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Procedure for Determination of Local Content

On 27 June 2013 the National Commission that Performs State Regulation in the Energy Sector (the "NERC") adopted a Procedure on Determination of Local Content for Power Plants, including Commissioned Power Plant Construction Stages (Start-up Complexes) Producing Electricity from Alternative Energy Sources (Except for Blast Furnace and Coke Gases) (the "Procedure"). The Procedure was registered with the Ministry of Justice on July 15, 2013 and would come into force after its official publication.

Procedure creates rules for determination of local content for producers of electricity from renewables according to the changes in Power Industry Law which has entered into force since July 1, 2013 (Law of Ukraine Law "On Amendments to the Law of Ukraine" On Electrical Power Industry "On Promotion of Electricity Generation from Alternative Energy Sources." № 5485-VI, dd 20.11.2012)

 "Importantly, the Procedure clarifies that 30% or 50% of the statutory required local content will be calculated by summarizing of fixed shares of the local content attached to separate components of a generation facility. For example, for purposes of wind energy projects a local content requirement of 30% will be met provided that a tower is manufactured in Ukraine and project construction works have been performed by a company registered in Ukraine. Adoption of the Procedure is a positive step, which should help implementation of renewable energy projects in Ukraine", comments Yaroslav Petrov, associate at Asters law firm.

According to the Procedure the Ukrainian origin of the project elements should be confirmed by Certificates of the Ukrainian origin (except for construction works), which are issued by the Ukrainian Chamber of Commerce and Industry or its regional divisions. Ukrainian origin of construction works should be determined by the place of registration of the General Contractor or all subcontractors.