Last year, the Ukrainian energy sector demonstrated unprecedented profitability, which becomes especially relevant against the background of the ongoing war and the increasing load on the infrastructure. Most of the profit concentrated in the hands of state-owned companies that benefited from tariff policy changes and tighter regulation, while private players, including those linked to Rinat Akhmetov and Igor Kolomoisky, held separate positions in the top 10. Such dynamics indicate not only the new contours of economic control in energy, but also the strengthening of the role of the state in the critical sector.
Who received special tariffs and under what conditions
Last year in Ukraine was a year of major revision of tariffs. If before that the state held back the prices of energy resources for years, then after a new wave of attacks on the energy infrastructure, the government decided: it’s enough to hold back, it’s time to count.
Since June 1 last year, the Cabinet of Ministers established the single electricity tariff for the population is UAH 4.32 per kWh, regardless of how much you consume. This canceled the previous preferential system for those who “saved” up to 250 kWh per month. For owners of two-zone meters, night electricity costs half as much — UAH 2.16, Ministry of Energy.
The reason, as the government admitted, was not only infrastructure losses after the attacks, but also a shortage of funds in state-owned companies, which simply lacked money even for basic network maintenance.
Change for entrepreneurs were even tougher. The cost of electricity for industrial consumers has more than doubled. Entrepreneurs began to pay at least UAH 10 per MWh. Depending on the operator, region and type of provider, the price could be even higher, taking into account the transmission tariff, distribution and margin.
According to all these figures is standing NKREKP is the National Commission that sets limit prices, distribution tariffs, rules of the game on the market and approves development plans of companies. It is the regulator that determines how much Oblenergo will receive, how much will be received by the GTS Operator, and how much will be left to the state.
Last year, the commission began a full-scale review of marginal prices. This affected both the market and the wallets of Ukrainians.
Despite the general increase in prices, the state has kept special conditions for critical infrastructure. At the end of the year, the government confirmed a list of objects that cannot be turned off even under strict limits: military units, TCC, defense enterprises, hospitals and mobilization support hubs. These structures received priority right to power supply, even when the rest of the country sat in the dark.
It was the state energy companies that became the key beneficiaries after the tariff increase. For example, Ukrgazvydobuvannya earned UAH 20.9 billion last year, Ukrnafta — UAH 16.4 billion, Ukrhydroenergo — another 15.4 billion LIGA.net.
These are profitability records that have become possible thanks to the increase in tariffs. What’s more, even private players such as DTEK Akhmetov were in the black: DTEK Pavlogradvugilia and DTEK Energo earned UAH 9.1 and 8.6 billion, respectively.
Under the slogan of “realistic tariffs”, the state restarted the energy economy. Yes, it has become more expensive. But at the same time, for the first time in a long time, the energy industry became not a hole, but a source of profits. And almost all these profits remained in the hands of the state. In 2024, the tariff is not just a fee for electricity, but a tool of economic policy. And, as we can see, it works very effectively in favor of state players.
The shadow of expensive electricity: why state-owned energy giants remain unprofitable, and business pays for everyone
Last year, a paradox emerged in the Ukrainian energy sector: state-owned companies, tariffs are rising, money is flowing out of consumers’ pockets, and Ukrenergo and Energoatom are still in the red. How did it happen that energy is a profitable industry, but its key players have a hole in the budget?
Last year, the company that manages main power transmission lines — NEC Ukrenergo — suffered a loss of UAH 37.7 billion. And this despite the fact that income increased to more than UAH 101 billion — 21% more than last year.
But profit “ate” colossal financial costs: UAH 38 billion, as well as other “holes” — operational costs — UAH 26.9 billion, repairs, compensations, debts to external creditors. It is important to understand that the main part of these costs are the consequences of the war: in three years, Russia damaged more than 60,000 energy facilities, and Ukrenergo itself is responsible for their restoration.
Another giant is NAEC “Energoatom”, which operates domestic nuclear power plants. In the first quarter of last year, the company lost UAH 5.5 billion. The reason is obvious: the Zaporizhzhia NPP remains under the control of the Russian Federation, and this entails enormous losses of both electricity and property. According to the company’s estimates, is lost at least UAH 36 billion and 87 million MWh of unproduced electricity.
However, until the end of the year, Energoatom will have a little leveled off: received a net profit of UAH 1.3 billion, restored financial discipline, paid compensations to the population and paid off debts of previous years.
This is where the most interesting part begins: the mechanism for assigning special duties. This is a kind of “energy charity”: “Energoatom” and “Ukrhydroenergo” are obliged to sell electricity to the population so cheaply that it creates losses.
The latter are partly covered by the state, but mostly at the expense of other market participants, primarily industry and business, which pay the maximum. This is cross-subsidization. That is, when a pensioner pays UAH 4.32 per kilowatt, an entrepreneur can pay three times more. Part of his money goes to cover the “social” tariff.
