Energy; Energy Market; Reforms; Tariffs; Energy Supply Companies

JEL Classification: Q40; Q43; Q48; L43; D41

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Received 20.12.2014