Page 33 - Ukraine OUTLOOK 2023

Ukraine needs $1bn to restore its energy sector. Ukraine needs as
much as $1bn to restore critical infrastructure quickly in order to get
through the winter following the Russian bombing campaign of energy
infrastructure that started on October 10, Prime Minister Denys
Shmyhal said on December 12.

The state energy operator has received loans of €400mn to repair
the grid after Russian attacks. The package includes a €300mn loan
from EBRD, a €72mn grant from the government of the Netherlands,
and a €32.5mn loan from a German bank. More assistance has been
offered as Zelenskiy estimated the damage as of December at closer to
$2bn.

During a video conference with the G7 club of wealthy nations in
December, Zelenskiy said Ukraine also needs "about 2 bcm" of
additional gas or coal equivalent to get through the winter.

Russia has been sending 42,000 cubic metres per day via the Ukraine
gas pipeline network during the war, about a third of normal volumes,
but this supply remains uninterrupted and together with the gas going
through TurkStream is the only gas being delivered to Europe.

However, Ukraine has been unable to store enough gas to meet its
winter needs. It started the heating season with around 14 bcm of gas
in storage, or about 4 bcm less than normal. Even with the reduced
demand caused by the war, Kyiv says it still needs an extra 2 bcm that
it hopes to import from its friends in the West.

Missile strikes have destroyed 50% of Ukraine’s energy facilities
as of December, Zelenskiy said in a call with US President Joe Biden,
according to a statement published on the Ukrainian leader’s website
on December 9.

Ukraine plans to double commercial electricity tariffs. The national
energy company, Ukrenergo, has proposed an increase in tariffs for the
transmission of electricity and for dispatching management beginning
January 1, 2023. In particular, the company is offering to set the
electricity transmission tariff at the UAH636.17/MWh level for 2023,
while in 2022, it was UAH345.64/MWh. It is proposed that the tariff for
dispatch management services is raised from UAH62.13 to
UAH207.63/MWh. If Ukrenergo's proposal is approved, the two-fold rise
in prices for businesses will be transferred to consumers through an
increase in the prices of goods, which will reflect the new tariffs. Among
the main reasons for the need to raise tariffs, the company cited the
destruction of the energy infrastructure, which has led to a significant
upsurge in the volume of physical work and cost.

Russia's invasion of Ukraine will lead to a doubling of green
energy capacity. The International Energy Agency (IEA) noted that the
global capacity of renewable energy will double over the next five

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