Ukraine’s cement industry calls on the government to reconsider the 80% electricity import rate

In the current state of affairs, the energy-intensive domestic economy may suffer colossal losses

Representatives of the cement industry are appealing to the Ukrainian government to reconsider amendments to paragraph 6 of the Regulation on the specifics of electricity imports under the legal regime of martial law in Ukraine, which obliges Ukrainian producers to buy at least 80% of electricity from the EU at a European price to avoid forced electricity supply restrictions. This is stated in the press release of the Ukrcement Association.

On October 27, 2023, CMU Resolution No. 1127 established a guarantee of electricity supply for domestic producers, provided that 30% of electricity from the European Union and 70% of Ukrainian electricity are used. On June 1, 2024, CMU Resolution No. 661 amended the above Regulation to change these proportions to 80/20.

The increase in the required import rate to 80% has already led to an increase in demand, which has led to an increase in prices for imports of European electricity to Ukraine. At the same time, the electricity consumption capacity of the domestic industry is much higher than the available border crossing capacity, so the condition of using 80% of electricity from the EU is technically limited.

«Given that cement production is energy-intensive (the cost of electricity increases the cost of production), and its consumption takes place in the domestic market and it is the main component for military and civilian construction, we ask the Ukrainian government to return to the previous 30/70 proportion. This proportion will ensure reliable energy supply to industrial enterprises of Ukraine, which will help maintain the current pace of economic recovery in Ukraine in the face of military aggression by the Russian Federation,» the Association emphasizes.

Steel companies and industrial associations are also asking the government to reduce the share of electricity imports to ensure stable energy supply. Since the decision was made without discussing it with business and assessing the consequences, it threatens to shut down the industry, including iron and steel enterprises in Ukraine.

Among the key problems that the increase in the electricity import quota to 80% may lead to in the short term are:

• inflated prices;
• lower production and competitiveness;
• inability to plan production;
• reduction of state budget revenues;
• negative social consequences.

To solve the problem, the business proposes to consider the following options: reduce the share of minimum electricity imports to 50%; increase the authorized capacity of interstate crossing; resume long-term auctions for interstate crossing; introduce a balanced and reasonable distribution of mandatory purchases of imported electricity among consumer groups; provide ways to financially support consumers.

Read more in the article by GMK Center.