This publication was prepared with the support of the European Union. The contents of this publication are the sole responsibility of NGO “DIXI GROUP”, as well as Civil Network “OPORA”, All-Ukrainian NGO “Energy Association of Ukraine”, Resource & Analysis Center “Society and Environment”, Association “European-Ukrainian Energy Agency”, and can under no circumstances be regarded as reflecting the position of the European Union.
The project “Enhancing impact of civil society in monitoring and policy dialogue on energy and related sectors’ reforms in line with the Association Agreement implementation” aims at strengthening the role of civil society in advocating reforms in the energy and related sectors. The key objectives of the project are: • monitoring of the implementation of the energy provisions of the Association Agreement, including relevant environmental and trade-related commitments; • strengthening the civic experts’ and local actors’ capacity to track actual implementation of the reforms; • facilitation of public dialog to lead in proper implementation of the European energy and environmental reforms; • informing stakeholders and the Ukrainian society about the meaning and potential benefits of European reforms in energy and related sectors in order to empower them to keep the government accountable for pursuing these reforms. www.enref.org
Executive Summary Despite some positive developments in the gas sector legislative process in June, experts are still waiting for breakthrough steps that can significantly change the situation and create a competitive gas market and energy independence. In the electricity sector, the month was not short of events, including those related to the entry into force of the Electricity Market Law. In particular, the development of bylaws is underway. Also, Ukrenergo and ENTSO-E signed an agreement on the conditions for the future synchronization of the power systems of Ukraine and Moldova with the energy system of Europe. The government also worked on issues related to the construction of facilities for spent nuclear fuel and life extension of certain nuclear reactors. In the energy efficiency sector, experts notice a significant breakthrough in the adoption of necessary legislation. In particular, the adopted laws include the laws on the Energy Efficiency Fund, on commercial metering of utility services, and on energy performance of buildings. Apart from that, four technical regulations on energy labeling of household appliances were approved. At the same time, experts emphasize the need to continue work on the development and adoption of regulations that will implement the relevant legislation. Experts in the environment and renewable energy sources termed the President's signing of the law "On Environmental Impact Assessment" the greatest success of the month. They draw attention to the need to continue work to implement the provisions of this law. Experts also notice some restrained interest of investors in the renewables sector and its projects, calling the government for more active steps to be taken in that field. Experts in oil and oil products sector point to the adoption of the rules for the development of oil and gas fields, improvement of the procedure for granting special permits for subsoil use, and intensified efforts to choose a model for the formation and maintenance of the minimum stocks of crude oil and/or petroleum products. At the same time, they draw attention to delays in fulfilling a number of commitments. As regards business climate, experts notice some progress in the work on a number of initiatives, including the draft Energy Strategy, as well as a number of draft sectoral legislative acts. In addition, a Priority Action Plan for Industrial Development, which includes the energy aspect, was developed.
Most commonly used abbreviations: AA – Association Agreement CCSUP – Complex (Consolidated) Safety Upgrade Program of Power Units of Ukrainian Nuclear Power Plants CHP – combined heat and power plant CMU – Cabinet of Ministers of Ukraine CSNFSF – Centralized Spent Nuclear Fuel Storage Facility DHU – district heating utility DSO – distribution system operator ENTSO-E – European Network of Transmission System Operators for Electricity ESCO – energy service companies FEC – fuel and energy complex GDS – gas distribution systems GTS – gas transportation system
HUS – housing and utility services LRA – legislative and regulatory acts MECI – Ministry of Energy and Coal Industry of Ukraine Naftogaz – National Joint-Stock Company Naftogaz of Ukraine NEURC – National Energy and Utilities Regulatory Commission RNPP – Rivne Nuclear Power Plant SAEE – State Agency on Energy Efficiency and Energy Saving SNRIU – State Nuclear Regulatory Inspectorate of Ukraine TPP – thermal power plant TSO – transmission system operator UES – United Energy System of Ukraine VRU – Verkhovna Rada of Ukraine WANO - World Association of Nuclear Operators YuUNPP – Yuzhno-Ukrainsk Nuclear Power Plant
20 ELECTRICITY AND NUCLEAR SAFETY
30 ENERGY EFFICIENCY AND SOCIAL ISSUES
12 ENVIRONMENT AND RENEWABLE ENERGY SOURCES
40 BUSINESS CLIMATE
Gas The adoption of the law on commercial metering of utility services, which include gas supply, broke in late June the nearly six-month standstill, during which the Parliament produced no gas-related laws. In addition, MPs registered two new legislative initiatives in June. Meanwhile, the Cabinet of Ministers presented to lawmakers the approved version of updated Energy Strategy, approved the preparation plan for the next heating season (2017-2018) and the plan to transfer gas transmission assets to a new TSO. At the same time, a dispute is underway between Naftogaz and the Ministry of Energy and Coal Industry over the GTS development and modernization plan. The NEURC continued to issue to market players new licenses for gas supply and distribution, and also issued a draft resolution on amendments to the standard gas storage agreement. In our opinion, this year's realities - the slowed down legislative support for reforms, delayed Naftogaz reform (pending the Stockholm arbitration awards), speed of Russia's promotion of the Nord Stream 2 project (with the support of certain European business circles), delay in granting active state support to increase domestic gas production - posing a point-blank question to the nation: if these gaps are not bridged by the end of the year and first steps are not made to implement a series of "saving" ideas, including actual involvement of European partners in GTS management and organization of spot market (gas hub), Ukraine risks missing a crucial opportunity to become a sufficiently energy independent state and to get a developed and truly competitive gas market. Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (Article 338, 341, Annex XXVII to the Association Agreement) in accordance with Article 278 of the Association Agreement In the last week of June's plenary sessions, MPs finally adopted the law on general rules for commercial metering of utility services, including gas supply (No. 4901 1), a draft registered back in the summer of 2016 in pursuance of Ukraine's commitments under the AA and returned in May 2017 for a repeated second reading. In the gas sector, the law regulates the liability and fines for breaching the gas consumption and accounting rules, and introduces a procedure and sources of financing the maintenance, calibration, and repair of gas metering devices. However, as early as June 23, that is, the next day right after the adoption of this law, a draft VRU resolution was registered (No. 4901-Đ&#x; 2) proposing to reverse the decision on its adoption. In June, MPs registered two new draft laws. Draft Law No. 6583 3 concerns amendments to the law "On the Natural Gas Market" to the extent related to the functioning of the gas distribution system. The draft law proposes to establish that the GDS may only be in state or communal ownership. Accordingly, DSOs may only be business entities 100 percent of whose corporate rights belong to the the government or a territorial community. If this law is adopted, such systems that are in private hands will be bought back from their private owners after a required GDS inventory.
