Interview with Boris Kolesnikov: “the Ukrainian power has become efficient, you need to spend at least $60 billion”

Blockade of Donbass continued for almost a month, the Cabinet declared a state of emergency in the energy sector, constantly referring to the “bakadzhika” skip wagons with coal, but the process from the dead point has not moved. Yenakiieve and Makiivka metallurgical plants have already stopped. According to Minister of energy Igor Nasalik, from day to day in Ukraine will start rolling blackouts. Prime Minister Vladimir Groisman, who met with members of the “carbon blockade”, popularly told them that if you do not unblock the supply of coal, Ukraine will face disruptions in the supply of heat, electricity and possible loss of jobs. According Groisman, he always expected that the railroad could cut Russia to use against Ukraine the energy dependence of our country. “But I never thought that the overlap and energy blockades are created by some Ukrainian citizens. To start an energy blockade in the middle of the heating season is not quite fair to the Ukrainian citizens”, – said Groisman. While the authorities are trying to solve this issue, other politicians and experts complain about the artificially inflated price of coal according to the “Rotterdam+”. They say that the price of Ukrainian coal should be lower prices on foreign exchanges. In an interview with the co-chair of the Opposition bloc and Prime Minister of the Opposition government Borys Kolesnikov “Today” to find out who benefits from coal blockade of Donbass, discussed a fair price for Ukrainian coal, the loss-making state-owned mines and the reasons for the split in the Opposition bloc.

– Let’s start with the blockade of Donbass, which lasted for a month. The coal reserves in the TPP, including in Kiev, stayed for a couple of weeks. Then you can begin rolling blackouts. Tell me, who can it be profitable?

– To begin with, to whom it is unprofitable? It completely destroys Ukraine. It is the collapse of the Ukrainian economy. This Monday night, yenakiieve and Makiivka metallurgical plants proof. A few more days and this chain will be irreversible destroyed energy, and as a result, destroyed industry and agriculture. I do not exaggerate, it is true, and such irresponsible actions require at least the intervention of a higher authority immediately. Now, who benefits? Maybe a separate pseudo and believe that it will bring them ranking, but not once in the pursuit of ratings of Ukraine were destroyed as “orange” and not “orange” forces. All who want to achieve power and authority in this way, digging your own grave. If the God is with them, but they dig the grave of Ukraine. I was at Ladyzhyn thermal power station (Vinnytsia oblast – Ed.) talked to people who work there. You need to clearly understand that there will be energy – Ukraine will not be. Not even waiting for the rolling blackouts, two steel plant ceased its operation. If Mariupol stopped, Ukraine will lose 12% of GDP. All hryvnia exchange rate keeps on export for metallurgy and agriculture.

In April of last year, the national Commission adopted the market method of calculating the wholesale electricity price, which is based on the European price index for coal “Rotterdam+”. All shout that this formula is corrupt, because the Ukrainian coal mining a priori cheaper prices on the stock exchange in Rotterdam.

Is scream corrupt. Even in respected media, I read: “What we carry coal from Rotterdam?” And Brent we carry from London? This is the exchange rate – Rotterdam + shipping, in our case Ukrainian enterprises. All energy sold on the exchange, and it’s not like those who used to earn in their offices on the determination of the purchase price. I want to remind you that no private mine in the country never received a single hryvnia of state subsidies. Many have always said that the Donbass unprofitable. As the Chairman of the Donetsk regional Council until 2006 I want to say that Donetsk oblast has never been unprofitable and subsidized. Subsidized the coal industry, to which local councils and communities of Donetsk region have nothing to do. The energy Ministry gave its affiliates the money, 2/3 of which was stolen in Kiev. And this was called the subsidy of state-owned mines. The efficiency of the mines to private due to huge modernization in times more than in the state. Some officials became jealous that these mines successful and unprofitable state. This is how Papanov in a film “Beware of the car” said: “And you do not steal”.

