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April 18, 2020

Online conference COVID-19 and the New Reality for the Energy Industry: Could Energy Companies Be Hit by a Crisis?

In preparation for the Russian Energy Week International Forum the Roscongress Foundation held an online conference dedicated to the sustainability of energy companies during the crisis related to the COVID-19 pandemic.  

The virtual studio brought together representatives of the Ministry of Energy of the Russian Federation, energy companies, industry associations, and consulting groups.

Electricity generating companies carry on providing reliable energy and heat supply to both public and businesses, regardless of the coronavirus spread. Yet, crisis manifestations that energy companies may face are not out of the question. 

According to Evgeny Grabchak, Deputy Minister of Energy of the Russian Federation the overall situation in the industry is stable. There was a deep dive in electricity consumption during the first week of self-isolation, but soon it started to go up again. Certain industries in the regions also demonstrate decrease in energy intake. Evidently, it is practically impossible to predict further development of the situation, so the Ministry prepared a number of different scenarios and is ready to react to each one of them.

Power generating companies are also very careful when it comes to forecasting. Currently, they are most worried about the cash flow deficiency caused by Decree 424 by the Government of the Russian Federation that annuls fines for delinquent energy bills. 

“We are gravely concerned about the fines annulment. We do not believe it is an efficient measure,” shared Alexandra Panina, Member of the Board, Inter RAO. “Most people continue diligently paying their bills. It is the mediators, the unscrupulous managing companies that collect the payments from the population, yet do not transfer the funds to energy generating companies using the pretext of Decree 424 by the Government of the Russian Federation. And imagine them doing so until the end of the year. Energy producers are not going to be able to do anything about it. Thus, we believe it is necessary to either correct the time frame or use these measures on a case by case basis, such as with certain select territories. Otherwise, the consequences of delinquent payments can be unprecedented.”  

Mikhail Khardikov, General Director, EuroSibEnergo was asked a question about the depth of the resources of energy companies. According to the top manager, the reserves are fairly significant, yet it is paramount to preserve the payment discipline that took years to nurture. 

“We are looking at the situation as a whole and we believe that state support should cover every player in the process, from small to large enterprises, including energy companies. Payments that energy companies receive go towards salaries and other indispensable expenditures. We do hope, however, that the pandemic curve is going to flatten soon, and everything will start going back to normal.” 

Experts in the online studio of the Roscongress Foundation have pointed out significant changes in business processes where a lot of work is now done remotely. Many companies introduce digital technologies, use unmanned aircrafts, and develop online communications. Experts agree that these trends are going to persist even after the quarantine is over. 

The session is available on YouTube at Roscongress TV. Feel free to address your questions to the panel experts in the comments section .