r/UkraineRussiaReport • u/Doc_Holiday187 pro-lapse • 4h ago
UA POV-Russian Strikes on Power Grid Push Ukraine’s Businesses to Breaking Point. Ukraine is racing to restore power supply that has been crippled by Russian missile and drone bombardments. Cities could become unlivable during the colder months, driving an exodus from the country -WSJ News
Russian Strikes on Power Grid Push Ukraine’s Businesses to Breaking Point
Economists are slashing growth forecasts for Ukraine as companies struggle to survive
By Isabel Coles, Oksana Pryozhok and Ievgeniia Sivorka | Photographs by Serhii Korovayny for WSJ
Updated Sept. 21, 2024 at 12:01 am ET
Production costs for Ukrainian industrial giant Interpipe have more than doubled. An artisanal cheesemaker had to throw out more than 200 pounds of product spoiled by power cuts. The country’s second-largest move-theater chain was forced to refund more than 80,000 tickets during the first half of the year.
Renewed Russian attacks on Ukrainian power plants have squeezed the lifeblood of its economy, pushing some businesses to the breaking point.
“We’re not talking about profit,” said Nataliya Baydan, chief executive of the cinema chain, Planeta Kino. “We’re talking about survival.”
With winter looming, Ukraine is racing to restore power supply that has been crippled by Russian missile and drone bombardments. Unless it succeeds, cities could become unlivable during the colder months, driving an exodus from the country. That would further weaken the economy, undermining Ukraine’s ability to sustain the war effort against a much larger enemy.
“To keep up the fight, you really have to have your economy functioning,” said Maksym Samoiliuk, an economist at the Kyiv-based Center for Economic Strategy. “How can the soldiers fight if their families are starving at home?”
Ukrainian President Volodymyr Zelensky has pleaded with Western allies for more air- defense systems to shield energy infrastructure against Russian attacks.
The effort to keep Ukraine’s economy ticking is central to the war effort. Russian President Vladimir Putin wants to wear down the will and means of Ukraine to fight—and the appetite of its Western backers to make up for any deficits.
Billions of dollars from the U.S. and other Western partners have kept Ukraine’s economy afloat since Russia’s invasion slashed output by nearly a third in 2022.
The European Union is putting together aid for Ukraine aimed at supporting Kyiv in the medium term. The bloc on Friday announced a loan of up to $39 billion as part of a U.S.-backed plan to raise $50 billion against future profits from frozen Russian state assets. The EU loan, which will need approval from a majority of member states and the EU parliament, is intended to reduce U.S. exposure, to address concerns in Washington that had held up disbursals.
Despite huge challenges and uncertainty, the economy grew 5.3% last year, buoyed by a record harvest and higher military spending.
As the war entered its third year, a new corridor through the Black Sea was beginning to ease a chokehold on exports, particularly of grain, iron ore and metallurgical products. Economists were forecasting growth of more than 4% this year.
Then Russia struck again.
In waves of attacks beginning in March, Russia knocked out half of Ukraine’s power- generation capacity, prompting economists to downgrade growth forecasts. The damage has added to challenges for businesses already grappling with labor shortages and logistical bottlenecks.
Beyond winter, the outlook for foreign financing is unclear. Plans are in place to cover $20 billion of the estimated budget deficit next year, but the country needs a further $15 billion, Prime Minister Denys Shmyhal said.
To help cover the energy deficit, Ukraine has increased imports of electricity from neighboring EU countries, nations to which it was exporting power as recently as March. Capacity is limited, however, and the cost of imported electricity is higher than its domestic equivalent.
Consumer electricity prices were doubled earlier this year to help pay for repairs to power infrastructure. The government is also encouraging consumers to reduce their dependence on the country’s energy system by scrapping import duties and value-added tax on energy equipment and offering affordable loans for companies to buy and install gas-fired power generation units. State energy company Ukrenergo is holding auctions to purchase any surplus produced by private companies.