That coal was cheaper, need high production efficiency, and it leads to upgrades. All you need is tens of billions of dollars of investment. I’ll tell you more below the Ukrainian energy sector became effective, you need to spend at least $60 billion on One unit at CHP plant worth $450 million, I recall that a year ago, oil cost $27, charcoal – $40. Survive whether the economy is state-owned mines $40? But even that doesn’t matter. We finally came to an absolutely objective exchange price, regardless of a government official. But if tomorrow the stock price falls, the formula has already been adopted, nowhere to go, so all risks will be borne by the manufacturers that took on such obligations.

But the people still does not understand why Ukrainian mines we have to buy coal at the price of Rotterdam.

By a strange logic, we can say that “people do not understand”. Why is the grain, and subsequently the bread, buy in Ukraine at the price of the Chicago stock exchange? First, the exchange price is a fair price, so it is accepted all over the world. Second, in order to invest in the cost of profitability need to modernize. Coal may not be cheap under any circumstances. But if it’s cheap, so buy from the state mines, where it cost 5 thousand UAH. And who decided that Ukrainian coal is cheap? If we work at depths of up to 1 thousand meters and deeper, and in many countries coal is mined including open method, the cost of our coal below. Just exchange is an indicator of efficiency. Want to be a competitive market, upgrade production and achieve that price. We have for the vast majority of state-owned mines in Rotterdam ten pros not enough to cover their costs. Ukrainian coal is one of the most expensive. The price of coal produced in the state mines, with the market price today in Rotterdam at around $84, comes to $150.

– Then that it was impossible for three years of war with Russia translate CHP plants anthracite coal brand “G” now to not have to break your head and to shout that the anthracite can be purchased only in South Africa and Russia?

But then there will be enough coal brand “G”. First, you all know from school textbooks, particularly in chemistry, that anthracite is the most high-calorie coal in the world. That is 9.2 million anthracites nothing to replace it. If they replaced gas, it will not be enough gas group. The whole world cares about its own energy security, the U.S. still does not export oil, is prohibited under Federal law. Buying coal in Ukraine, the Ukrainian enterprises, albeit temporarily uncontrolled territories, it is still a contribution to the Ukrainian economy. There live our citizens, and the authorities are obliged to provide them with jobs. Extracting Ukrainian coal, though in the East, at least in the West, in Lviv region, we are strengthening Ukraine’s economy, stabilize currency resources, currency, saving, and exporting electricity – and even earn. Buying energy abroad, we completely kill the stability of the hryvnia. And so we have no GDP. We have $80 billion of GDP is a joke, nominal GDP below $2 thousand per capita. This is worse than the poorest countries of the world.

– Why, according to Prime Minister Vladimir Groisman, the results of IV quarter of 2016 the economic growth amounted to 4.7% of GDP…

– Indeed, growth in IV quarter of 2016 amounted to 4.7%, leading to annual growth of 2%. But I want to tell you that we dropped by 2.5 times, 250%. We $200 billion GDP in 2013 dropped to $80 billion If we grow at 10% per year, which is close to the world record, the 2013 level we will reach by 2030. So a 2% growth is not the answer.

– So hyped Groisman raising the minimum wage to RS 3200 will not give the promised results in economic growth?

In this case, Groisman rights. I hope that the increase of the minimal salary up to 3200 UAH is only the first step. You need to make 5 thousand UAH, as proposed by the Opposition government. In the same in Sweden there is a law that does not allow open work space, even create it if you don’t warrant minimum wage. So if someone have received less than RS 3200, this is pure hypocrisy and fraud. Fraud not directed against the state officials, but against seniors, as the salaries are pension contributions, against teachers, employees of public agencies, which are financed through income tax. Therefore, the increase in minimal salary the right move. On the other hand, you need to clearly understand that if we want to become a civilized country, then taxes have to pay everything. But the most important thing here is that the state, represented by government of AP and BP, before demanding to pay taxes, must abandon all ineffective expenditures and to trust companies. In the United States, the largest economy in the world, the Ministry also solve nothing. Professional associations – from farmers to rocket scientists – determine the rules governing the American economy. The closest example of Estonia – has moved to an electronic model of governance. When all this is in Ukraine, then there will be a dialogue with society that will begin to pay taxes.

