The President of Ukraine, Volodymyr Zelensky, has signed a law aimed at addressing the accumulated debt in the wholesale electricity market, which was introduced to the Verkhovna Rada by the people's deputy from the "Servant of the People" faction, Yurii Kameliuchuk, back in 2019.
According to the bill card №2390 on the website of the Ukrainian parliament, it was accepted in the first reading on May 20, 2020, in the second reading on July 28, 2023, and was sent for the President's signature on August 3 of the same year, returning with his signature on January 2, 2025.
"The law establishes conditions for stable settlements and ensures the possibility of a complete transition to a competitive model of the electricity market," it is reported in the Telegram channel of the Verkhovna Rada.
As previously reported, bill №2390 proposes amendments to the Bankruptcy Procedures Code of Ukraine, which provide for the protection of the State Enterprise "Energorynok" from bankruptcy and create conditions for settling debts accumulated before July 1, 2019, in the wholesale electricity market. Furthermore, the moratorium on satisfying creditors' claims during bankruptcy proceedings, according to the bill, does not apply to the period of settlements among electricity market participants under the law aimed at addressing the arising debt in the wholesale electricity market.
"Earlier, during May-June 2019, the State Enterprise 'Energorynok' received 156 claims for urgent payment of debts for purchased electricity amounting to over 15 billion UAH from electricity producers, as well as lawsuits totaling over 23 billion UAH. Thus, the enterprise shows all signs of insolvency, which is grounds for initiating bankruptcy proceedings... If the enterprise goes bankrupt, we will face issues with electricity distribution and supply," Kameliuchuk stated while presenting the bill in the Verkhovna Rada in 2019.
He explained that due to the bankruptcy of "Energorynok," generating companies would need to pay off accounts receivable exceeding 28 billion UAH, negatively impacting their operations.
Additionally, Kameliuchuk emphasized that the potential bankruptcy procedure of the State Enterprise would jeopardize the mutual settlement of debts formed by electricity market participants before July 1, 2019, the mechanisms for which are outlined in the bill №2386 regarding measures aimed at settling the arising debt in the wholesale electricity market. "When bankruptcy proceedings are initiated, the court imposes a moratorium on satisfying creditors' claims, which effectively blocks settlement mechanisms," he noted.
On April 30, 2020, the Verkhovna Rada adopted the bill on measures for settling debts that arose before July 1, 2019, in the wholesale electricity market (№2386) in its first reading, and on June 17 of the same year, it was adopted in the second reading, which includes, among other things, the recapitalization of the National Atomic Energy Generating Company "Energoatom" and the Public Joint Stock Company "Ukrhydroenergo" through the issuance of domestic government bonds (OVGZ). Zelensky signed it on July 14 of the same year.
"According to the bill, there will be mutual settlements between energy sector enterprises. That is, no money will be gifted to anyone; in fact, these will be zero-sum settlements, which will allow these enterprises to emerge from the crisis and avoid bankruptcy risks," commented the author of the legislative initiative, Yurii Kameliuchuk.
As stated in the explanatory note to the bill, the creditor's debt of the enterprise as of August 31 amounted to 28.1 billion UAH. Meanwhile, according to "Energoatom," the debt of "Energorynok" to the generating company remained at about 11.7 billion UAH by the end of 2019, which constitutes 42% of the total debt amount.
According to the document's text, after the increase of the charter capital of "Energoatom" and "Ukrhydroenergo," the creditor's debt of "Energorynok" will be written off in the corresponding amount.
The debts of coal industry enterprises to the State Enterprise "Regional Electric Networks" and the State Enterprise "Ukrinterenergo," as well as the debts of these suppliers to "Energorynok," are also subject to write-off. "Regional Electric Networks" account for 42% of the accounts receivable of the former wholesale supplier.