Nikopol Ferroalloy Plant, Marganetsky and Pokrovsky Mining and Processing Plants will suspend production from November 1, 2022 due to increased costs, mainly due to the expected increase in marginal prices (so-called price caps) for electricity at day-ahead market (RDA), intraday market (VDR) and balancing market.
Such statements were made on October 12 during a public discussion of the draft decision of the National Commission for State Regulation in the Spheres of Energy and Utilities (NEURC) on changing the marginal prices (so-called price caps) for electricity on the market "in day ahead” (RDN), the intraday market (VDR) and the balancing market.
In particular, Alexander Zavgorodniy, director of economics and finance at the Nikopol Ferroalloy Plant, said that electricity is the main component of the cost of the plant's products, so price increases will significantly affect the economy of the enterprise.
"Given the likely increase in price caps, rising prices in the electricity market, as well as intentions to increase the cost of transportation and dispatching of electricity, we decided to stop the operation of the enterprise from November," he said, adding that the company tentatively plans to be in simple winter season.
Oleg Kachko, Deputy Chairman of the Board for Finance of the Zaporozhye Ferroalloy Plant, stressed that an increase in price caps would inevitably lead to an increase in electricity prices and, as a result, lead to an increase in production costs and a forced shutdown of the enterprise.
According to him, the increase in price caps will cost the company an additional billion hryvnia per year. “It is not known where to get these funds, when there are problems with logistics within the country, you need to keep staff, pay salaries. Therefore, in a war, this is not a very correct decision,” said the top manager.
The mining industry is also under threat. In particular, Alexander Petrovets, Deputy Chief Power Engineer of the Pokrovsky Mining and Processing Plant, said that there is a high probability that the enterprise will shut down in November, and the increase in price caps will make it impossible to work.
“PGOK is a city-forming enterprise, the existence of the city of Pokrovsk depends on our work. We try to work in extremely difficult conditions: the demand for our products is decreasing, the cost of production is growing, there are problems with the purchase of materials for repairs and maintenance of equipment. Therefore, our company can no longer withstand this difficult situation,” he said.
Vladimir Bodnar, Deputy Chairman of the Board for Economics and Finance of the Marganets GOK, added that the enterprise is constantly under fire from enemy artillery. However, due to rising costs, the work of the GOK may stop. “And if price caps rise, then due to the shutdown of a large number of enterprises, there will be no one to sell this electricity to,” he stressed.
The increase in the marginal price of electricity will complicate the work for Dniproazot as well, a representative of the enterprise noted. The only producer of chlorine for Ukrainian water utilities has been idle since the beginning of the war. Due to the technological danger of the production cycle, the company maintains minimal economic activity. However, according to the representative of the plant, due to the increase in price caps and electricity costs, Dniproazot will have to stop completely, and the resumption of work will no longer be possible.
