A year ago, the first phase of the blockade of the trade with the occupied territories began. There were attempts to crush it down and continue trading with the terrorist organizations “LNR” and “DNR”. Nevertheless, on March 15 the blockade was officially recognized by the decision of the National Security and Defence Council and by the order of the President.
At that time there were many horror stories about rotating power cuts, about losses, about the recession of the economy and the exchange rate of hryvnia. And the Prime Minister Hroisman even stated on Akhmetov’s TV channel that there was no alternative to anthracite from ORDLO. A state of emergency was imposed in the energy sector, because it is true that before the blockade all the anthracite coal had been imported from ORDLO, even though the “Rotterdam+” formula had been operating for more than half a year back then and had caused a sharp increase in the price of electricity for consumers.
So, has the blockade resulted in any apocalyptic economic consequences, or has it made Ukraine stronger and strengthened its energy independence?
Horror story #1: “There is no coal, there will be power cuts”.
There have been no power cuts, and there could not have been any. On the contrary – since April 1, electricity export to Moldova has begun.
Horror story #2: “If there is no anthracite from the ATO area – the tariffs will rise”.
Back in March 2016, the National Commission for State Regulation in Energy and Utilities, headed by the President’s puppet Dmyto Vovk, adopted the formula of “Rotterdam+”. That is, all coal, regardless of where it came from, was counted at the price of coal in Rotterdam plus its delivery to Ukraine. That is, Ukrainians had been long paying the price of coal not transported form ORDLO. And the Ukrainians were promised coal independence, for which they have ALREADY PAID. But coal was still transported from ORDLO, and billions of super profits were made. It is Akhmetov’s DTEK that made the most. This corrupt formula “Rotterdam+” is still in effect today, although most of the anthracite is imported not from the European stock exchange, but from Russia.
But it was after the blockade that Energoatom started producing more electricity: in 7 months of 2017 – more than 58% of the total production in the country. This is the cheapest electricity – 48 kopiykas per kWh. If the tariffs were set fairly, this will be the ground for reducing the price of electricity.
Horror story #3: “The blockade will lead to a fall in GDP.”
Gross domestic product is a statistical indicator. First of all, it does not have a directly proportional connection with the welfare of citizens, because it is distributed very unevenly. Secondly, GDP consists of several components. The calculation of GDP takes into account labor remuneration and consumer spending on goods and services. Of course, if wages in the quasi-republics of “LDNR” are not taken into account in the Ukrainian GDP, then statistically it will grow less. But are the wages in the territories occupied by Russia really the priority of the government? Who will benefit from the knowledge that our GDP is bigger due to the large incomes of the terrorist organizations with which there is a war going on?
Another article of GDP (income method) – “profit of companies.” We do realize that some oligarchs made big profits from the trade with the ATO zone; perhaps those profits did decrease, but this does not affect all the rest of the Ukrainians anyhow.
Horror story #4: “Enterprises are working there under Ukrainian laws and are paying taxes – revenues to the budget will decrease.”
It is a big mystery, how enterprises can work under Ukrainian laws in the territory captured by militants with the help of Russian troops, where there is no Ukrainian police or Ukrainian authorities. Yet, there is no decrease in revenues, but an increase, on the contrary. On July 13, the Verkhovna Rada adopted changes to the budget, and budget revenues were increased by 26 billion hryvnias.
But those enterprises that “worked under Ukrainian laws” did not pay for electricity. The debt of Alchevsk Iron and Steel Works is more than 1 billion hryvnias. DTEK mines stopped paying for electricity in the spring of 2016. In total, during the war years, electric power for the amount of about 3 billion hryvnias was transferred to the territory of ORDLO free of charge (or, more precisely, at the expense of all other Ukrainian consumers). This generous sponsorship was only stopped after the blockade.
Horror story #5: “The export currency earnings will decrease – hryvnia will fall”.
Hryvnia did not fall, but strengthened. As of January 25, at the time of the active phase of the blockade, dollar cost 27.2 hryvnias. As of the end of August, dollar was worth 25.6 hryvnias, and the National Bank is not spending gold and foreign exchange reserves, but on the contrary – it is buying dollars. The trade with ORDLO created corruption flows worth of billions, which did not only corroded law enforcement and controlling bodies, but also formed demand for currency in the cash market, since corruptionists prefer dollars.
Not only horror stories were dispelled. Finally, concrete steps were taken to strengthen our energy security. Thus, a new power transmission line was built, which provided Avdiivka with electricity from the Ukrainian controlled territories. It is unbelievable, but for the previous 3 years the city had been dependent on the supply of electricity from the occupied territories.
Serious progress was made in the coal issue. Thus, this year Ukraine will cut the consumption of anthracite compared to last year by more than two times (4.5 million tons against more than 10 million tons). One block of Zmiyiv thermal power plant has already been readjusted to the G coal, which is mined in Ukraine. Another block there and a block of Trypila thermal power plant should be transferred to the G mark before the end of the year. DTEK, which previously stated that the transfer was impossible, has already readjusted one boiler of Myronivska thermal power plant. Blocks of Prydniprovsk and Kryvyi Rih power plants will be readjusted as well. Thus, next year the consumption of anthracite will be further reduced to a level that is not critical for the energy system. And this all means more jobs and bigger salaries for our miners, who extract G-type coal.
Of course, we would like the President and the government to be able to conduct a dialogue, hear the society, and make decisions in the interests of the state and all citizens, and not in the interests of the richest oligarchs and corruption flows. Unfortunately, this is the problem.
But a strong and independent Ukraine is our task no matter what. And we will win!
Glory to Ukraine!