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59553 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=62124 3 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=62018 1 2
Gas Draft Law No. 6547 4 is designed to supplement the provisions of the law on the specifics of access to information in the fields of power supply, natural gas supply, etc., to achieve full transparency in the supply and improve the protection of consumer rights and interests. First of all, the document proposes to extend the list of types of information, access to which is granted to consumers, information about cash payments and liabilities of service providers (gas suppliers), as well as about the latter's revenues. On June 7, at the VRU Committee on Fuel and Energy Complex (FEC), the Ministry of Energy and Coal Industry gave a presentation of a draft approved by the Cabinet of Ministers' Governing Committee 5 of updated Energy Strategy of Ukraine until 2035 6, which sets 3 stages for achieving the strategic goals. Stage One energy sector reform - scheduled for completion by 2020. In presenting the document, Minister I. Nasalyk7 stressed that one of the strategy's priority tasks is to fulfill the requirements of the Third Energy Package, which Ukraine implements as part of its obligations under the Treaty establishing the Energy Community. The government has a vision of how to implement the reforms envisaged by the strategy, in particular, how to reform Naftogaz after the Stockholm court renders its award and how to ensure energy security for Ukraine in the gas sector by 2020, as reflected in the comments given by Vice Prime Minister V. Kistion8. In his words, the preparatory stage of creation of a new gas transmission operator separate from Naftogaz (MGU PJSC, an already existing company with a legal entity status approved by the Cabinet of Ministers 9) is nearing completion. Over the past four months, the government working group has prepared a list of assets, which Ukrtransgaz will have to transfer to MGU, and completed their preliminary analysis. Members of the Cabinet of Ministers unanimously approved the assets transfer plan at a government meeting of June 14, 2017 10. According to the plan, at the first stage MGU will receive both gas pipelines and underground gas storage facilities as a single technological complex and the transfer of these assets will take place upon completion of the arbitration proceedings in Stockholm. The European Commission believes that without the actual separation of the TSO from Naftogaz a fullfledged gas market is not possible in Ukraine and calls for acceleration of the unbundling process. This opinion was once again voiced by European Commission representative T. Woellert (head of the energy subgroup, Support Group for Ukraine) during a speech at the VII National Expert Forum, which took place in Kyiv on June 15. 11. According to Naftogaz, due to delays on the part of the government (which, as Naftogaz says in its statement 12, "... has not only failed to complete the implementation of the corporate management plan of the new operator, but it has failed to even start its implementation"), one of the most pressing tasks related to management of the new operator is now in standstill, and this is the preparation of plans for the development of the GTS, in particular, its modernization. This standard function of a European gas transmission operator, which neither Ukrtransgaz nor Naftogaz currently performs, may be implemented before we see a Stockholm arbitration award on the transit contract. In the end, according to the company's press release13, Naftogaz decided to use its own resources to develop a modernization plan for Ukraine's GTS.
