New troubles with payments for imported electricity

“Inter RAO” has decided to postpone until Monday, 27 June, the termination of electricity supply to Belarus due to debts. Earlier the company planned to cut off supplies on 22 June.

“Inter RAO” several times delayed payment deadlines for electricity delivery to Belarus. As a result of the Belarusian-Russian negotiations a payment schedule was signed, where Belarus has committed to pay off the debt for Russian energy by 5 July. However, the debt was not yet repaid with May payments adding up.

On 23 June in St. Petersburg Belarusian Prime Minister Mikhail Myasnikovich has promised that Belarus will settle payments for electricity supply from Russia by 28 June.

Comment

There are two options. Option 1: The National Bank will provide “Belenergo” with an opportunity to buy the necessary amount of foreign currency to repay the debt. Regardless of the improved statistics concerning growing currency earnings of enterprises and regulations about the 30% mandatory sale, de facto amount of foreign currency sold at the official rate is less than $ 500 million, which is insufficient for servicing the foreign currency loans and paying for critical imports. The first tranche of the loan could improve the situation. Option 2: “Belenergo” might borrow the necessary amount to pay the debt to try to avoid escalation of the conflict. However, it will worsen the financial state of the company.

In any case, repayment of debts will inevitably be followed by more debts due to the deficit of the currency on the Currency Exchange and also due to stable money-losing state of “Belenergo”.

In the meanwhile Belarus does its best to avoid conflicts with strategic suppliers (it can do without electricity imports, not without gas and oil) and pays to “Gazprom” for gas and to “LUKOIL” for oil without delays.