Interpipe is concerned about the consequences of the introduction of the 80% electricity import rate

Interpipe Steel, a part of the Ukrainian industrial company Interpipe, is concerned about the possible negative consequences of the new 80% electricity import requirement imposed by the Ukrainian government. This is stated in the company’s press release.

The amendments to the Regulation on the peculiarities of electricity imports under martial law in Ukraine introduced by Resolution No. 611 of 30.05.2024 stipulate that industrial electricity consumers are exempted from planned restrictions by NPC Ukrenergo if the volume of imports in their consumption structure is at least 80%. Previously, this standard was 30% from May to September 2023, and 50% from October 2023 to April 2024.

“This decision of the Ukrainian government can lead to numerous negative consequences for the domestic industry in general and Interpipe Steel in particular,” the company emphasizes.

Currently, the capacity of interstate cross-border electricity imports is 1.7 GW, which is significantly less than the needs of all Ukrainian businesses. This means that the country’s international agreements do not allow it to comply with the new rules introduced by the Cabinet of Ministers in May.

«In practice, this could lead to an artificial, even speculative increase in demand for imported electricity, the price of which could rise to any level. However, to avoid disconnection, only those companies that have minimal electricity costs in their production cost structure will be able and willing to pay for it,” Interpipe adds.

For Interpipe Steel, electricity accounts for almost 25% of the cost of steel billets, which are then supplied to steel pipe and railway products plants as part of the group’s vertical integration.

“This means that the rise in price and increased demand for electricity will not only have an extremely negative impact on the competitiveness of Interpipe’s finished products, but may also lead to a lack of capacity to purchase the required amount of imported electricity in accordance with Resolution No. 611,” the statement said.

Currently, Interpipe’s plants in the Dnipro region employ almost 9,000 people in the frontline region. In particular, about 3,000 people are employed and have a stable income at the pipe plant in Nikopol, which is officially recognized as a combat zone.

In 2023, the company paid a record amount of taxes and duties in the amount of UAH 4.4 billion. In addition, Interpipe helps mobilized employees, internally displaced persons and demobilized veterans. It also provides systematic assistance to 15 brigades and units of the Ukrainian Defense Forces.

As GMK Center reported earlier, Interpipe recently presented a large investment project worth about $1 billion, which involves the expansion of green steel production facilities. The company has plans to build the second stage of the Interpipe Steel complex and a green flat steel production shop.