Ukraine’s ferroalloy industry opposed the increase in electricity transmission tariffs

The Ukrainian Association of Producers of Ferroalloys and Other Electrometalurgical Products (UkrFa) has opposed the initiative of the National Energy and Utilities Regulatory Commission (NERC) to raise electricity transmission tariffs. This is stated in a letter from the UEF to the Ministry of Economy of Ukraine, NEURC, Ukrenergo of the Ministry of Energy and other relevant structures, UAprom reports.

On November 13, 2024, the NEURC adopted a draft resolution that provides for a 26% increase in the tariff for electricity transmission services from 2025, from UAH 528.57 to UAH 665.26/MWh. The Association emphasizes that this will lead to a significant increase in the costs of ferroalloy producers. The annual costs of Ukrainian metallurgists will increase by more than UAH 1.6 billion.

“Given that the Ukrainian steel industry is in a critical condition due to the war, logistical constraints and falling global demand and prices for mining and metals products, and during the energy crisis caused by the war, the above changes for domestic steelmakers will lead to massive layoffs and, in general, the risk of losing a strategically important industry. Moreover, some of the member companies of the Ukrainian Association of Ferroalloy Producers are located in the war zone, and mining and processing plants are currently not operating, all of which are located in the territories adjacent to the temporarily occupied ones,” the statement says.

UkrFa emphasizes the importance of taking this position into account when making the final decision.

Earlier, the Federation of Employers of Ukraine opposed the unreasonable increase in electricity transmission and dispatching tariffs proposed by the NEURC. The FEU considers such increases to be dangerous for the country’s economy, as they are an additional burden for Ukrainian enterprises, which could lead to catastrophic consequences in times of war.

Additional pressure on the Ukrainian industry, including the mining and metals sector, is created by the intention of the railway operator Ukrainain Railways JSC to increase freight transportation tariffs by 37%. The last time UZ increased tariffs was in June 2022 – by 140% for the transportation of coal, ore and limestone, 96% – for grain, and 70% – for steel.

Such actions by state-owned companies can lead to a serious blow to industry, tax and foreign exchange revenues to the country’s budget, the business economy and the competitiveness of the domestic industrial sector.