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=61957 http://www.kmu.gov.ua/control/publish/article?art_id=250006624 6 http://iportal.rada.gov.ua/news/Novyny/145757.html 7 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245214747&cat_id=35109 8 http://www.kmu.gov.ua/control/publish/article?art_id=250085071 9 Full name - Public Joint Stock Company â€œMahistralni Gazoprovody Ukrainyâ€? 10 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245216554&cat_id=35109 11 https://lb.ua/economics/2017/06/15/369126_ukraine_nuzhno_razdelenie_funktsiy.html 12 http://www.naftogaz.com/www/3/nakweb.nsf/0/3672AF2094E036BAC2258148002E5D4D?OpenDocument&year=2017&month =06&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 13 Ibid 4 5
Gas On the other hand, the Ministry of Energy and Coal Industry insists14 that there is no delay in the implementation of the government's GTS reform plan, and the working subgroup, whose mission is to ensure that MGU is able to perform the functions of new TSO, makes all necessary decisions in a timely manner. In addition, "â€Śthe sectoral department ofthe ministry has already worked out a long-term plan for the development and modernization of Ukraine's gas transportation network." Supporting Naftogaz, the Cabinet of Ministers allowed the company in June to draw UAH 3.5 billion in domestic short-term loans from Ukrgazbank JSB to purchase natural gas and cover cash gaps (instruction No. 377-p 15). For its part, the EBRD made up a list of European suppliers that would take part in tender completions for contracts to supply gas to Naftogaz in 2017-2018 to be purchased for the funds borrowed from this bank 16. Three companies have been preliminarily and unconditionally qualified for this. These are CEZ A.S. (Czech Republic), ENGIE SA (France), and PGNiG SA (Poland). Eleven more companies have passed the qualification procedure conditionally, including Axpo Trading AG (Switzerland), EDF Trading Ltd (UK), Eni trading & shipping S.p.A (Italy), to name just a few. As reported earlier17, Naftogaz plans to make purchases on the European market through its subsidiary, Naftogaz Trading Europe SA (Switzerland). By another resolution, the government changed the principle of formation of the auction committee for exchange auctions to sell crude oil, gas condensate of domestic production, and liquefied gas 18. In particular, Naftogaz representatives were excluded from its membership, and now the committee will be made up of representatives of the Ministry of Economy and the Ministry of Energy and Coal Industry. The government stresses that the decision will improve the auction committee's impartiality. In the meantime, the Ministry of Economy published a draft CMU resolution 19, providing a permanent distribution mechanism for funds credited to the special regime current accounts of gas suppliers bound by special duties, for natural gas consumed by household consumers and religious organizations. As the government expects, this will regulate settlements and keep in check arrears of Naftogaz's contractors. The NEURC continued its campaign of re-issue and issue of new licenses based on the new licensing conditions (set out in Resolution No. 201 dated February 16, 2017) for natural gas supply and distribution (the regulator adopted almost two dozen relevant regulations). In particular, a license to supply gas on Ukraine's domestic market was granted to Trafigura Ukraine, a recently created subsidiary of Trafigura, one of the world's major energy traders (Resolution No. 773 20). In addition, in June, another international trader, MET Holding AG from Switzerland decided to enter and operate on Ukraine's domestic market 21. According to the media 22, the subsidiary company MET Ukraine was registered for natural gas operations in Ukraine. Parallel to this, the NEURC published a new draft resolution on amendments to the standard agreement for natural gas storage (injection, withdrawal) 23, which are intended to improve the terms and conditions of the agreement with the ultimate purpose of involving European partners in using the infrastructure of Ukraine's GTS, in particular, gas storage facilities. The key changes proposed concern the possibility to have resort to international arbitration institutions to defend the interests and rights of non-residents cooperating in Ukraine with residents at gas storage facilities. http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245218751&cat_id=35109 http://www.kmu.gov.ua/control/ru/cardnpd?docid=250050186 16 http://www.ebrd.com/work-with-us/procurement/project-procurement.html 17 http://oilnews.com.ua/a/news/Naftogaz_obnovil_rukovodstvo_shveytsarskoy_dochki_pod_nachalo_treydinga/227613 18 http://zakon2.rada.gov.ua/laws/show/422-2017-%D0%BF 19 http://me.gov.ua/Documents/Detail?lang=uk-UA&id=b2c548af-8bab-4777-8d014363b6d49f4d&title=ProektPostanoviKabinetuMinistrivUkrainiproVnesenniaZminDoPostanoviKabinetuMinistrivUkrainiVid26Kvitnia2017-R-N29620 http://www.nerc.gov.ua/?id=25891 21 So, the following companies are already present on Ukraine's gas market: Engie, Trailstone, Shell, Trafigura, SOCAR, and MET. 22 http://biz.liga.net/all/tek/novosti/3687306-ocherednoy-mezhdunarodnyy-gazovyy-treyder-zashel-v-ukrainu.htm 23 http://www.nerc.gov.ua/?id=25570 14 15
Gas Currently, the NEURC is studying the possibility of modifying the previously adopted methodology of payment for gas distribution, which contains such component as payment for the cost of "exit" from trunk pipelines, according to O. Kryvenko, deputy director of the department for regulation of relations in the oil and gas sector, who said this at the June 18 meeting of the Coordination Platform of DSOs of the Energy Community in Odessa 24. The goal is to reduce the natural gas distribution tariff by shifting payments for exit points from gas consumers to gas suppliers. In June, the NEURC also held a public discussion considering global tariffication practices in natural gas distribution, the advantages and disadvantages of specific models25. According to Naftogaz' consolidated report for 2016 26, the Naftogaz group of companies made UAH 22.5 billion in net profit and paid UAH 74 billion in taxes to the state budget. In addition, according to the press service of Naftogaz 27, the company paid in June 2017 to the state budget UAH 13.3 billion in dividends for 2016. On June 22, Naftogaz was denied the distrainment of the bank accounts of the Odesa Portside Plant, one of the company's major industrial debtors (Ruling No. 916/188/17 of the Odesa Oblast Commercial Court 28). It should be noted that Naftogaz filed a lawsuit within the amount of the debt for natural gas for UAH 1.47 billion (the arrears of direct industrial consumers, DHU and CHP enterprises, to Naftogaz totaled approximately UAH 31.6 billion as of June 27 29). As from July 1, Naftogaz reduced by 3 percent its gas prices for industrial and other consumers that are not subject to the Regulations on Imposing