Electricity consumption growth slowed to 2.3% y/y in 8M19, significantly below forecasted numbers as well as growth levels of previous periods. On supply side, hydrogenation decreased by 9.7% y/y due to unfavourable hydrological conditions. Reduced generation created demand on imported electricity despite the low consumption growth rate. As a result, electricity trade deficit widened 80.5% y/y to US$ 29.6mn in 8M19, and we expect trade deficit to double for the full year of 2019.
The Ministry of Economy revised downwards 2019 electricity consumption growth forecast to 5.7% from initial projection of 13.2%. The revised forecast takes into consideration actual consumption figures of 1H19.
Energy sector was largest FDI recipient in 1H19. FDI in energy sector increased 32% y/y and stood at US$ 112mn.
Importantly, market deregulation process is evidenced by intensified activities from power traders and direct consumers’ increased share in the total electricity consumption mix. The latter increased from 12% of total electricity consumption in 2017 to 21.5% in 8M19, as a result of legislative changes.
Parliament is discussing two energy-related laws – 1) on energy and water supply and 2) on promotion of renewable energy sources. Both laws are expected to be adopted by the end of the year, but the bylaws are set for a longer term.
