Vector Value calculations and values

Table 4.1. Capital investments in Ukraine's fuel and energy sector in 1990, million KBV

Table 4.2. Target investments in fuel and energy complex,

Table 4.3. Ukraine capital stock in power sector in 2000.

Presently there is a growing tendency of dramatic investment reduction in Ukrainian power sector. During the last 5-7 years the Government was highly constrained as a source of capital. The state owned utilities have sold energy at prices substantially below the cost of production and cannot internally finance major new investments, even if these have attractive paybacks. One of the main barriers to energy efficiency investments in Ukraine is the risk that large industrial enterprises for whom energy efficiency would be extremely cost effective will not survive the overall privatisation and/or restructuring of the Ukraine economy.

This tendency of reducing investments into power generation, when taking into account the fact that main assets are becoming obsolete and worn out, can lead to the uncompensated withdrawal of a considerable part of its generating capacities, and their rehabilitation will require much more time and investments. Since Ukraine has built up huge debts importing gas from Russia and Turkmenistan, it has no money to invest in modernisation of energy infrastructure or "clean" generating capacities. As we mentioned above, a small amount of available money is used for nuclear reactors. Thus, Western help seems to be the only way out.

In accordance to these circumstances, the World Bank and other donors started their financial assistance with the rehabilitation of power generation, transmission and distribution. With the Electricity Market Development Project ($317 million), the WB is supporting the restructuring, and rehabilitation of power sector enterprises, helping them to improve cost recovery, financial self-sufficiency and payment discipline. To improve the quality of power supply, the WB is financing the rehabilitation of hydropower plants through the ongoing operation ($114 million). 

Besides that, the World Bank and the EBRD are involved in financing projects to rehabilitate district heating systems in Lviv and Dnipropetrovsk (respectively USD 20 and 36 m). In Kyiv, the WB and EBRD are jointly financing modernization of heat supply and distribution facilities of Kyivenergo (respectively $200 and $91 million). 

We will consider all these projects as energy investments with some environmental dimension. At the same time we can classify the EBRD $30 m loan for UkrESCO as investment in clean energy. If so, than foreign investments in clean energy as a fraction of total power generation investments in 1998 we equal to 30 / (317+114++20+36+200+91) = 0.038.