While “Ukrgazvydobuvannya”, “Ukrnafta” and “Ukrhydroenergo” show billions in profits, their “neighbors” in the public sector are in the red. And this is not an accident, but a structural problem: someone gets access to the market at full cost, and someone works in the mode of “cheap energy for the population”.
This is a balance that is only maintained by the business paying extra. How long such a model will be able to exist is a question before the energy reform. For now, business pays, and the population consumes. The state is trying to crunch the numbers, but energy companies are still in turmoil.
Private individuals in the energy field: who is left in the game
While the state giants one after the other report about billion-dollar profits or complain about losses due to the occupation, there are also private players in the energy sector. However, the past year has clearly set the tone: the market is almost completely controlled by the state, and those who are still in the game are mostly old acquaintances. Akhmetov. And a little Kolomoiskyi.
In the ranking of the 100 most profitable companies of Ukraine for 2024, two enterprises from the orbit of Rinat Akhmetov entered the top ten. We are talking about DTEK Pavlogradvugilya, which received 9.14 billion UAH in profit, as well as DTEK Energo – 8.60 billion UAH in profit.
These sums look especially bright against the background of the crisis at the state-owned Energoatom and Ukrenergo. The reason is simple: coal is back in favor. Due to the destruction of other sources of generation, the country is again massively burning coal, and DTEK is the main supplier.
Players associated with the structures of Igor Kolomoisky, are mentioned in the analytics of LIGA.net, but without specifics about the names of the companies or their financial results. Usually, we are talking about assets in energy supply at the local level (oblenergo) or in gas production, which are currently under partial control of the state (seizures, remediation, transfer to management).
Yes, but there are very few of them. Almost the entire market of energy production, distribution and supply is state-owned or oligarchic. There are no new big players from the private sector. Small companies work in the RES (green energy) segment, but after the collapse of the “green” tariff and shelling of SES/WPPs in 2022-2023, it is no longer a “golden vein”.
In 2024, the state policy is clear oriented on state-owned enterprises. It is them allocate subsidies from the budget, international financial assistance (in particular, EBRD, EU, etc.), priority loans for infrastructure restoration.
Private companies, on the contrary, cannot apply for donor funds if they do not have state participation or partnership with the public sector. It is also more difficult for them to participate in regulated markets (for example, in providing basic supplies to the population).
The Ukrainian energy market in 2024 is a de facto state monopoly with islands of private influence. Akhmetov remains the only real private player with large profits. All others have either stopped being active or are surviving on the sidelines. The state has taken full control over a critical resource — and is unlikely to give it to anyone anytime soon.
Who invests in energy and what about the reforms
After three years of war, hundreds of shelled substations and dozens of destroyed TPPs, Ukraine is finally here passes from patching holes to systemic energy upgrades. Last year it became obvious: if you do not invest in new technologies, “green” electricity and the market, the country will remain vulnerable to any drone.
The Ukrainian market has not yet seen an influx of foreign capital, but the first investors are already on the horizon. Rinat Akhmetov’s DTEK remains the most active, which continues to implement the “30 to 2030” strategy — a plan to increase “green” capacity to 30 GW. Last year, the company attracted €450 million for the restoration of wind energy, in particular from the EBRD and Dutch banks.
Ukrenergo received a record 76 million euros in grants and loans for the modernization of high-voltage substations, in particular from the EU, the governments of Germany and France.
Ministry of Energy launched a co-financing platform for the restoration of facilities of distribution companies: more than 40 projects, some of which are in the frontline regions.
Although memorandums with the IMF repeatedly refer to the demonopolization and privatization of some state-owned enterprises, none of the key energy companies (Ukrenergo, Energoatom, Naftogaz) announced last year that they were preparing for an IPO or a partial sale.
However, Naftogaz announced plans to prepare “subsidiary” projects for investment — and this may become a prerequisite for entering foreign markets.
Formally, the course remains. In the Memorandum with the EU and the IMF Ukraine obliged in the near future, de-monopolize the generation market, separate the wholesale and retail sales markets, make conditions available for independent traders, and ensure full transparency of the balancing market.
However, the reality of the past year was the strengthening of state control. More than half of the largest energy companies of Ukraine are now subordinate to the Ministry of Energy, and the role of the National Energy Regulatory Commission in regulating prices and tariffs is key. Competition exists only on paper, especially in the retail market.
Investments appear, RES projects are coming to life, grants are coming, but real reform is still a long way off. IPOs are being delayed, competition is being held back, and only private players like DTEK are taking large-scale risks. But the state still centralizes more than releases. But in energy, this is perhaps not the worst wartime strategy.
Tetyana Viktorova