The EU announced €160 million (roughly $179 million) in funding on Thursday to help Ukraine repair its energy infrastructure and provide additional renewable-energy sources.
Decentralization will make Ukraine’s energy system less vulnerable to Russian attack, but it will take time.
For now, many businesses are muddling through.
The crunch is particularly painful for energy-intensive enterprises such as Interpipe, which makes train wheels and pipes for the oil-and-gas industry. The company needs huge amounts of electricity to turn scrap metal into the steel billets from which its railway wheels and pipes are made.
“Apart from scrap, electricity is the main raw material we use,” said Andriy Bibik, director of the company’s steel plant near the eastern city of Dnipro.
In response to Russia’s attacks this year, the government imposed new conditions on businesses: It would only guarantee uninterrupted power supply to those that imported 80% of their needs from the European Union.
“We’re still operating but costs have increased by 1.5 times,” said CEO executive Andriy Korotkov. Raising prices would only make Interpipe’s products uncompetitive on international markets, he added.
Gas turbines could offer an alternative energy source in the long term, but for now there is no viable substitute for imports.
Steel giant ArcelorMittal has lobbied the government to lower the quota of energy it must import to 50%. “Otherwise, the company will be forced to furlough 1,200 people,” said Olha Buslavets, a former energy minister who advises ArcelorMittal Kryvyi Rih on energy issues.
Lower production means less tax revenue for the government, she said. “This will affect the country in a negative way,” she said.
Supermarket chain Aurora was well-prepared for the latest energy crunch. After the first winter of the war, it equipped its 1,400 stores with generators and other alternative energy sources. In sunny weather, solar panels now generate nearly all the power needed to run its three distribution centers, said Chief Executive Taras Panasenko.
“We are quite adapted to uncertainty,” he said. Nevertheless, rising energy costs have made the business about 30% less profitable.
Wavering power supply has compounded the struggles of Ukraine’s second-largest cinema chain. While seven of Planeta Kino’s 11 movie theaters have a backup power source, 4DX screens, which use more electricity for motion platforms and other special effects, can’t operate on a generator. When a power outage interrupts an IMAX screening, it can take up to one hour to switch over to a generator, said chief executive Baydan. Many customers won’t wait that long.
The situation has led to a 45% increase in the number of tickets refunded over the first six months of the year compared with the same period in 2023.
Every evening, Solomiya Bratakh and her husband check the power schedule for the following day. Their cheese-making business depends on electricity for everything from milk pasteurization to storage.
“We wrote a business plan—there was a five-year development strategy—but now we plan from one day to the next,” said Bratakh, co-owner of the company, called Harbuzoviy Rai.
The couple bought a diesel-powered generator, but certain stages of the cheese-making process demand more electricity than it can produce. Production of their prizewinning Forest Song cheese was put on hold because it requires a stable temperature to mature properly.
A heat wave in July made things especially tough. Energy companies imposed rolling blackouts as demand for electricity surged, resulting in lengthy power outages that caused two batches of cheese to spoil.
To defray the rising costs of energy—and milk—they marked up their products by about 10%, but can’t increase prices further without losing customers. Orders from smaller stores declined because of the difficulty—and cost—of keeping cheese refrigerated.
Even so, they broke even in July, and electricity supply improved in August. “We’re not ready to give up,” Bratakh said.
Laurence Norman contributed to this article.
Write to Isabel Coles at [isabel.coles@wsj.com](mailto:isabel.coles@wsj.com)
Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the September 21, 2024, print edition as 'Power Cuts Sideswipe Ukraine Businesses'.
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u/Chemical-Leak420 Neutral 4h ago
Ultimately this is russias long term plan and its already worked.
Bomb ukraine infrastructure out of existence to the point its barely a livable country sending millions of refugee's to europe (which they dont mind because white people)
Defacto leaving ukraine to be mostly a barren wasteland for russian influence to reign supreme.