Special Duties, as compared with the prices of June 2017 30. According to the new price list 31, the price for gas as a commodity (inclusive of VAT) is set from July 1, 2017 as follows: for monthly gas consumption of up to 50,000 cubic meters inclusive, unregulated monthly consumption, and monthly consumption exceeding 50,000 cubic meters without prepayment - UAH 8,008.80 per tcm; and for monthly consumption exceeding 50,000 cubic meters with prepayment 32 â€“ UAH 7,208.40 per tcm. Regulation (EU) No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005 (Articles 338, 341, Annex XXVII to the Association Agreement) in accordance with Article 278 of the Association Agreement, trade-related issues (Articles 269-274 of the Association Agreement) Despite any obstacles, the European Commission will continue supporting Ukraine in its efforts to implement reforms in the energy and gas sectors, in particular. This conclusion can be drawn from the discussion of the report presented by Deputy Minister of Energy and Coal Industry for European Integration N. Boyko in Brussels at a coordination meeting of the EU Member States and Norway on this matter33. In its gas-related part, the report raised before the meeting participants first of all the issue of Ukraine's acquisition of a fullyfledged competitive gas market and whose key tasks remain to be: the achievement of actual TSO independence, a task propelled by support from cooperation with ENTSO-G and still experiencing a drag from the incomplete reform of Naftogaz, and the burning need to modernize Ukraine's GTS to save Ukraine's role http://ua.interfax.com.ua/news/general/429979.html http://www.nerc.gov.ua/index.php?news=6139 26 http://www.naftogaz.com/www/3/nakweb.nsf/0/E76CFF0BABBFED13C225813A002E6A2E?OpenDocument&year=2017&month=06 &nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 27 http://www.naftogaz.com/www/3/nakweb.nsf/0/04AF2A6EF47927FCC225814C0021F184?OpenDocument&year=2017&month= 06&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 28 http://reyestr.court.gov.ua/Review/67348495 29 http://www.naftogaz.com/www/3/nakweb.nsf/0/0CB747C82D7C9697C225814E003A18A6?OpenDocument&year=2017&month =06&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 30 http://www.naftogaz.com/www/3/nakweb.nsf/0/1681D8171B7D55E5C2258145003AABD3?OpenDocument&year=2017&month =06&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 31 http://www.naftogaz.com/files/Information/Naftogaz-gas-prices-July-ne-PSO-2017.pdf 32 Payments made within the calendar month preceding the month of gas supply 33 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245214079&cat_id=35109 24 25
Gas as a reliable transit partner delivering natural gas to the EU countries, apart from pure observance of the principle of European solidarity. A similar case - how Kyiv and Warsaw should cooperate in the field of gas transportation for the benefit of the European community to be able to jointly prevent Russia's monopoly of gas supply to Europe in the event of successful implementation of the Nord Stream 2 project - was raised at the top of the agenda at the second Poland-Ukraine gas conference in Warsaw34. According to Deputy Energy Minister I. Prokopiv, the answer is to create a joint Ukrainian-Polish gas hub on the basis of the infrastructure most of which is now available 35 and needs the Ukraine-Poland interconnector as an important additional element36. S. Makogon, Vice CEO of the present operator of Ukraine's GTS, Ukrtransgaz37, is of the same opinion, saying that Ukraine and Poland may need five years to launch a gas market for the countries of Central and Eastern Europe, thus diversifying their gas supplies and enabling them to purchase gas in this hub at a price lower than that offered in Western European hubs. Vice Minister of Energy of Poland M. Kurtyka has said that in order to have a full-fledged hub, access to gas from different directions is needed (not only from Russia): through the LNG terminal, the Northern Gate pipeline from Norway to Poland, "a series of interconnectors that will join Poland to the Central European countries and Ukraine." R. Storozhev, chairman of the association "Subsoil Users of Ukraine," claims38 that radical legislative changes have already become imminent in the way of the gas sector's integration into the European space and will be implemented by the end of 2017, and, as a result, a gas hub on the territory of Ukraine will become a matter of the near future. According to him, at the moment, Ukrtransgaz is preparing for launch a digital platform that will provide new ways of organizing and administering the process of natural gas trade and supply, factoring in the requirements of the EU daily balancing regulations. Directive 2004/67/EC concerning measures to safeguard security of natural gas supply (Articles 338, 341, Annex XXVII to the Association Agreement), functioning of an "Early Warning Mechanism" (Annex XXVI to the Association Agreement), reacting to an emergency situation (Articles 275-276, 309, and 314 of the AA) With the purpose of ensuring stable operation of the energy system, the government approved the Plan of Measures to Prepare the Fuel and Energy Complex of Ukraine for the Autumn-Winter Period of 2017-2018 (Instruction No. 410-Ń€39). The plan covers the obligation of the Ministry of Energy and Coal Industry to organize and control the accumulation of necessary energy resources, in particular to have natural gas reserves amounting to 17 billion cubic meters as of November 1, 2017 40. The Ministry of Energy and Coal Industry is also working to strengthen the protection of critical infrastructure, including through increased cooperation with the NATO Energy Security Center 41. Work is underway on the possibility to join the Center as a member country. In June, the Ministry of Energy and Coal Industry made public its 2016 report on the results of security monitoring of natural gas supply, and taken or planned measures on these issues 42. The document was http://mpe.kmu.gov.ua/minugol/control/publish/article?art_id=245214058 Some 14-17 bcm of gas will be injected into Ukrainian gas storage facilities, whereas their total capacity is 30 bcm 36 According to the Ministry of Energy and Coal Industry (http://biz.liga.net/ekonomika/tek/novosti/3682274-gaz-iz-polshi-i-rumyniiminenergo-obyasnilo-kak-oboytis-bez-rf.htm), there is agreement with the Polish side that the Ukraine-Poland interconnector will be launched in late 2020 - early 2021, increasing the throughput capacity for possible gas supply from Poland from the present 1.5 bcm to 7 bcm of gas per year (the capacity of the route from Ukraine to Poland is currently totaling 1 bcm per year). 37 https://economics.unian.ua/energetics/1962331-ukrajina-i-polscha-planuyut-protyagom-5-rokiv-stvoriti-evropeyskiy-gazoviy-hab.html 38 http://blog.liga.net/user/rstorozhev/article/27353.aspx 39 http://www.kmu.gov.ua/control/uk/cardnpd?docid=250076520 40 According to Ukrtransgaz (http://utg.ua/utg/media/news/2017/06/utg-stored-11-bcm.html), the rate of injection of natural gas into underground storage facilities in June tripled, resulting in a total of 11 bcm of gas accumulated as of June 20, 2017, up 15 percent from last year's amount as of the same date. 41 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245213369&cat_id=35109 42 http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=245215124 34 35
