NBU\\\'s monthly report, electricity tariffs, Sberbank, Avangard, steel news

Yesterday, the National Commission on Regulation of the Electric energy sector (NCRE) adopted a resolution on raising the electricity tariff to households that consume more than 150 kWh of electric energy per month by 30%, effective as of 1 February this year. If a household resides in a dwelling that uses electricity for heating or cooking, then its tariff will rise by 30% only if it consumes more than 250 kWh a month. Some groups of the public (for instance, families with three or more children, etc.) that are considered as most sensitive to the move will be exempt from paying this new tariff. In effect, the electricity tariff will rise from 24.36 kopecks to 31.67 kopecks per 1 kWh (with VAT) for urban consumers, while for rural consumers, it will increase from 22.50 kopecks to 29.25 kopecks (with VAT), and for households that use electric appliances for cooking or heating, the tariff will rise from 18.72 kopecks to 24.34 kopecks per kWh (with VAT).

Investment implications: Firstly, this is great news to the entire electric utilities sector, and particularly to the listed thermal power generation companies, as well as DTEK, which has its US$500m 5-year bond outstanding. It would set a supportive trend for the market prices of stocks and bonds from these companies. Secondly, the IMF\\\'s next tranche, expected at the end of March or in early April, is getting a higher chance of being received each day. The tariff policy is ranking high on the agenda of cooperation between IMF and Ukraine\\\'s authorities. The above-mentioned moves serve to reduce the overhang of the so-called crossed-subsidy system, in which lower tariffs for households were supported by higher tariffs charged from corporate consumers.