From Bankruptcy to Buoyancy
May 18 (Mongolian Economy) The energy sector has begun to rid itself of its losses and debts collected over the many years. However, the mindset among society to save and spare energy has not changed a bit. If they don’t learn and teach their children how to save energy, they might not be able to deal with inevitable higher energy expenses. Maintaining balanced household budgets requires that they support a green economy and change their mindset to one for efficiency.
The 72nd Article of the energy law, introduced in 2010 to provide guidelines to the fuel energy sector passed by Parliament states that actions directed towards the fuel and energy sector should support this sector, which nearly collapsed due to inefficient operations, before it falls at the nation’s feet. In order to save this sector, a kilowatt of electricity would have to cost MNT 115 by 2014. This directive is meant to provide citizens with stable electricity as well as the ability to live warm and comfortable lives. Thus, energy prices, which have steadily increased, must be carefully correlated with national demand. Protective actions for consumer rights have already been taken .
Operators in the mining sector pay MNT 100 for every kilowatt of electricity, the highest fee regarding energy imposed in Mongolia.Residents in the central provinces pay around MNT 84 per kilowatt. However, if this price does not reflect true market value, losses will be impossible to avoid.
End users consume electricity at a true cost of over MNT 100. Liberalised prices are scheduled to be financed through MNT 15 billion in subsidies from the annual state budget up until 2014. It is assumed by then that energy producers will operate independently by then and the payouts will stop. That means people will have to pay real prices when that happens.
“The price for energy in Mongolia is below the international average”, said T. Tserenpurev, the head of the Energy Regulatory Committee .
If people continue to live as they do now, then households in Mongolia will have to pay large sums for their electric bills.
Discounts for Saving
A household that consumes a maximum of 150 kilowatts an hour of electricity will pay MNT 79. The Energy Regulatory Committee will increase that price once a household passes that threshold, according to the aforementioned 72nd Resolution.
“Although the price of energy have increased from MNT 79 to MNT 84, it’s not enough to make up the losses”, explained N. Myagmarsuren, coordinator at the Energy Regulatory Committee.
Mongolia has the cheapest prices for electricity for consumption at night. It is also included in the list of countries where a discount and welfare policy is enforced, allowing, it to enjoy cheap prices for electricity. That calls for a change in mindset. Beginning in 2014 one kilowatt of electricity will cost MNT 115. Imagine how much more you will pay then.
The price of energy is cheaper than its true value, which results in losses to producers. Energy producers experienced a loss of over MNT 39 billion last year. The energy law was amended in 2011, stating it would pursue “profitable prices close to real prices”.
However, instead of seeking profits, the committee has been operating only to make up for its losses. It is no secret that there is widespread opinion that price hikes would put a great deal of pressure on people’s lives. For that reason, the price for energy will increase gradually until reaching MNT 115 per kilowatt two years later.
Prices that account for all expenses incurred through production would have the following results:
(1) Better quality services: Companies with special licences function to produce, deliver and supply energy and heat. Higher prices would allow energy producers to operate without incurring losses, and therefore allow improved technical services from servicing companies. That would be passed on to provide customers with more reliable and quality services as well.
(2) Investment: A more efficient price scheme would attract more foreign investors. Prices that fail to earn profits will not attract anyone’s attention or investment dollars.
(3) Cost savings: Families would be forced to pay more mind to their energy consumption and use more energy-efficient thinking.
(4) Green habits: Energy savings are key to the green energy movement.
Indexing energy
When the new price is introduced in 2014, analysis and research to their impact can begin to help develop a price index. This index would be used to adjust price depending on the expenses incurred by fuel costs (coal and oil as well as their transport).
Such costs comprises up to 50 percent of spending in the energy sector. There is also the currency exchange rate to account for. Because all of the equipment needed in this sector must be imported, trade must be done in foreign currencies. The same goes for imported energy, which amounts to over 200 million kilowatts in addition to interest collected from long-term credits each year. Indexed energy prices would allow the sector to adjust electricity and heating fees so they align with fuel prices, exchange rates, and consumption price indexes.
“Energy consumption is increasing every year. Supplying rising demand has become a headache for the sector”, said N. Nyamsuren, another coordinator at the Energy Regulatory Committee . “Of course, a new energy source is needed immediately. Also, people must learn to save energy. There is so much heat lost. We lose so much heat through windows, the walls and doors. We are too wasteful”.
He added, “The sector has recovered over the last two years. Debts are being lessened quickly. Before, debts were greater than profits. Now the opposite is true. That debt will soon vanish. But that doesn’t mean everything will be fine. These are just the first signs of improvement”.
Last year, most of the debt from coal mines and power plants were repaid. Representatives from this sector have confirmed that it has switched over to a policy that obligates immediate payment for the coal it purchases. Experts also have noted that foreign investments in the sector have increased.
