Kyiv city promises to compensate KIEN’s difference between heat costs and tariffs

According to Kyiv mayor Leonid Chernovetskiy, Kyiv city will fully cover the difference between Kyivenergo’s (KIEN) heat costs and retail heat tariffs, by the end of 2008. Last week Kyivenergo stopped supplying hot water to about a half of houses of Kyiv city – the key reason was limited gas supply to Kyivenergo’s heat and power plants #5 and #6. Kyivenergo owed gas supplying companies UAH 347 mln, and Kyiv city under-paid the same amount of compensation to Kyivenergo. Alexander Paraschiy: Positive news for Kyivenergo: if Kyiv city indeed fully compensates the difference in tariffs, the company will report about UAH 100-120 mln in profits in 2008. By limiting heat supply, Kyivenergo had double benefit: first, the company decreased supply of loss-making product (heat); second, the company pressured Kyiv municipality to speed up payment of tariff difference.