– We all remember how in late 2015, the Deputy corps and the government rushed to draft a new tax reform. In the end, only agreed to cut the Ust rate to 22%, which increased the deficit of the Pension Fund.

Returning to Churchill, who said Khrushchev’s historic sentence: “Mr. Khrushchev, no one in the world has managed to jump a chasm in two steps. Are you or do reforms, or better don’t do anything, otherwise you’ll ruin the Soviet Union.” So do not reform, what we have here is again lowered and all… are Considered in General business environment, the comfort of a business that is profitable for businesses to operate in Ukraine? Big business somehow could theoretically fend off checks due to the powerful legal services, the influence of the media. Small and medium business – it is crushed by the tax authorities, the economic unit of the interior Ministry, the PGO, the SBU… This should not be. In Ukraine, only the Ministry of Finance, in the face of the fiscal service has the right to control the economy. In the West, the industrial giants of decades are not checked tax because it does not cause suspicion. We went and lowered the SST. Let’s take a simple tutorial on arithmetic: in the country before the war, the working population was 20 million, subtract at least 10% of the unemployed is 18 million people. We have 13 million pensioners. If you set a pension on which to live, but it is at least 3000 UAH 13 million pensioners monthly expenses amount to 39 billion UAH. It means that 18 million working must pay to the Pension Fund of 39 billion UAH. What should be the salary at 25% of deductions? If we have 18 million working get 5000 UAH, that is 90 billion. To cover this budget, we need to have 40% of the Pension Fund. And it’s a lot, everything will go into the shadows. Then in Ukraine, no one should receive less UAH 6000, and the average salary should be 7500 UAH, and only in this case we will be able to collect 39 billion. Therefore, the minimum wage, with which you can create a workplace should be no less than 5000 UAH, then we will receive an average salary 7500 UAH. But I stress again: the state should eliminate 100% corruption tax that bribes were impossible to give, is the basis for the success of the market economy throughout the world.

– Ukraine is on the threshold of the next tranche of the IMF. Another recommendation (in the Cabinet say that the IMF did not require) the Fund to carry out pension reform. The Cabinet says that now to raise the retirement age, no one will, but recently, the Minister sotspolitiki Andrey Reva did not exclude that in the future.

– The IMF is Ukraine’s creditors, and creditors are always concerned about how the borrower will repay a debt. I participated in many negotiations with the World Bank including the IMF never gives hard instructions, never. They say: balance the budget, reduce costs or increase revenues, and better do both. Not to raise the retirement age and provide a retirement pension is one way – fully white salary. These funds will be enough. And when in 10 years it will increase the life expectancy of Ukrainians, then we can talk about the European approach to pension reform, then the people themselves will be happy to work till 60 and more.

– The IMF also recommends us to carry out land reform, repealing the moratorium on the sale of land with/x destination. That it should be done, no doubt. But populists hammered people in the head that it will kill the village, and large agricultural holdings will redeem people shares for a penny.

– Strategically in the long term to lift the moratorium need. And in the short and medium term do not. First, at the legislative level it is necessary to set the rent per hectare of land depending on its productivity. You need to set the payment per hectare, which will be clearly adjusted for inflation. This payment should be done legally monthly. Then the villagers, who are mostly retirees (middle-aged and older) for a few years to feel the real rentiers. That is, that they have land, they have lease it and receive a monthly rent as per his own apartment. Several years pass and everyone will get used to this regular income, we will create a culture of relationships between land owners and tenants. You say there will be investment. Why now is investment in the village? In the Ukrainian land investors. You can, for example, to fix that it is impossible to conclude lease agreements for less than 12 years (two rotation). But then it will be really concern about the people who actually gave their property and you will consciously be able to sell it. But they will already have a steady income. When selling they will receive the money immediately, typically the 20-year cost of the lease, they will be separated with a monthly income. But it will be their informed choice, which will create a land market. In South Korea, which experienced the industrial boom, people wanted in the city to get a job with a high salary. They sold their land, and raised enough money for a city apartment. Unfortunately, this industrial revolution in Ukraine is not observed.