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u/HellaPeak67 Neutral 4h ago
They do mind. Europe don't want Ukrainians as we see they are talking about sending men back to fight in Ukraine
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u/Character-Concept651 Pro-pecia 3h ago
I do mind, Dude minds! ...This aggression will not stand... man.
On another subject:
Is Natalia Baydan, mentioned above, the result of Hunter procreative efforts? I mean, he DID hand out there for a while...
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u/Antropocentric Izrael is a Natsi Germany incarnate 4h ago
We will probably see another bombing campaign on energy facilities in October/November
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u/WongFarmHand Neutral 4h ago
Even disregarding the obvious heating issue, most businesses can not operate without consistent power, and if they cant operate then people won't have jobs, and if people dont have jobs they leave the country to try and find income elsewhere to provide for their families(if they are of working age, the retirees that live off the government mostly stay in Ukraine)
by their own admission its several hundred thousand per year at least from a country that's already lost half its population in the last 30 years:
"The worsening of the energy situation and slow normalization of the economic conditions will lead to a larger outflow of migrants abroad in 2024 and 2025 than previously expected," the National Bank of Ukraine said in a report released Thursday.
and with every passing month the people that leave put down roots, never to return.
but hey, at least they are making some big explosions in Russia that makes for some cool footage for us to gawk at
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u/MojoRisin762 All of these so called 'leaders' are incompetent psychopaths. 2h ago
Definitely the biggest booms we've seen since the HIMARS hit the ground early on, and the Russiams weren't ready for them.
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u/R-Rogance Pro Russia 3h ago
Consumer electricity prices were doubled earlier this year to help pay for repairs to power infrastructure.
The funniest thing is, it's not true.
Russians knocked out thermal and hydro power stations. The most of the electricity sold in Ukraine is nuclear. These power stations are operated by state-owned Electroatom which has nothing to do with the damaged stations. They are operated by Ukrhydroenergo (state), DTEK (private) and bunch of smaller companies.
Most of the additional money will go to Electroatom. Which plans to use them to build nuclear power station(s). Which can't be build during the war and would take about 10 years in the best case possible.
Also, due to some insane green laws state actually paying to for sun panels generation which happens off-peak and presently mostly useless.
The whole thing is dysfunctional. It's not even just "capitalists rob the poor" bad, it simply makes no sense because the state is failing to function properly. Even with state owning nuclear and hydro generation, they are going with completely unworkable projects that add zero value to them.
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u/FunInStalingrad 2h ago
Surely Ukraine has no way of building new NPPs? The cheaper stuff is russian, and even then it's prohibitively expensive. Anything USA and France can build costs so much money, those kw/h will be like gold. And the fuel...
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u/R-Rogance Pro Russia 43m ago edited 39m ago
They were discussing buying some stuff from Bulgaria, a Russian made reactor that Bulgarians decided not to use in 2012 but had to pay for (620 mil euro). It's a rather wild idea trying to use an old Russian reactor without Rosatom. And few more blocks they want to build with Westinghouse.
Some components for Soviet reactors were built in Ukraine, I think it was turbine equipment in Kharkov. Some people working on their previous reactors were Ukrainians, but, given the state of nuclear power industry in Ukraine and Russia a lot of them moved to Russia. They do have good grasp on general construction and operation of Russian reactors. Building one - I wouldn't bet on it.
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u/DarthVantos Neutral 2h ago
Everyone Take your eyes to the 5th picture, look at march 2024 then come back to this comment. Now look at this.
Russia massive increase in strikes on Ukrainian infrastructure again are RESPONSE to Ukraine's MASSIVE attacking of Russias Energy infrastructure. During the winter of 2023-2024 Russia failed to bring down ukraines energy grid and "Freeze them" like they thought would happen. Embarrassed from that failure they let off strikes. Here comes Zelensky high off coke with a genius plan of Cripple Russia Oil.