Gas prepared with the participation of Ukrtransgaz PJSC in accordance with the requirements of Article 29 of the Treaty establishing the Energy Community, Article 7 of the Law "On the Natural Gas Market," and the National Action Plan and Rules on Security of Natural Gas Supply. In an effort to broaden its opportunities for cooperation with European companies, Ukrtransgaz PJSC set up a "customs warehouse" in June on its ten gas storage facilities43 (entered into the Register of Customs Warehouses of the State Fiscal Service under No. лю/0487/V/00). Previously, natural gas could be admitted to Ukraine for storage in UGS (underground gas storage) without customs clearance only in the "transit" status, that is, for 31 days only. The "warehouse" status allows traders to store natural gas in Ukraine's UGS without customs clearance for more than 1,000 days. However, in our opinion, this move of Ukrtransgaz is unlikely to seriously affect the demand of Europeans for the services of gas storage in Ukraine's UGS, given the high entry and exit tariffs of Ukraine's GTS in comparison with the European average. As regards improved gas supply security, the government plans to achieve it primarily through increased domestic gas production (as envisaged in the 20/20 plan of the Gas Industry Development Concept adopted in 2016). Recognizing some positive trends in this sector 44, V. Kistion stressed the need to intensify the modernization of Ukrgazvydobuvannya and prospecting and exploration efforts. At the same time, the accounts of this largest gas-production company in Ukraine have been blocked for about a month, following a May 24, 2017 decision of the Kyiv City Commercial Court on a claim by Arab Energy Alliance LLC, which the company immediately appealed against 45. As the Ukrgazvydobuvannya management states in their address to the President of Ukraine, the Cabinet of Ministers and the Verkhovna Rada 46, the distrainment of the accounts "harms the production activities" of the company and "blocks its operation." The company calls on all parties to comply with applicable law and demands that the distrainment of the accounts be lifted. According to media reports of June 6 47, the Russian monopolist Gazprom and European companies 48 agreed to finance Nord Stream-2. The partners signed an agreement on deficit financing of the project for the amount of up to USD 6.65 billion in case of insufficient funding of the project. The agreement will be in force for 15 years from the first date of project financing, that is, from January 1, 2020. The maximum amount of loan under the agreement, including interest, will not exceed 70 percent of the total cost of the project. In spring, Gazprom claimed that the project partners, European energy companies, would provide the company Nord Stream-2 AG with long-term financing of 50 percent of the cost of the Nord Stream 2 gas pipeline49. At the same time, it became known on June 650 that Gazprom was not admitted to the hearing of Ukraine's lawsuit regarding the OPAL gas pipeline in the European Court. The European Commission submitted a request to the EU Council for a mandate for negotiations with the Russian Federation to clarify the key principles of operation of the Nord Stream-2 gas pipeline and its impact on the security of gas supply to Europe 51. The mandate was granted to the European Commission, thanks to the support of 13 EU member states 52. At the same time, at the conference "The Role of Ukraine as a Strategic Energy Partner of the EU", held in Brussels53, a member of the European Parliament from Poland, J. Buzek,
http://utg.ua/utg/media/news/2017/06/ukrtransgaz-vidkruvae-sklad-dla-treideriv.html According to a Naftogaz press release of May 18, 2017, the gas output increased over the 4.5 months of the current year by 78 mcm. This growth exceeds the growth in domestic gas output for the whole year of 2016, which totaled 77 mcm. 45 http://ugv.com.ua/press/news/66567-rahunky-zalyshautsya-zablokovanymy 46 http://ugv.com.ua/press/news/66642-zvernennya-do-kerivnyztva-krayny 47 http://ru.reuters.com/article/businessNews/idRUKBN18X0QI-ORUBS 48 The partners of Gazprom PJSC in the Nord Stream-2 project are Uniper, Royal Dutch Shell, Engie, OMV, and Wintershall 49 http://biz.liga.net/keysy/tek/novosti/3654277-evropeyskie-kompanii-profinansiruyut-severnyy-potok-2-na-50.htm 50 https://economics.unian.ua/energetics/1960409-gazprom-ne-dopustili-do-rozglyadu-pozovu-ukrajini-po-gazoprovodu-opal-vevropeyskomu-sudi.html 51 http://europa.eu/rapid/press-release_IP-17-1571_en.htm 52 http://europa.eu/rapid/press-release_IP-17-1571_en.htm 53 http://www.polradio.pl/5/38/Artykul/313001 43 44
Gas stressed that the European Parliament would participate in further "... consultations and monitor the situation surrounding the European Commission's mandate regarding Nord Stream-2 54. June 8, 2017 can be considered a historic day. That is the date of delivery of the first batch of liquefied natural gas from the United States to Poland's LNG terminal in Świnoujście55. The carrier that brought the gas to Poland from the state of Louisiana was the company Cheniere Energy. Thus, having diversified its gas supply, Poland implements the idea of national energy security. By joining the capacity expansion of the common gas transportation infrastructure, Ukraine may potentially also become a beneficiary here, receiving American gas from Poland. Incidentally, the US believes56 it can become a global LNG supplier and over the period of 2016-2040, its gas exports may bring USD 118 billion in revenues to the US federal budget. In addition to using gas pipelines in Poland and sharing common infrastructure, Ukraine will have another opportunity to strengthen its energy security in the gas supply sector - future supply of Norwegian gas (from 2022) 57, M. Biliavskyi, advisor to Energy Minister, so commented on the signing of a memorandum between Poland and Denmark on cooperation in the field of gas infrastructure for organizing direct gas supplies from Norway)58. To diversify gas supplies, the government is also ready to take part in the project of new gas corridor "Croatia - Hungary - Ukraine."59 Prime Minister V. Groysman announced this at his talks with Prime Minister of Croatia A. Plenković during his official visit to this country. The project will use the capacity of the LNG terminal on the Croatian coast and potentially envisages not only gas supplies, but also possible merger of the gas transportation systems of the three countries.
