The state electricity grid operator Ukrenergo will replace the majority of its supervisory board members by Dec. 9, according to a document from the Ministry of Energy obtained by news outlet Ekonomichna Pravda.
The reshuffle was scheduled because the previous members' three-year terms expired in October. Ensuring that Ukrenergo has an operational supervisory board by the end of the year was one of Ukraine's commitments to receive a new $700 million tranche from the International Monetary Fund on Nov. 24.
The supervisory board will expand from five members to seven.
The new board will include three European specialists: Peder Ostermark Andreasen, CEO of Danish national transmission system operator for electricity and natural gas Energinet; Daniel Dobbeny, president of the Dutch green transition company KIC InnoEnergy Benelux; and Roman Pionkovsky, CEO of the Polish energy operator Energa-Operator.
Having such specialists on board will help Ukrenergo integrate into the European energy network, Andriy Boytsun, the editor of Ukrainian State-Owned Enterprises Weekly, told the Kyiv Independent.
“People with an international background are a good choice for Ukrenergo’s board because it’s about this integration,” he said.
The new supervisory board will face massive challenges, including regulating electricity prices and solving the long-running issue of green tariffs, he said.
Low electricity prices don’t bring enough funds to Ukrenergo to rehabilitate its archaic grid. In 2020, Ukrenergo posted losses of $1 billion, compared to a profit of $69 million in 2019.
The change of supervisory board members comes amid a long-running standoff between the state and renewable energy producers over the feed-in tariff that they're supposed to be paid.
These high, euro-denominated tariffs for green electricity were introduced in 2008 to encourage renewable energy investment, with a goal of making 25% of Ukraine’s energy production come from renewable sources by 2035. Under a new energy system introduced in 2019, state company Guaranteed Buyer was supposed to buy all renewable energy, using Ukrenergo's revenue.
But the government struggled to pay for the power produced by wind and solar firms, angering investors. The Covid-19 pandemic exacerbated the problem. A 2020 memorandum between the government and some of the producers, failed to resolve the problem and some investors threatened international arbitration.
To tackle the situation, the state-run electricity grid operator Ukrenergo placed $825 million green bonds on Nov. 3 to try to resolve the unpaid debts. The European Bank for Reconstruction and Development invested $75 million in these securities.