Wu Wei

Subsidies, what subsidies?

The UK government plans to sell a 25 per cent stake in nuclear group British Energy in a long-awaited move that will raise about £2.2bn at current share prices and help pay decommissioning costs for reactors. more

Wouldn't this be the same British Energy that was recently in such financial trouble because nuclear electricity was not competitive in the UK electricity market, that it had to be bailed out by the tax payer?  Remember, all the old dodgy Magnox reactors already closing soon could not be sold off, so British Energy got the best lot.

And aren't these the decommissioning costs that are supposed to be part of the real costs of nuclear electricity, not paid for by the tax payer? 

And what is the strategic stake of 29.9% that the government feels it needs to keep in this company?  Or is that just to keep track of the plutonium?  

And just who is going to want to buy this doubtful competitor in the market?  All these reactors going to close by 2020, leaving only the decommissioning for the tax payer to pay for, I suppose.  I suppose that could only be EdF who no doubt will buy the power stations for the sites, since it is highly unlikely that new nuclear plants will be built anywhere but on the sites of the old one. 

And we all know how transparent the French nuclear industry is, and the exact separation between state aid and nuclear power, don't we?

 

Technorati tags: nuclear energy, British Energy, EdF, subsidies

Divine answers

Snowsquare reports here that Moscow is likely to have no snow for New Year, an unheard of event.

Do you think that the warm winter throughout Eastern Europe could possibly be Someone's response to Lukashenka's prayers about Gazprom's bullying over gas price rises?  He doesn't seem to have many alternatives.

Or the result of Gazprom's prayers in case it can't meet domestic demand and EU exports in the case of a severe winter (predicted here for 2010).  

Technorati tags: Gazprom, gas, Lukashenka

The end of the old?

An end of year assessment of EU-Russian energy relations here from the Jamestown Foundation.

And the New Year Resolutions should be? Lots of EU energy policy changes in the spring?

Plock off

The Jamestown Foundation reports this

Information released following the December 10-11 session of the Ukraine-Kazakhstan Intergovernmental Commission on Economic Cooperation suggests that Russia has successfully forced an indefinite postponement of the Odessa-Brody-Plock oil transport project. Kazakh and U.S. companies in that country were to have been the oil suppliers and Poland the first among European Union consumer countries, once the pipeline would be extended to Plock in Poland under a EU-backed project.

More here.

My colleague who was working on the EU project doing a business plan for this extension must be well miffed. Even the Polish side managed four changes of leadership during 18 months, so the Ukrainians were not the only difficulties.

More changes in Ukraine

Some random changes we noticed during our visit:

1. it was unseasonably warm.  Usually by now there is snow and hard frost at night.  Hats and gloves were hardly needed. This weather must be ordered specially in preparation for the sharp price rise for gas and electricity planned for the New Year, which is likely to cause the new government some problems in the eastern region where their biggest support is.  I saw a report suggesting that payments for utilities are already quite low in the Donetsk region.

2. The posters in the metro telling you to pay your utility bills (with a picture of an ostrich with its head in the sand) have vanished.  Instead (?) there was a very discreet poster for Aids Day. Aids in Ukraine is growing fast, according to the Kyiv Post about 1% of the population are infected.  However, the World Bank has just reinstated its loan to fight the spread of AIDS and tuberculosis, which it suspended earlier this year due to lack of progress.

3. At Boryspil Airport a third language has now appeared on the screens announcing departures and arrivals.  It's quite strange to think that perhaps the one place that justified notices in Russian, didn't have them till now.

And a restaurant review for "Parmesan" from Petro's Jotter

Technorati tags: Ukraine, Russian language, utility bills, AIDS

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Free WiFi and free oil

Back to my favourite occupation in Kiev: sitting in the airport on the way home, surfing the blogs that I haven't had time to read all week.

A reasonably successful trip, at least until the last day.  The political changes had replaced the Ministry official we had been working with, and we saw no reason to suppose this would be a change for the better.  Indeed we feared that we might have to start from scratch with people who saw no point in working with us.  Too late to start again, when we practically had finished our work.

But we found our new politician was favourable, making promises that things would move, and nobody else had changed.  We were complemented on our report (so not one that will sit on the shelf), and it has already been used for more awareness training for senior officials.  Moreover we found the Minister has appeared on TV to explain what he is promising to do.  Of course the new government has made lots of promises, which are thick on the ground anyway in Ukraine.  We were not sure that the Russian oil companies would be so interested in paying for oil stocks to comply with EU legislation, especially as our new guy said "It will be a good benefit for my children, not me".  However, nobody turns their nose up at a bulk purchase of oil at quite high prices, probably with new storage, paid for by the poor Ukrainian taxpayers, even if it enables the oil companies to keep their prices stable and avoid further prices rises at peak consumption as happened this summer.  This was the first crisis the new government had to deal with in August.  Of course, in a normal market economy, oil companies would not expect the state to pay for their seasonal balancing mechanism, but then in most economies, very high oil prices cause consumers to demand some action by the government.

