While all pay their attention to the cost of gas, without too much noise electricity is becoming more expensive

The media space is filled with news about the increase in gas prices, which is currently taking place in global markets and affects the formation of the cost of natural gas for Ukrainian industrialists. Therefore, against the background of heightened attention to “gas” news, the fact of rising electricity prices in the state, not the world, remains unnoticed.

Andrii Ostrogrud, Director General of Kievguma LLC
Andrii Ostrogrud, Director General of Kievguma LLC

Railway Supply magazine decided to find out in figures how much the increase in the cost of energy will affect the Ukrainian producer.

Andrii Ostrogrud, Director General of Kievguma LLC, is talking about the realities of the energy crisis:

– We are witnessing the collapse of the economy. And I’m talking about not just the cost of gas. Although to say that a fourfold increase in the price of natural gas will negatively affect the Ukrainian entrepreneur, and thus the state’s economy as a whole – it is to say nothing.

How will the work of Kievguma change and what consequences do you see for your company in the “gas crisis”?

– At the beginning of the year, our company bought 40 thousand cubic meters of gas for 340 thousand UAH – about this volume is consumed by our production per month (and this is only gas for technology, not including heating). Today we buy the same 40 thousand cubic meters for 1 million 380 thousand, ie plus 1.04 million UAH to the cost of production. And as I hear comments in the market – we are still lucky.

– You have now said about production (technology), but the heating season has begun – how do you optimize here?

– At the current price of gas, we “burn” 45 thousand UAH per day (just for our buildings heating). And it, in fact, has not been frost! According to our calculations, with the maximum savings for November alone, we will have expenses of more than 1 million UAH compared to November previous year. That is already now gas gave 2 million UAH of additional expenses for a month! This is the reason for the transfer of production from a 7-day to a 5-day schedule. And I want to note that Kievguma is a modern enterprise, where more than 1 million USD was invested only in the construction of the boiler house in 2013 (modern engineering solutions, full automation, Viessmann boilers).

– Speaking of the energy crisis, did you say “I’m talking about not just the cost of gas”, what did you mean?

– Of course, electricity! In my opinion, in Ukraine the issue of the price per kW of energy is more acute than the cube of gas. Because gas is “visible”, the market is European, prices are exchange – everyone here understands what the price is formed from. But who knows the real cost of kW of electricity? Who can predict the actions of officials and monopolies? The electricity market is opaque, and there are no landmarks to Europe!

– Speaking in numbers, how has the cost of electricity for Kievguma changed during the year and who will suffer losses?

– The monthly consumption of the electric power by our enterprise makes about 550 thousand kW. At the beginning of the year, it cost us 1.5 million UAH. And in October we paid 2.4 million UAH (for the same 550 thousand kW). And we already have a warning about the price increase in November, or be more exact 2.75 million UAH for the current month!

Such an increase in energy prices (electricity and gas) is already plus 3.25 million UAH to the cost of our products, and it means to the prices for the consumers. And this is either ordinary people who buy our household products, medical devices, etc., or other industrial companies from various industries to which we supply our products, including pharmaceutical companies that produce drugs for the population. By the way, among them are state-owned companies and structures – Energoatom, Ukrtransgaz, Metro, Ukrainian Railways, the Ministry of Defenсe, the Ministry of Health and others. The same losses will be for everyone – both the manufacturer and the buyer.

– What is the cost of electricity should entrepreneurs expect in the next six months, in your opinion?

– I have exactly the same question, though rhetorical. In such a situation, no predictions are possible. By the way, our company has already received a warning about “periodic shutdowns”. So, it seems that we will all soon think not about the economy, forecasts, investment in development, but about how to “survive and overwinter”!

About the company:

Kievguma is a Ukrainian company majoring at production of rubber, latex, PVC, TEP and silicone goods. The product line includes more than 4000 goods. The rail pads manufactured according to DSTU 2805-94 are among them. Kievguma is a full cycle enterprise (provides services starting from mixture development and equipment design to the process of their manufacture).

Kievguma LLC production complies with the International and Ukrainian standards requirements: ТUV SUD ISO 9001:2015, DSTU ISO 9001:2015. It has its own laboratory certified by the National Agency of Ukraine according to DSTU ISO\IEC 17025:2006 (ISO/IEC 17025:2005).

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