– During a visit to Brussels, Volodymyr Groysman promised that soon the Cabinet will submit to Parliament a bill lifting the moratorium on the export of roundwood. Depends on the receipt by Ukraine of the second tranche of EU macro-financial assistance in the amount of 600 million euros. But we know that in the Parliament can never become 226 “for” this decision and the decision itself is unpopular.

– Not to lift the moratorium will be the only constructive solution Happy. We give 600 million euros loan, so we opened the export of raw materials. In Ukraine, only 12% of forest cover. In France, 32% in any case, and in the US 29%. The lifting of the moratorium will not even stupidity, and betrayal of national interests.

– Now in Parliament there are rumors that the Cabinet is preparing to announce the lowering of tariffs for gas and light. Not much, but to lower can, say, play is.

– It is necessary, first, to look at the entire chain: from the purchase of energy to create the finished product (heat and hot water), and see where we can effectively use this method. I know we waste, and the most important reform, which is expected from all Governments for 25 years, is the modernization of housing and communal services. It is possible not to reduce tariffs, and to lower the price of the finished product, or less to consume, or more efficiently. To produce heat and hot water more efficiently and without loss. And not as we do from the CHPP to the city, and the seam of the tube always green. He’s always in Africa: at least -20, but it always hovers and evergreen – just “Sannikov Land”. So let’s not make a “Sannikov Land” at the expense of our citizens. Berlin at the time, where was exactly the same Soviet home, with upgrades saved up to 2/3 of the rates in “Khrushchev”. The Soviet system of heat consumption and hot water allows you to clearly pay for the product. If you go buy a loaf of bread and litre of milk or kilogram of sausage, it’s all balanced, and you know what you pay for. In a modern communal area turn valve on the radiator – this is your counter. But in our country this is not possible. For this you need a roof boiler house, crisp account, but it is not. And here the principle of “split” and corruption is rampant.

– And with the roads what? Like in the modernization investing huge sums, and the snow came down again together with asphalt.

– Here global contrast of the former Soviet republics from the Western world, the West spends vast resources at once and 20-30 years is not suitable to the road, only to successfully exploit it. That is, once laid all the technology that will provide at least 30 years of operation. We, holding and patching “kaloyani” repairs annually show that spend a little, but every year, and we have no roads, no quality. There are no miracles. If the West road, are worth $5-6 million per mile (this is the cost of 4 lanes, two in each direction), it is impossible to build in Ukraine the street for 10 million UAH. No, you can build, but each subsequent year will need to invest another 10 million In the end to the 10th year you will spend more than if you just invested $5-6 million for example, the US is building concrete roads, which in 20-25 years covered by asphalt because the concrete starts to peel off. Europe building asphalt roads on high-quality bitumen. And if we have tender documents will be registered under one or the other, the bitumen will, believe me, is not very different from domestic resin in the barrel, which caulk seams on the houses.

– Turning to pure politics, a split in the Opposition bloc into two camps due to early elections canceled?

Rumors about the split of the Opposition bloc go for 2.5 years. The oath of people’s deputies of the 8th convocation in 2014. I’m not going to comment on the rumors. If that happens, the media will know about it very soon, and we will assess what happened, if it happens. As for early elections, they can occur without the influence of the Opposition bloc, as we have only 43 of the mandate. But all the “fans” of early elections, I want to say the following: in order that the constructive forces have won the elections, got the real power in the country and began to pull her out of the financial abyss, which, as said Ostap Bender, “the deepest in the world, because it is possible to drop your entire life”, it needs at least two conditions. First: in a country that ranks first in corruption and the last place in Europe on a salary, there can be no system of elections, in addition to proportional. All electoral districts will be bought with giblets. Second, elections should involve all citizens of Ukraine, including the temporarily uncontrolled territories. And, of course, elections to the Parliament should pass under Ukrainian law under the leadership of the CEC of Ukraine. I’m talking about elections to be held within the planned period.