Energy reforms for the first half of 2018

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PRESS RELEASE

Experts described urgent energy and environment reforms

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European-Ukrainian Energy Agency, together with partners from the “Energy Reform” coalition, noted the slowdown in energy and environment reforms and presented a list of changes that need to be implemented promptly by Ukraine for the implementation of the Association Agreement.

Expert conclusions are based on the results of regular monitoring of Ukraine's implementation of the Association Agreement with the EU in the areas of energy and environment. The participants in the six working groups are responsible for the expertise and provide the latest information on reforms and related analytical products.

The composition of the coalition include: NGO "Dixi Group", Civil Network "OPORA" Ukrainian public organization "Association of Energy Ukraine", Resource and Analysis Center "Society and Environment" and Association "European-Ukrainian Energy Agency."

Results of regular monitoring of implementation by Ukraine Association Agreement with the EU in the areas of energy and the environment can be found on the official website of the coalition "Energy reform»(http://enref.org/ )

GAS

Government has not proposed vision concerning removing systemic regulation, including price, in the gas market for the population. This was stated by the expert of the subgroup "Gas" of the coalition "Energy Reforms" - Roman Nitsovych.

"Instead of adopting a clear model of price equalization, the second time in a row the action of the provisions on special duties was extended, preserving uncertainty, at least until the end of July," the expert noted.

Also, the implementation of the plan of unbundling (separation of activities on transportation and storage of gas) of Naftogaz of Ukraine was actually frozen.

"Appealing to the decisions of the Stockholm arbitration should not be the reason for the postponement of the process, on the contrary - Ukraine is expected to implement the reform as soon as possible and involve the European operator in the management of the GTS. This will be key to maintaining the transit status of Ukraine. According to our information, on May 29, at a meeting of the Government Coordinating Council for Reforms, a decision was made on the unbundling variant to be implemented. Now it is necessary for this decision to be implemented." he stressed.

At the same time, in March, for the first time, the plan for responding to gas supply crisis was successfully applied. The gas shortage caused by Gazprom's refusal to comply with the arbitration clauses was overcome due to operational anti-crisis measures, and the situation was reported to the EU within the framework of the Early Warning Mechanism.

"Hopes also relate to the new composition of the Regulator, which should regulate gas distribution tariffs and create an even more favorable regulatory framework for gas exchange trading," Roman Nitsovych said.

ELECTRICITY

The issue of RAB regulation for the transmission and distribution of electricity, as well as the legal and organizational and methodological component of the division of oblenergos by type of activity, remains unresolved. This was stated by the expert of the subgroup "Electricity and Nuclear Safety" of the coalition "Energy Reforms" - Svitlana Golikova.

"The RAB-tariff methodology adopted by the Regulator methodology is not perceived by international institutions, as well as by the majority of Ukrainian experts and the public. Therefore, it requires discussion and elaboration." - Svetlana Golikova emphasized.

According to the expert, more than 2 months of this year, the Regulator remained without a quorum, which suspended the adoption of new regulatory acts for the electricity market, investment plans of the oblenergos were not approved.

Recall that on May 26, President of Ukraine Petro Poroshenko completed the rotation process of the Regulator members and dismissed the Head of the Regulator D. Vovk and the member of the Commission R.Mashlyakivsky. On May 29, 2018, by Decrees of the President of Ukraine No. 150-154 / 2018, O. Antonov, D. Kovalenko, O. Kryvenko, E. Maglirov, and O. Formagay were appointed as the new members of the Regulator on the basis of the open competitive selection.

ENVIRONMENT

“The law on strategic environmental assessment was adopted in March, does not apply in practice  due to the lack of a number of bylaws” - announced this Anastasia Yermakova, an expert on the subgroup on Environment and Renewable Energy, of Energy Reform coalition.

"At present, such subordinate acts have not yet been made public for public discussion. First of all, it is about the procedure for conducting public hearings of projects of urban planning documentation at the local level and the procedure for monitoring the consequences of implementation, "- added Anastasia Yermakova.