http://www.naftogaz.com/www/3/nakweb.nsf/0/2D5BBFEACD2C17E1C225814F003C81CC?OpenDocument&year=2017&month =06&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 55 https://www.ukrinform.ru/rubric-economix/2243872-v-polsu-vpervye-dostavili-szizennyj-gaz-iz-ssa.html 56 https://www.whitehouse.gov/the-press-office/2017/06/27/president-donald-j-trump-unleashes-americas-energy-potential 57 http://www.pravda.com.ua/news/2017/06/11/7146603/ 58 http://biz.liga.net/ekonomika/tek/novosti/3685200-norvezhskiy-gaz-nachnet-postupat-v-ukrainu-s-2022-goda-minenergo.htm 59 http://www.kmu.gov.ua/control/publish/article?art_id=250061842 54
total score: 58
75 Degree of transposition of EU legislation into Ukraineâ€™s law
45 Degree of independence of TSOs/SSOs
40 Independence degree of DSOs
54 Degree of market openness
Not applicable Presence of clearly regulated supplier change mechanisms
70 Degree of dependence on imported gas and diversification of imports
100 Impact of supply interruptions
20 Status of settlements
Gas Evaluation of Ukraine's progress: 58 of 100 The degree of transposition of EU legislation is high. In particular, the adoption of the Law "On Commercial Metering of Utility Services" was registered as a progress step, as well as the regulator's efforts to improve the codes and to switch to gas metering in units of energy. At the same time, there is a lack of adaptation of the entire legislation to the Law "On the Natural Gas Market," as well as NEURC resolutions regarding programs of compliance and functional separation of GDS and GTS operators. The plan for restructuring NJSC Naftogaz of Ukraine to unbundle natural gas transportation and storage (injection, withdrawal) operations is halfway through its implementation. In particular, the government approved the plan of assets transfer to the new GTS operator and also put forth a draft law on continued corporate governance reform. However, the assets are yet to be transferred since the Stockholm arbitration award in the case of Naftogaz against Gazprom regarding the gas transit contract is delayed at least until the fall. GDN operators generally comply with the legislation on operations unbundling and non-discriminatory access to the networks. Of the 11 licensees checked by the NEURC in the first half of 2017, one was found to have breached the legislation on economic competition and other two were accused of crosssubsidization between gas distribution and other activities. At the same time, the majority of licensees have failed to give a clear answer to the question of separate accounting. Only part of the market (about 38 percent) is liberalized, having a high degree of pricing competition. For other market segments - gas supply for households, religious organizations, thermal energy companies the regime of pricing regulation by special duties has been extended (until April 1, 2018). This act is not in line with the market reform obligation as it restricts the said consumers in their ability to choose a supplier. Payment discipline in the regulated market segments has worsened. As of the end of June 2017, the level of settlements closed by DHU and CHPs with Naftogaz was only at 52 percent. To a large extent, the debts are due to a delay in the allocation of appropriate subventions from the State Budget to cover housing and utility bill subsidies. According to the results of the first six months of 2017, the import dependence remains at a level exceeding 40 percent, but the import structure is competitive and diversified, with a large number of suppliers. No cases of gas supply interruption were registered in the reporting period.
