Eduard Kulbak: The “Green” tariff allows investors to earn AT LEAST 15% per annum.
CDC Energy Service Consortium President Eduard Kulbak spoke in an interview to Energy Club about the benefits of investing in the Ukrainian electricity market and working with foreign investors.
The energy market in Ukraine is quite young and interesting from the business perspective. Is it possible to attract investors to implement their projects here?
Ukraine is a unique country with natural resources, suitable for growing agricultural products. We have very hard working people. They do not overestimate their labor, therefore today qualification, education of our people plus all other infrastructural possibilities, probably, except for roads, provide an opportunity for business to enter. There is still a rather favorable taxation, one of the most preferential in Europe. All of this allows and attracts investors to implement their projects in Ukraine.
As far as investing and working with foreign investors is concerned. What is very important, when choosing a team that an investor wants to work with, is first of all the number of projects implemented, and the company really has to demonstrate the projects it has done. Of course, the professional environment’s opinion is important, where you can say your word. Furthermore, the banking system of Ukraine. We have such a well-developed banking system in the country that I consider it one of the best in the world, and then the convenience provided by the applications in desktop and portable devices. This is also one of the advantages that should attract investors to Ukraine.
If we are talking about renewable energy sources, how are investors doing?
A good law was once passed in Ukraine to support investors who invest in the development of renewable sources: biogas, wind energy, and solar energy. This is the so-called Green Tariff Law. This tariff is pegged to the euro and allows investors to receive passive income from their investments in the amount of at least 15% per annum, with the existing tariff until the end of this year. And since the cost of equipment is declining, and the import VAT has been canceled, I think that at the same level, even after the reduction of the “green” tariff, from next year the profitability will still not be reduced, possibly even vice versa due to the lower cost of equipment, it will grow. 15% per annum in foreign currency is a fairly high passive income, which cannot be guaranteed by any deposit. I will say more: practically, there is no other such income that would be legally provided by the state as a “green” tariff for renewable energy in Ukraine.
Are there any risk factors?
There are always risk factors. In any business. However, it seems to me that these risk factors are leveled out in comparison to many countries, the African continent where the investor is still going, investing money. Ukraine has a normal socio-political situation despite the events in the East of the country. Corruption is another factor. I hope that in the new political tenure this issue will be resolved in the near future. Regarding the latest lawmakers, these initiatives related to the amendments to the Green Tariff Law, unfortunately, have created some difficulties for private investors, Ukrainian investors; I mean the amendment No. 24 – the ban on construction of solar plants, network stations on land plots, private households of private homes, of course they influenced the investment activity of the population, for whom the law was in the first place intended. We need a mass installation, such as 1,000,000 solar roofs. We discussed such programs in our time. And there we relied on a private investor. However, I always said that it is not necessary to improve the law, which was once devised by investment business professionals. I also participated in the drafting of the Green Tariff Law.