According to the specialist, there also are no sub statutory acts that would ensure the legality of the procedure for assessing environmental impact. In particular, it is a question of determining the fees for conducting environmental impact assessment and the procedure for conducting a cross-border environmental impact assessment. In addition, the updated Strategy for State Environmental Policy has not yet been adopted.

ENERGY EFFICIENCY AND SOCIAL ISSUES

The development of subordinate acts of the "energy-efficient package" takes place at a slow pace, creating conflicts in legislation, as well as blocking the activities of reformers. This was stated by the expert of the Public Network "OPORA" Yulia Cheberyak.

Also, as the expert pointed out, the funds for Energy Efficiency Support Programme are almost exhausted, despite the appeal of the expert environment and the profile of the Agency to government officials and deputies regarding the provision of sufficient funding. Instead, according to the calculations of specialists, the minimum amount of funds is UAH 3 billion instead of the current UAH 400 million.

"A month later, the work of the program will be suspended once more, as in previous years. The only financial instrument on the part of the state, which has a fairly high level of public confidence, works manually. Only after pressure from the public and potential participants of the program decisions were made on additional financing ", - the expert emphasized.

Another problem is the launch of the Energy Efficiency Fund, scheduled for June 2018.

"In 2018, the Fund's work in the state budget provides 1.6 billion UAH and 50 million euros from the EU. However, these funds remain in accounts without targeted use. Subordinate acts on the Fund's activities were only recently adopted, and the Foundation itself as a state institution has not even been registered by this time. Moreover, work on the selection of candidates for membership in the Supervisory Board of the Fund has not even begun, which should last at least 3 months."- said Julia Cheberyak.

OIL

Ukraine still does not approve the model for creating the minimum oil and oil product stocks under Directive 2008/119 / EC, as well as the relevant Law. This was announced by the expert of the subgroup "Oil" of the coalition "Energy reforms" - Gennady Ryabtsev.

"No one doubts, and the next report to the Energy Community Secretariat will show a lack of progress in Ukraine's priority tasks in the oil sector. For the fourth time, the deadline for submission to the Verkhovna Rada of the draft new Subsoil Code (Directive 94/22 / EC) has been postponed, and the Ministry of Environmental Protection has already twice reported on the adoption of amendments to the State Regulatory Service's three rejections of procedures for granting permits for use of subsoil, "- said the expert.

The control of the quality of petroleum products remains an acute problem, since none of the state supervision bodies (control) does not want to be responsible for the organization of an effective system for checking the quality and safety of petroleum products (Directive 99/32 / EC).

BUSINESS CLIMATE

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The State Aid Portal, developed by the Antimonopoly Committee of Ukraine (AMCU), has begun work with a delay and is inactive in the frame of new law About State Aid. This was stated by the expert of the subgroup "Business Climate" of the coalition "Energy Reforms" - Oleksandra Gumeniuk.

"The AMCU has launched the State Aid Portal in the past year, however, it began to fill in the information only in the spring. Within a few months of work on the Portal, there were only about five records of the cases begun, "- added the expert.

Also, according to Oleksandra Gumeniuk, due to the delayed completion of the special examination of candidates by the Presidential Administration, the competition for the selection of members of the Regulator was substantially delayed. Thus, within 67 days the Commission did not have a quorum for making decisions.

In February, the Law "On the Audit of Financial Reporting and Auditing" was adopted, which determines the basis of its conduct according to the European model. In March,two laws came into force - About Privatization and About Limited Liability Companies. Both are aimed at increasing investment attractiveness and reducing all kinds of risks in conducting business.

The publication was created within the framework of the project "Increasing the Civil Society Impact on Monitoring and Policy Dialogue on Energy and Related Sector Reforms in Implementation of the Association Agreement", which is implemented with the financial support of the European Union and co-financing of the International Renaissance Foundation.

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