We arrived in the ministry just at the end of a meeting described as "setting the rules of the game for the oil companies". Aren't these private companies?  Isn't there supposed to be a free market for the oil industry?  Aren't the rules of the market set by the laws in force at the time? Aren't oil companies supposed to compete rather than set the rules of the game (something called a cartel in other regions of the world)?  If there is a cartel of foreign oil companies, you wouldn't expect it to meet in the home country Ministry offices.  But then this is Ukraine.

So there will be plenty of work for somebody next year to organise the seasonal stocks under state control.  We have been asked back to help, but it's unlikely that arrangements to let a new contract will be done that quickly and otherwise I will be off to pastures new.  It's always the way.  It takes the whole contract to build a good working relationship and understand each other's point of view, so the conditions are right for getting some real work done, then it is time to stop. 

 

Technorati tags: Oil, wifi, ukraine, oil stocks

KEK is finally getting tougher on payments

KEK is Kosovo's power company. Since the war it has been in deep financial trouble as people have not paid their bills and illegal connections mean that people are stealing electricity. This situation has been condoned by the international community in the first few years and now it is hard to rectify, given the corruption that has developed in KEK. The result is rolling power cuts, frequent breakdowns of plant and expensive imports.

Recently KEK trade unions scored an own goal by complaining that international KEK managers were vastly overpaid.  As a result, even more people refused to pay their electricity bills with a drop of 2mill Euros in collections in September.  However KEK is now getting tougher, and collections have improved again in November.

It seems that even the Kosovo Trust Agency has not paid bills due from privatised SOEs.  If the internationals don't pay bills, what hope is there?  KTA is the nominal owner of the assets of KEK and responsible for its management.  What is going on here?

Now the Minister of Energy and Mining is claiming that civil servants will not get paid if they can't show they have paid their electricity bills. Municipalities have been told that unless they have paid their electricity bills, their accounts will be blocked (by the Ministry of Finance?).

Since the summer, KEK has had a new female Managing Director, and of the four division heads, two are women. Does this mean that a new regime has taken over, which is forcing UNMIK and the government to work on the problem?

Or has the Kosovo government finally realised that without electricity, the country will never have economic growth, people will stay poor and both main parties will have no one to blame after status is settled in a few months (or even weeks)?

Hmmm. We shall see. But at least the talking is getting tougher.

Technorati tags: Kosovo, electricity, KEK

 

RosUkrEnergoBoyko!

Now the information about the owners of RosUkrEnergo is out (courtesy of ForeignNotes).  Tymoshenko claimed on TV that the one founder of RosUkrEnergo are in fact a company part-owned by the new Ukrainian Energy Minister Boyko.  The other owner is the not very aptly named ErosGaz, a Russian company.

Tymoshenko is telling everyone to remember whose pocket they are paying into, when the utility bills come in higher.  Could be a powerful argument for non-payment of bills this winter.  There were plenty of adverts in the metro already over the summer reminding about bill payment before the tariff rises, so it can only get worse.

Technorati tags: RosUkrEnergo Ukraine energy gas

Integrated energy groups are too close to the state?

Under the heading "Brussels plans break-up of energy groups" the FT has just reported that:

the European Commission is preparing to break up big, integrated groups such as Eon, RWE and EdF in an attempt to stimulate cross-border competition.

Neelie Kroes, the European Union competition commissioner, will say that splitting up companies that supply energy while owning infrastructure such as power grids and interconnectors is an “absolute priority”.

The Commission is due to propose a review of EU energy legislation early next year. Ms Kroes’ stance will face tough opposition from Germany and other member states, and may also meet resistance from other commissioners. However, she insists that her views are receiving growing support from regulators and market participants.

She also hits out at long-term supply contracts that she says act as a brake on healthy competition: “Where almost all gas coming to the market is locked in for the long-term, the cumulative effect is likely to be that new entrants cannot buy enough gas to build up a business, or access enough customers to create a sustainable customer base.”

With France and Germany defending their national champions and helping them to avoid both domestic competition and hostile takeovers, their relationship with their energy companies is looking increasingly like Russia and Gasprom.  It's not surprising that Russia and Germany see eye to eye about long term gas contracts. 

 

Technorati tags: EU energy Germany France Russia Eon RWEGasprom

More energy problems for Ukraine?

In the middle of an article on Kazakhstan's energy, I spotted this

But critics have many reasons to question Russia’s financial resources; over the last four years Russia has swung from being an electricity exporter to become dependent on imports. Chubais, who admitted that Russia is facing an “extremely complicated situation” with electricity supplies, stressed the need to “correct [Russia’s] export and import policy” (Aikyn, October 16).

Chubais made it clear that Russia, struggling with a surge in electricity demands, was planning to substantially reduce the power it supplies to Ukraine, Belarus, the Caucasus, and the Baltic states in the winter months.

So not just utility increases and turning off oil and gas pipelines this winter. It looks like Russia's near abroad will have an uncomfortable winter, with or without political differences.