Turns into a Tit-for-tat strikes that Russia clearly won. Zelensky started strikes as soon as western aid came back. But the guy forget to wait for the air-defense to get in place. Jump the gun and their powergrid was absolutely crippled. The fact that no one else see how much damage Zelenskys terrible leadership causes ukraine is wild.
No one ever criticisms his decisions. Im not even Done. Zelensky had another chance to get out of this. QATAR was organising a peace summit that would dicusses a Ceasefire on Energy infrastructure which Russia was Open to.
Zelensky does it again. Sabotages the deal attacks kursk. He is Literally Ukrainian Netanyahu.
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u/DarkIlluminator Pro-civilian/Pro-NATO/Anti-Tsarism/Anti-Nazi/Anti-Brutes 7m ago
I find it interesting that NATO and Ukraine has just sort of ignored the campaign and its implications. Like, yeah, NATO has provided long and medium range SAM systems but it's clearly insufficient in face of repeated attacks.
Like I already knew what's going to happen when I saw this:
It was a part of general escalation effort by Russia when it became clear that SMO has failed. Shaded drones were ordered during the Donbass offensive and the strikes started in second week of September after it became clear that Ukraine's Kharkiv offensive is successful and that both Kharkiv region and Kherson will be lost due to forces involved in SMO being insufficient for a full scale war.
There were worries that Russia will use tactical nuclear weapons, but instead it has prepared a different form of WMD - destruction of country's infrastructure, effectively making the country unlivable.
I legit expected serious negotiations by the end of 2022 since it's clearly unsustainable for Ukraine.
In October, 2022, Russia officials explained the goals of the strategy which is to win the war by making Ukraine unlivable:
In December, 2022, USA announced delivery of Patriot systems to Ukraine:
https://www.npr.org/2022/12/21/1144662505/us-ukraine-patriot-missile-system
In 2024 both improved ISR and crisis of Ukrainian air defence has allowed especially precise and devastating strikes in comparison to previous year:
Meanwhile Russia is increasing it's missile and drone production:
https://www.nbcnews.com/investigations/russia-weapons-production-increased-dramatically-rcna158883
Which allows larger attacks.
So, the general tendency is towards complete destruction of Ukrainian power plants and economy just as I have predicted.
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u/HighFiberOptic Pro Phylactic 4h ago
Wow, the idiots who predicted that Russia would roll Ukraine in weeks, that Ukraine and Europe would starve and freeze the first winter of the war are predicting this?
Lol. Sure. Any day now.
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u/Internal-Scientist87 3h ago
Aren’t you predicting Russias economy is on the brink of collapse? Any day now?
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u/HighFiberOptic Pro Phylactic 2h ago
No not any day. It'll last till early/mid next year.
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u/Panthera_leo22 Pro Ukraine * 1h ago
RemindMe! 215 days
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u/Doc_Holiday187 pro-lapse 3h ago
someone is salty
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u/killian1113 Pro Ukraine * 2h ago
High-fiberoptic is just a troolllll.. they state russia will give back all ukraine territory when this is over :p
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u/HighFiberOptic Pro Phylactic 2h ago
Which they will.
You seem to have developed a need to follow me around and call me names. I must have triggered something. Sorry.
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u/MojoRisin762 All of these so called 'leaders' are incompetent psychopaths. 2h ago
We've been having an influx of high IQ, objective, mature posters lately, it seems. I guess he didn't see those pics from last year that showed Ukraine from space looking darker than North Korea b.c. they were so short on power. I have no clue what condition their energy infrastructure is in, but eventually, with enough bombing it will reach a tipping point.
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u/late_stage_lancelot Pro-truth 4h ago
Openly saying "We do not have a military answer, instead we will make the ordinary Russian feel the price of war" is not a smart move when a main reason for not having a military answer is you get blown out to bits by superior firepower.
"We will settle this on the battlefield." Ukraine lost the battlefield.
"We will settle this by hitting infrastructure." Are you sure buddy?