Electricity and Nuclear Safety The Electricity Market Law came into force, introducing a new energy market model in accordance with the Third Energy Package and providing a procedure for transition to it. In accordance with the Transitional Provisions of the Law, the regulator unveiled its first regulation related to the Procedure for Certification of the Electricity Transmission System Operator (TSO). Ukrenergo NEC will carry out the TSO functions and is currently getting ready for corporatization. A significant event was the signing of an agreement between ENTSO-E and SE Ukrenergo NEC on the terms of the future unification of the energy systems of Ukraine and Moldova with the continental power grid of Europe. Ukraine's energy companies were not seriously affected by the cyber attack that took place in Ukraine on June 27. The preparation for the 2017-2018 heating season is underway, therefore, the government has been looking for ways to accumulate coal and diversify supplies, in particular, it carried out effective negotiations with the United States. Also, the conversion of the power generating units of Trypilska TPP and Prydniprovska TPP from anthracite to gas-grade coal continued. The Agreement between the Government of Australia and the Government of Ukraine on Cooperation in the Peaceful Uses of Nuclear Energy has come into force. The CMU issued instruction No. 380-p "On Approval of the Project "Construction of a Centralized Storage Facility for Spent Nuclear Fuel from PWR Type Reactors of Domestic Nuclear Power Plants." Much attention was paid to the implementation of measures under the CcSUP and the Program for the Life Extension of Power Units No. 3 of the RNPP and No. 3 of the YuUNPP. The Cabinet of Ministers issued Resolution No. 415 "On Amending Clause 3 of the Procedure for Using the Allocations from the State Budget for Maintenance of an Environmentally Safe Conditions in the Exclusion and Unconditional (Mandatory) Resettlement Zones." Directive 2009/72/EC of July 13, 2009 concerning common rules for the internal market of electricity and repealing Directive 2003/54/EC (Articles 269, Chapter 11, Section IV of the EU-Ukraine Association Agreement) On June 12, the Law "On the Electricity Market" came into force, introducing a new energy market model in accordance with the Third Energy Package and providing a procedure for transition to this model. On June 12, the VRU registered draft amendments to this law (No. 6635), proposing a system of incentive regulation to be applied to the procedure for connecting electrical installations to power grids. 60 The document proposes that part 16 of Article 21 of the Law "On the Electricity Market" be reworded, excluding the mandatory status of the provision that the funds received by the transmission system operator and distribution system operators as a connection fee for the creation (construction) of the linear portion of the power grid connection are subject to refunding to the customer if, after the transfer of the respective transmission system operator, distribution system operator to the incentive regulation, such assets are included by this transmission system operator, distribution system operator in the regulatory base of assets. The document also proposes to amend part 16 of Article 21 so as to provide that the transmission system operator, distribution system operator should refund connection fees charged for the creation (construction) of the linear portion of the power grid connection in equal installments within five years, and not under the procedure established by the NEURC. The authors of this draft are a group of unaffiliated MPs. Regulation 714/2009/EC of July 13, 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation 1228/2003(Articles 271, Chapter 11, Section IV of the EU-Ukraine Association Agreement) On June 19, the Ministry of Energy and Coal Industry held a scheduled meeting of the working group on corporate governance reform of SE Ukrenergo NEC under the chairmanship of Deputy Minister N. Boyko , whose participants approved a draft of new charter of SE Ukrenergo NEC, factoring in proposals from the 60
Electricity and Nuclear Safety Ministry and the donor community. 61 The corporatization of Ukrenergo NEC is needed for the company to obtain the license and become recognized as a system operator. On June 22, SE Ukrenergo NEC and the system operator of the power grid of Slovakia, Slovenská elektrizačná prenosová sústava, a. s. signed a memorandum of understanding and cooperation regarding increasing the throughput between the energy systems of the Slovak Republic and Ukraine, which is to become the basis for a mutually acceptable technical solution to increase by 30 percent the throughput capacity of the 400 kV interstate overhead line running from Velké Kapušany (Slovakia) to Mukachevo (Ukraine). 62 On June 27, an array of Ukrainian enterprises, including Ukrenergo, banks, and Ukrzaliznytsia, as well as the Ministry of Energy and Coal Industry (MECI), sustained cyber attacks that partially paralyzed their operation. MECI Deputy Minister N. Boyko and V. Kovalchuk, acting director of Ukrenergo NEC, told the media that the attacks on computer networks had not affected the functioning of Ukraine's energy system. They also noted that enterprises had a sufficient number of backup channels to control the power grid and safely operate the equipment. 63 On June 28, ENTSO-E and SE Ukrenergo NEC signed in Brussels an agreement on the terms of the future unification of the energy systems of Ukraine and Moldova with the continental power grid of Europe. The procedure requires that the agreement be also signed by Moldelectrica SE and all system operators in the ENTSO-E Regional Group "Continental Europe." 64 The document is in three parts: a catalog of requirements whose unconditional fulfillment is a prerequisite for the decision giving a go-ahead to the unification of the energy systems; a list of necessary additional studies; and a road map. The project will take at least 5 years to implement. Directive 2009/72/EC of July 13, 2009 concerning common rules for the internal market of electricity and repealing Directive 2003/54/EC (Articles 273, Chapter 11, Section IV of the EU-Ukraine Association Agreement) On June 14, the NEURC made public drafts of three resolutions regarding the procedure for tariff setting of electricity produced by CHPs65, NPPs, 66 and HPPs (HPSPPs) 67. Electricity release tariffs of CHPs and NPPs are determined by dividing the amount of planned annual expenses included in the production cost and annual planned profit from electricity generation by the planned annual amount of electricity release. For HPPs (HPSPPs), the electricity release tariff and its structure are determined for a planned term. Electricity release tariffs and their structure are determined by license holders on the basis of their annual electricity production and release plans, planned economically reasonable expenses and other costs, including standard costs, and projected profits. It should be noted that tariff methodologies for electricity producers, adopted by the regulator, should comply with the requirements of Article 6 of the Law of Ukraine "On the Electricity Market," which defines the powers of the NEURC regarding the new market. On June 22, within the framework of the Twinning project, the NEURC held a seminar "Separation and Independence of Distribution System Operators (DSOs). The seminar considered requirements for the separation of DSOs in accordance with the provisions of the directives of the EU's Third Energy Package, Law of Ukraine "On the Electricity Market," role of the energy regulator in the process of DSOs separation and opening of the electricity market, experience and recommendations of the regulator from the Slovak Republic (RONI), etc. 68
