How blackouts are killing small businesses
17 February 18:08
Small businesses in Ukraine are experiencing another wave of pressure due to Russia’s attacks on the power grid, which in winter lead to days-long outages of electricity, water, and heating. This forces entrepreneurs to either work in extreme conditions or temporarily close down, often at the point of profitability.
This is reported in an article by Reuters, as relayed by "Komersant Ukrainian".
A story from the suburbs of Kyiv
One of the heroes of the publication is Natalia Bilostotska, the owner of a beauty salon in the suburbs of Kyiv. According to her, one of the salons had to be temporarily closed when the temperature in the room dropped to 2 degrees Celsius.
Work resumed only in early February, but a new wave of frosts again lowered the temperature to 6 degrees. Customers came for procedures in winter coats, and the staff worked in conditions that were unsuitable for normal service.
Generators as a necessary solution — and a new burden
Like thousands of other entrepreneurs, Bilostotska switched to a generator, but this dramatically increased costs:
- the electricity bill increased approximately fourfold — to 58,000 hryvnia per month;
- another 15,000 hryvnia goes toward fuel and generator maintenance.
The salon owner does not dare to raise prices, fearing she will lose customers who are themselves under financial pressure.
A risk for the entire economy
The Kyiv School of Economics calls power outages the greatest economic risk. According to their estimates, prolonged outages could cost the economy 2–3% of GDP if businesses are unable to adapt quickly.
The National Bank of Ukraine has already lowered its economic growth forecast for this year to 1.8%, directly linking this decision to the energy crisis.
Why small businesses are particularly vulnerable
Small businesses are the most vulnerable because:
- they have limited financial reserves;
- they cannot always afford autonomous energy solutions;
- they face staff shortages, military risks to their premises, and supply chain disruptions.
It is estimated that small businesses provide about half of all jobs in Ukraine. Mass closures could lead to rising unemployment and a new wave of emigration.
Restaurants on the brink of survival
Restaurateur Yevgen Klopotenko has publicly warned of difficult months ahead for the industry.
In addition, a survey by the National Restaurant Association of Ukraine showed that 60% of respondents consider the energy crisis a critical threat to their establishments.
Additional electricity costs will hit the following particularly hard:
- processing enterprises;
- businesses engaged in storing last year’s harvest;
- service establishments, where work is virtually impossible without electricity.
