VR Capital has frozen 4 projects for the construction of wind farms in Ukraine

Ветроэлектростанции в Украине

The American company VR Capital has frozen 4 projects for the construction of wind farms in Ukraine with a total capacity of 260 MW due to financial risks in Ukraine and the possible introduction of an excise tax on the production of “green” electricity at the level of 3.2%.

This was stated by the operating director of Elementum Energy (part of VR Capital) Alexander Podprugin during the discussions of the European Business Association about possible tax changes in Ukraine.

“The additional excise tax is almost killing the economy of the projects that we have now. Moreover, we stopped the implementation of wonderful projects in Ukraine after the announcement of this news about the potential introduction of excise tax, “- said Podprugin.

According to him, after the introduction of excise duty on the production of electricity from renewable sources, claims to international arbitration can be filed by 10 companies at once.

Podprugin recalled that his company is the largest international investor in renewable energy in Ukraine and has invested about half a billion euros in the Ukrainian energy sector in 3 years.

He noted that it was the signing of a memorandum with the Cabinet of Ministers in June 2020 that gave a signal to investors that even after the reduction of green tariffs, the state guarantees the stability of payments, and also guarantees the absence of any subsequent changes to reduce the profitability of renewable energy projects.

“There was one, perhaps the most significant rule that became the property of investors, and it was because of which many investors agreed to reduce the green tariff – this is a stabilization rule that provided that the state guarantees that no negative changes will be introduced in comparison with the regulatory field that existed on the date of signing the memorandum and then signing the bill No. 3658, ”said the top manager.

However, he noted, the situation in the green energy sector began to deteriorate critically in terms of technical and financial aspects.

“We see that the memorandum in terms of debt repayment is not being fulfilled. And in addition, this latest news regarding the new 3.2% excise tax. Without it, all the regulatory changes that took place in the first half of the year effectively reduced the profitability of green generation by at least 10%, due to imbalances, by limiting generation, by not repaying debt … We insist and expect that one of such solutions will be non-admission of additional excise tax “, – Podprugin summed up.

We will remind, the Cabinet of Ministers in early June registered bill No. 5600 on amendments to the Tax Code, which, among other things, is proposed to introduce an excise tax on “green” energy in Ukraine at a rate of 3.2%.

During the discussion of the draft law, specialized renewable energy associations stated that the introduction of an excise tax on “green” electricity de facto worsens the conditions for the economic activity of the resource of producers from renewable sources, is a gross violation of the rights of investors, will damage the investment climate and make it impossible to raise funds for new environmental projects.