Ukraine's small businesses struggle as Russian strikes turn off power

By Max Hunder

IRPIN, Ukraine, Feb 17 (Reuters) - Nataliia Bilostotska poured her heart and soul into her three-year-old beauty salon in a commuter town just outside Kyiv. But when the temperature inside plunged to almost freezing, she realised she had to shut up shop.

"At first the girls said: 'It's fine. We'll warm up,'" she recalled. "Then a manicure specialist called me and showed me on video that her fingers wouldn't bend from the cold."

Bilostotska is among the many small business owners struggling to stay afloat as Ukraine endures its coldest, darkest winter of the four-year-old war.

Russia's frequent airstrikes on Ukraine's power grid have caused days-long outages of electricity, water and heating during a winter that has seen temperatures sink below minus 20 degrees Celsius (-4 Fahrenheit).

Across the riverside capital Kyiv, many cafes, restaurants and other small businesses have closed, unable to withstand the financial strain in a bleak wartime economy. Those that remain open rely mostly on costly generators parked on the sidewalks, spewing fumes and noise.

Bilostotska complained that her monthly electricity bill had roughly quadrupled this year to 58,000 hryvnia ($1,340), plus another 15,000 hryvnia ($350) to fuel and service her generator.

"We have no earnings, no turnover. What are we supposed to pay it with?"

Raising prices isn't an option, she said, because customers would simply stop coming.

The Kyiv School of Economics said last month power outages pose the biggest immediate economic risk for Ukraine. Prolonged disruption could cost up to 2–3% of GDP, it warned, though the impact would be smaller if firms adapt quickly.

Ukraine's Central Bank last month revised down its growth forecasts for this year to 1.8% from 2% because of the energy crisis.

CLIENTS IN WINTER COATS

Bilostotska, a mother of two young children, took a part-time office job to pay off her loan for the business, which is currently losing up to 40,000 hryvnia ($925) per month.

She opened her first nail salon, part of the G-Bar franchise with dozens of locations across Ukraine, in Irpin in 2023, a year after Moscow's invading forces were expelled from the northern town.

She opened her second salon in the neighbouring town of Bucha last year. Six months later Russia began its intense bombardment of power infrastructure, plunging cities into darkness for all but a few hours a day.

When the temperature in her Irpin salon dropped to 2 degrees Celsius and electric heaters proved inadequate, Bilostotska decided to close it until conditions improved.

The salon reopened in early February — just as a fresh cold snap arrived.

The first day saw clients getting their nails painted and hair styled in thick winter coats as the temperature inside hovered around 6 degrees Celsius (43 Fahrenheit).

Yuliia Kharchenko, a 28-year-old lawyer, sat bundled in a hoodie and a down jacket to have her nails painted, as employees heated water in a kettle to wash hair.

"The Russians still haven't understood that even when Ukrainians find themselves in the circumstances they created for us, it's still better than being part of Russia," she said.

FINANCIAL DIFFICULTIES EXACERBATED

Most Ukrainian businesses had already procured alternative power sources to survive previous winters of Russian strikes, said Nataliia Kolesnichenko, senior economist at the Centre for Economic Strategies, a Kyiv think tank.

But they remain vulnerable to the expense of having to run generators and surging mains electricity tariffs as demand far outstrips supply.

Ukraine's energy minister said last week that power demand was about a third larger than supply capacity - an improvement from the depths of January's extreme cold.

Kolesnichenko said the power crisis is the latest setback for small businesses already grappling with wartime labour shortages and safety risks to premises and supply chains. Small firms employ about half of Ukraine's workforce, and closures could lead to higher unemployment and emigration.

"The coming months will be difficult," Yevhen Klopotenko, a celebrity chef and restaurant owner, wrote on Facebook last week, warning of potential layoffs. "Maybe things will get even tougher."

A recent survey by the National Restaurant Association of Ukraine showed that 60% of respondents said the energy crisis posed a critical threat to their businesses.

Several million people have already left Ukraine since war broke out in 2022, many of them unlikely to return.

Bilostotska said she, like many Ukrainians, lives in a state of "permanent stress": exhausted by the struggle to keep her business going and fearful for her children every time Russian drones fly overhead.

"The question is: when all this ends and we finally exhale a bit, what will be left inside us?"

($1 = 43.2378 hryvnias)