From now on, the energy sector might operate with fewer losses and function with a positive balance sheet.
The 72nd Article of the energy law, introduced in 2010 to provide guidelines to the fuel energy sector passed by Parliament states that actions directed towards the fuel and energy sector should support this sector, which nearly collapsed due to inefficient operations, before it falls at the nation’s feet. In order to save this sector, a kilowatt of electricity would have to cost MNT 115 by 2014. This directive is meant to provide citizens with stable electricity as well as the ability to live warm and comfortable lives. Thus, energy prices, which have steadily increased, must be carefully correlated with national demand. Protective actions for consumer rights have already been taken .
Operators in the mining sector pay MNT 100 for every kilowatt of electricity, the highest fee regarding energy imposed in Mongolia.Residents in the central provinces pay around MNT 84 per kilowatt. However, if this price does not reflect true market value, losses will be impossible to avoid.
End users consume electricity at a true cost of over MNT 100. Liberalised prices are scheduled to be financed through MNT 15 billion in subsidies from the annual state budget up until 2014. It is assumed by then that energy producers will operate independently by then and the payouts will stop. That means people will have to pay real prices when that happens.
“The price for energy in Mongolia is below the international average”, said T. Tserenpurev, the head of the Energy Regulatory Committee .
If people continue to live as they do now, then households in Mongolia will have to pay large sums for their electric bills.
Discounts for Saving
A household that consumes a maximum of 150 kilowatts an hour of electricity will pay MNT 79. The Energy Regulatory Committee will increase that price once a household passes that threshold, according to the aforementioned 72nd Resolution.
“Although the price of energy have increased from MNT 79 to MNT 84, it’s not enough to make up the losses”, explained N. Myagmarsuren, coordinator at the Energy Regulatory Committee.
Mongolia has the cheapest prices for electricity for consumption at night. It is also included in the list of countries where a discount and welfare policy is enforced, allowing, it to enjoy cheap prices for electricity. That calls for a change in mindset. Beginning in 2014 one kilowatt of electricity will cost MNT 115. Imagine how much more you will pay then.
The price of energy is cheaper than its true value, which results in losses to producers. Energy producers experienced a loss of over MNT 39 billion last year. The energy law was amended in 2011, stating it would pursue “profitable prices close to real prices”.
However, instead of seeking profits, the committee has been operating only to make up for its losses. It is no secret that there is widespread opinion that price hikes would put a great deal of pressure on people’s lives. For that reason, the price for energy will increase gradually until reaching MNT 115 per kilowatt two years later.
Prices that account for all expenses incurred through production would have the following results:
(1) Better quality services: Companies with special licences function to produce, deliver and supply energy and heat. Higher prices would allow energy producers to operate without incurring losses, and therefore allow improved technical services from servicing companies. That would be passed on to provide customers with more reliable and quality services as well.
(2) Investment: A more efficient price scheme would attract more foreign investors. Prices that fail to earn profits will not attract anyone’s attention or investment dollars.
(3) Cost savings: Families would be forced to pay more mind to their energy consumption and use more energy-efficient thinking.
(4) Green habits: Energy savings are key to the green energy movement.
Indexing energy
When the new price is introduced in 2014, analysis and research to their impact can begin to help develop a price index. This index would be used to adjust price depending on the expenses incurred by fuel costs (coal and oil as well as their transport).
Such costs comprises up to 50 percent of spending in the energy sector. There is also the currency exchange rate to account for. Because all of the equipment needed in this sector must be imported, trade must be done in foreign currencies. The same goes for imported energy, which amounts to over 200 million kilowatts in addition to interest collected from long-term credits each year. Indexed energy prices would allow the sector to adjust electricity and heating fees so they align with fuel prices, exchange rates, and consumption price indexes.
“Energy consumption is increasing every year. Supplying rising demand has become a headache for the sector”, said N. Nyamsuren, another coordinator at the Energy Regulatory Committee . “Of course, a new energy source is needed immediately. Also, people must learn to save energy. There is so much heat lost. We lose so much heat through windows, the walls and doors. We are too wasteful”.
He added, “The sector has recovered over the last two years. Debts are being lessened quickly. Before, debts were greater than profits. Now the opposite is true. That debt will soon vanish. But that doesn’t mean everything will be fine. These are just the first signs of improvement”.
Last year, most of the debt from coal mines and power plants were repaid. Representatives from this sector have confirmed that it has switched over to a policy that obligates immediate payment for the coal it purchases. Experts also have noted that foreign investments in the sector have increased.
From now on, the energy sector might operate with fewer losses and function with a positive balance sheet.
Bankruptcy is the last option one should go for in order to get rid of secured and unsecured debts. Once you file bankruptcy, it will reduce your score by more than 200 points. Once you bankruptcy filing is discharged, you should make sure that you take steps in order to improve your credit scores.
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