Updated contracts with SE NNEGC Energoatom on UEEX: what has changed?

As is well known, JSC NNEGC Energoatom sells electricity through bilateral contracts on the Ukrainian Energy Exchange.

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For a long time, the terms of these contracts remained unchanged and were well known to the seller's counterparties.

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However, during the state of martial law, the electricity market has experienced significant fluctuations; in particular, the Day-Ahead Market price has repeatedly forced buyers to abandon contracted purchase volumes.

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Previous contractual structures did not allow JSC NNEGC Energoatom to effectively protect its interests in such situations, which led to the introduction of several significant changes and additions to the terms of the proposed contract.

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Specifically, a new clause 6.11 has been added to the new version, according to which "in the event of a delay in the performance of any monetary obligation (payment) by the Buyer under this Contract, the Buyer is obliged to pay the debt amount plus 25 (twenty-five) percent per annum on the overdue amount. The Parties agree that the Buyer's payment of the monetary sum at the rate of 25 (twenty-five) percent per annum in accordance with this clause of the Contract constitutes compensation agreed upon by the Parties as an alternative interest rate on the overdue amount within the meaning of Part 2 of Article 625 of the Civil Code of Ukraine, which is payable by the Buyer (as the debtor) upon the demand of the Seller (as the creditor), and does not constitute a penalty under this Contract or current legislation for improper performance of a monetary obligation."

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Thus, compared to the previous version of the contract, the buyer's liability in the event of late payment increases from 3% to 25% per annum.

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Furthermore, a new clause 6.12 has been added, according to which "in the event of a breach of the terms of this Contract by the Buyer, the Seller has the right to submit a request to the Auction Organizer to include the Buyer on the electricity market participant exclusion list for a period of 6 (six) months."

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Changes have also been made to the Supplementary Agreements to the main Contract regarding the procedure for applying the security deposit.

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Unlike the previous version, under which the security deposit amount was credited by the Seller as payment for electricity in the order in which payment obligations arose, the new version credits the security deposit as payment for electricity for the final days of the supply period.

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It is clear that the proposed changes significantly increase the financial burden and liability for buyers. Therefore, before signing a contract with JSC NNEGC Energoatom, it is essential to carefully assess potential risks and financial obligations to avoid negative consequences in the event of a breach of contract.

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Furthermore, the new version of the contract effectively undermines the balance of interests between the parties by increasing pressure on buyers, while the provisions regarding the seller's duties and liabilities remain unchanged.

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