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BMI View: The immediate outlook for electricity generation in Ukraine is poor, with an official state of
energy emergency still in place in parts of the country. Despite a ceasefire agreement in 2015, there are
reports of continued fighting in eastern Ukraine. That said, we expect power generation to stabilise in 2016
as conditions improve marginally, and see total generation returning to near-2014 levels.
Latest Updates & Structural Trends
? In the longer term, production and consumption will rise as the economy starts to recover and processes
of integration with the EU bring about a partial liberalization of the power sector and investment from
abroad. This will create opportunities for investment in Ukraine's power sector. However, multiple
barriers stand in the way of developing the sector, including corruption, vested interests and the fractious
political environment, that electricity production will fall far short of Ukraine's potential.
? Ukraine's natural gas imports approximately halved over the course of January-February 2016 (versus the
same period in the previous year), with the entirety of them coming from the European Union rather than
Russia. The difficult import outlook for natural gas suggests downside risks to our forecast for gas-fired
generation to stabilise in 2016. The short-term outlook for Ukraine's coal-fired power sector is poor due
to the ongoing conflict in Ukraine's main coal-producing regions in the east of the country. Around twothirds
of Ukraine's mines have ceased activity, forcing Ukraine to import coal to cover its needs.
? As a result of the uncertainty surrounding Ukraine's long-term energy supply, the national energy
company Ukrenergo has imposed rolling blackouts and suspended exports to Belarus and Russianoccupied
Crimea. Ukraine has also started to import electricity from Russia, but this is vulnerable to
political conditions, specifically Russia's demand that Ukraine continues supplying electricity to the
rebel-held Donbass region.