EAEU mulling over use of national currencies in common electricity market

MOSCOW, 10 June (BelTA) - The possibility of setting prices and paying for electricity in national currencies of the Eurasian Economic Union (EAEU) countries, as well as settlements and guarantees mechanisms in the common electricity market were discussed by representatives of the EAEU countries together with representatives of the banking sector, BelTA learned from the press service of the Eurasian Economic Commission.

“The price of electricity in the common market will be determined during the centralized (exchange) trading, where one will be able to bid to purchase and sell electricity and schedule a delivery period (year, quarter, month) or the following day. We also consider the possibility of setting prices and making payments for electricity in national currencies. This will be in sync with the trend towards dedollarization of mutual settlements in the EAEU countries,” the EEC explained.

In order to make such transactions, bids from sellers and buyers from different countries must be denominated in one currency. “It could be one of the national currencies of the Eurasian Five, the currency of a third party or even the future Elkoin,” the press service said.

“In any financial transactions it is extremely important to reduce risks of foreign currency fluctuations, to make settlements as transparent and comfortable as possible, and centralized trading attractive for market participants,” Vadim Zakrevsky, Director of the EEC Energy Department, said during the meeting.

The choice of currency, in which the price of purchase and sale contract will be set, may distribute risks between the parties differently: risks might be incommensurate due to the lack of direct exchange rates for each currency pair of the EAEU member states. Today, the price of a currency pair is set by the central banks of each country separately.

Representatives of the EAEU countries and banks discussed the possible configuration of settlements and payment guarantees for transactions, the role of financial institutions, the possibility of giving special powers to banks in the EAEU countries, the choice of one or more authorized banks. The agenda also included financial guarantees from banks and other types of security for performance of obligations by the parties, including delivery, infrastructure and penalty payments.

“The launch of the common market will help improve pricing transparency, curb the growth of electricity prices for end consumers and create favorable conditions for investment in electric power infrastructure,” the press service said.