Page 65 - bne_July 2024_20240709

bne July 2024
Opinion 65
and destroyed by Russia since the start of this year before the winter sets in.
As bne IntelliNews reported, 35 GW of Ukraine’s 55 GW of installed capacity of power generation has been destroyed or put out of action since the start of this year, raising fears over how the country can get through the coming winter. As many of the facilities cannot be fixed by the start of the heating season in November, Ukraine will be forced to increase imports of power from the EU, but the size of the energy deficit is such that even with preparations before the winter, the most the EU can do is halve the number of blackout hours in the high demand period of the day.
Thanks to tardy US financial support that ended with a new $61bn aid package on April 20, Ukraine has almost run out of air defence ammunition that has left its power sector unprotected and vulnerable to attack. Russia launched a barrage in March that has destroyed half of Ukraine’s power sector and rolling blackouts have already been introduced in a dozen regions.
Zelenskiy emphasised the urgent need for more air defences to protect Ukraine’s power infrastructure, but according to battlefield reports, the new ammunition is only arriving slowly. In particular, Bankova has called for fresh batteries of Patriot missiles, but rather than taking replacements from its stockpile, the US has simply ordered more from manufacturers that are working to fulfil those orders now, but will take months to fulfil.
Scholz said that Germany will soon provide Ukraine with a third Patriot system, IRIS-T installations, Gepard (Cheetahs), missiles and ammunition.
"Ukraine's most important need right now is ammunition and weapons, especially air defence. Therefore, over the coming weeks and months, we will supply Ukraine with the third Patriot system, IRIS-T installations, Cheetahs, missiles and ammunition," he said at a conference on the reconstruction of Ukraine. Since February 24, 2022, Germany has provided Ukraine with €30bn of military aid, as well as billions in humanitarian aid.
Zelenskiy highlighted Russia’s air superiority as its "greatest strategic advantage" in the ongoing conflict and reiterated his appeal for at least seven Patriot defence systems. German Chancellor Olaf Scholz announced that Berlin would send its third Patriot air defence system to Ukraine, alongside IRIS-T and Gepard anti-aircraft systems, missiles and ammunition in the coming weeks and months. However, these fresh supplies will not be enough.
Zelenskiy repeated earlier comments saying that Ukraine needs at least seven Patriot air defence installations in order to close the main cities in the near future, but Ukraine’s Foreign Minister Dmytro Kuleba said earlier this year that Ukraine actually needs a total of 22 to provide adequate
protection. The contrast between the two numbers was another confirmation of the survival mode thinking that marred the Berlin conference discussions.
"80% of thermal generation in Ukraine, and one-third of hydroelectric generation, have been destroyed by Putin.
And this is not the limit of his terror," Zelenskiy told delegates, adding that Russian missile and drone attacks
have destroyed 9 GW of Ukraine's energy capacity. Last winter, peak energy consumption reached 18 GW, meaning "half of that is gone now," according to Zelenskiy.
Zelenskiy said that Ukraine, with the help of partners, intends to build up to 1 GW of gas-fired flexible generation in 2024 and another 4 GW in the coming years, which will only partially close the gap Russia has created.
More recently Russia has started to target Ukraine large underground gas storage tanks that link Ukraine’s
energy system with Europe’s. However, as these tanks are underground they are almost impervious to attack, although the pipeline links and compressor stations have been damaged.
"We must also implement a quick and inexpensive restoration of all energy facilities that can be restored before winter... We know how to ensure this," Zelenskiy said. He asked allies for equipment from decommissioned power plants and direct financial support to "preserve normal life." Kyiv plans to sign hundreds of agreements worth billions of euros with partners in the defence and energy sectors, Zelenskiy added. European Commission President Ursula von der Leyen
“The new agreements consist of €1bn in credit guarantees and €400mn in mixed financial grants”
announced at the conference that Kyiv would receive €1.5bn from Russian frozen assets revenue in July, and €1.9bn under the Ukraine Facility this month. "About €1.5bn of windfall revenue will be available as early as July – 90% of them will go to defence, 10% to restoration," she said.
"The new agreements consist of €1bn in credit guarantees and €400mn in mixed financial grants," the Ministry of Economy of Ukraine said.
Change of tone
This year’s Recovery conference was a lot more downbeat when compared to the London recovery conference held
in London last June. At that event several prominent international leaders attended including US Secretary of State Antony Blinken in a show of solidarity. This year’s attendance was much thinner.
www.bne.eu