Court affirms validity of NABU estimates of Rotterdam Plus losses

The Kyiv Appellate Court has ruled that the experts of
the National Anticorruption Bureau of Ukraine (NABU) worked within their
authority to calculate the losses to power consumers inflicted by the Rotterdam
Plus approach on the wholesale electricity market, NABU reported on Jan. 14.
The decision cancels an earlier ruling of scandalous Kyiv District
Administrative Court recognizing NABU’s calculations as unlawful.

Recall, in 2019, NABU revealed its estimates that the
Rotterdam Plus formula resulted in UAH 18.9 bln losses
to electricity consumers in 2016-2017. According to NABU’s recent release, it
has third-party studies that confirm large losses for electricity consumers
from the Rotterdam Plus approach, which totaled about UAH 39 bln for the whole
period (2016-2019).

The Rotterdam Plus approach to calculate the
forecasted wholesale electricity price was introduced in March 2016, based upon
which the forecasted price for coal-fired thermal power plants was calculated
taking into account the full cost of coal as if it was imported from the ports
of Amsterdam-Rotterdam-Antwerp, while in fact most of the coal was supplied to
plants from local mines. The DTEK Group of Rinat Akhmetov was among the
initiators, key beneficiaries and fiercest advocates of the validity of such an
approach.

Alexander Paraschiy: This interim victory for NABU is unlikely to change the reality, which
is that it’s very hard to prove losses from the Rotterdam Plus approach unless
there is a strong political will to do so (which is not the case). Not only the
scandalous administrative court, but other state agencies (like the Security Service of Ukraine, the
Prosecutor General’s Office as
well as the Antimonopoly Committee) are working to undermine the investigation. And
even if wrongdoings and losses are confirmed by the courts (which is unlikely),
it will be even harder to demand any compensation of the losses from the
companies that allegedly benefited from the regulation, like DTEK Energy
(DTEKUA). All in all, we continue to expect that the risks for DTEK’s
fundamentals from NABU’s investigations are very low.