The first condition for investment in power companies – introduced in Ukraine, the system of incentive regulation – expert

The introduction of incentive regulation and successful practice will lead to increased interest in the field of distribution and supply of electricity in Ukraine. Such opinion in interview to «the Ukrainian news» stated partner of the corporate Finance Department of Deloitte in Ukraine, Ogadzhanyan Arthur.

«When dealing with dozens of interested foreign investors considering in 2016, the possibility of acquiring the state’s stakes in six power companies, we, among other things, practically from all heard the same thing. The first condition for considering the investment in the acquisition of these companies is introduced in Ukraine, the system of incentive regulation, and not necessarily in these companies; an important precedent,» – said the expert.

According to him, investors do not see that today the system has been implemented, they need to ensure that incentive regulation that considered in other countries that the name and essence coincide.

Ogadzhanyan added that, in contrast to the system cost-plus, incentive regulation, provided that it is correctly applied is much more progressive.

«First, the rate is formed as the sum of the underlying components: the cost of maintaining assets (depreciation), operating costs, profit margins, payment of income tax. Secondly, the tariff was established for a regulatory period (in Ukraine the first three years, subsequent to five years). This ensures the predictability of the tariff and intuitive calculation algorithm provides baboutgreater transparency, although the precise calculation is complex,» he said.

Therefore, the company will be motivated to optimize their costs and to earn extra income, says Ogadzhanyan, and investment in development will provide quality services.

«To reduce (optimize) the cost is taken into account in the formation rate in the future, which hinders its significant growth, and in terms of low inflation can theoretically even lead to a certain reduction – said the expert. – The whole system will give companies the opportunity to attract loans in the renewal of assets at least because a more intuitive size of the expected proceeds in the next few years.»

A decree approving a new technique that was published in the newspaper «Uriadovy courier» and came into force from January 10. The document provides a yield for power companies at 12.5% per annum as of the old assets and new in which to invest.

Incentive regulation is a tariff mechanism based on long-term regulation of tariffs. This method is aimed at attracting investments for construction and modernization of infrastructure networks that transmit energy, and stimulation of efficiency of expenses distribution and supply companies.

The first condition for investment in power companies – introduced in Ukraine, the system of incentive regulation – expert 28.02.2018

Февраль 28th, 2018 by
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