http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245217853&cat_id=35109 https://ua.energy/media/pres-tsentr/pres-relizy/ukrenergo-seps-novi-mozhlyvosti-dlya-spilnoyi-torgivli-elektroenergiyeyu/ 63 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245219495&cat_id=35109 64 https://ua.energy/media/pres-tsentr/pres-relizy/pidpysano-ugodu-pro-umovy-obyednannya-energosystem-ukrayiny-tamoldovy-z-energosystemoyu-entso-e/ 65 http://www.nerc.gov.ua/?id=25855 66 http://www.nerc.gov.ua/?id=25852 67 http://www.nerc.gov.ua/?id=25849 68 http://www.nerc.gov.ua/index.php?news=6118 61 62
Electricity and Nuclear Safety On June 30, the NEURC released to the media its draft Procedure for Certification of the Electricity Transmission System Operator. 69 This was the first draft regulation to be made in pursuance of the Law of Ukraine "On the Electricity Market." According to the transitional provisions of the law, the regulator will adopt this document by August 11, 2017. Directive 2009/72/EC of July 13, 2009 concerning common rules for the internal market of electricity and repealing Directive 2003/54/EC (Articles 274, Chapter 11, Section IV of the EU-Ukraine Association Agreement) On June 7, the VRU Committee on FEC watched a presentation of a draft of updated Energy Strategy of Ukraine until 2035. 70 The Committee supported the Energy Strategy draft as a whole and recommended the CMU to adopt it. Article 338, Chapter 1, Section V of the EU-Ukraine Association Agreement. Ukraine-IMF Cooperation Agreements Deputy Minister of Energy and Coal Industry N. Boyko discussed at a coordination meeting of the EU member states and Norway for support of Ukraine's energy sector reform, held in Brussels on June 6, further cooperation within the framework of the Memorandum of Understanding with regard to strategic UA/EU energy partnership; energy and cyber security, electricity market, corporate governance reform of Ukrenergo NEC, integration of Ukraine's UES with the energy system of Europe, and cooperation with ENTSO-E. 71 On June 12 in Copenhagen, O. Buslavets, director of electric energy complex department at the MECI, discussed with the representatives of the Danish Ministry of Foreign Affairs and the Energy Agency of that country the second phase of the Ukraine-Denmark Energy Centre 72, in particular, issues concerning support for the implementation of the New Energy Strategy of Ukraine by 2035 and development of a system of monitoring of its implementation, as well as long-term predictive modeling of energy consumption in accordance with international practices. 73 On June 13, a working meeting was held between NEURC chariman D. Vovk and EBRD Director for Power and Energy H. Boyd-Carpenter and other EBRD representatives on the introduction of long-term agreements for the purchase of electricity from renewable sources, acceptable to investors and creditors; progress in implementing the law on the regulator; and introduction of RAB tariffs for TSO and DSOs of the electric energy sector. 74 On the same day, the NEURC head discussed progress in implementing the law on the regulator with representatives of the Energy Community Secretariat. 75 On June 15, the Agreement between the Government of Australia and the Government of Ukraine on Cooperation in Peaceful Uses of Nuclear Energy came into force, providing for increased uranium production and development of other nuclear fuel components to satisfy the country's own needs for nuclear fuel and reduce its dependence on imports of nuclear fuel for Ukraine's nuclear power plants, as well as development of domestic components of the nuclear fuel production cycle. 76
Article 339, Chapter 1, Section V of the EU-Ukraine Association Agreement, Coal Market For the whole month, all efforts were focused on the accumulation of coal both for passing the summer high and for preparing for the upcoming heating season and conversion of certain TPPs from anthracite http://www.nerc.gov.ua/?news=6162 http://kompek.rada.gov.ua/documents/zasid/73177.html 71 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245214079&cat_id=35109 72 http://www.udec.org.ua/ua/ 73 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245216189&cat_id=35109 74 http://www.nerc.gov.ua/index.php?news=6102 75 http://www.nerc.gov.ua/?news=6101 76 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245216708&cat_id=35109 69 70
Electricity and Nuclear Safety coals to gas groups of coals. The negotiations between Ukraine and the United States on coal supplies also proved fruitful. To save coal of the anthracite group and accumulate for the heating season77, the government on June 14 prolonged the provisional emergency measures on the electricity market 78. Intensive preparations for the autumn-winter period of 2017-2018 is underway, in particular, TPPs and CHPs are accumulating energy coal in their storage facilities. According to the MECI head, the stock of coal as of June 19 amounted to 2.7 million tonnes, including 2.2 million tonnes of gas group of coals and 0.676 million tonnes of anthracite group, up 220,000 tonnes compared to last year's anthracite stocks as of the same date. 79 On June 21, the CMU approved amendments to the 2017 state budget, according to which additional UAH 100 million will be allocated for measures to improve safety of coal mining workers and UAH 280 million for miners' wages. V. Kistion said the government would seek additional resources to provide more substantial support for Ukrainian miners. 80 Taking into account the total deficit of coals of the anthracite group, some TPPs of both state and private ownership started modernization converting their power-generating units from coal of the anthracite group to coal of the gas group. In particular, the power-generating company Tsentrenergo has started to modernize the fourth power unit of the Trypilska TPP. 81 On June 26, the press service of DTEK Energo reported that in the heating season of 2017-2018, DTEK's energy units No. 7 and No. 8 of the Prydniprovska TPP would produce electricity and heat, operating on coals of the gas group, and, for this purpose, design documents were being developed for the conversion of these units to the gas group of coals. 82 In pursuance of the Plan for the Reconstruction and Modernization of Thermal Power Plants and Combined Heat and Power Plants 83 approved by Order No. 221 of the Ministry of Energy and Coal Industry, dated March 22, 2017 and titled "On Approving the Schedule of Reconstructions of Power Units of Power Generating Companies' Thermal Power Plants in Accordance with Section II of CMU Instruction No. 648 of September 08, 2004 in 2017 - 2019," 84 Donbasenergo, a power generating company, plans to complete the construction of two new power units at the Slovyanska TPP in 2022-2023, which will work on gas-grade coal, according to media reports. The project will cost approximately USD 716 million. 85 In line with the rise of outside temperature, electricity consumption has increased. DTEK reported readiness of its anthracite coal thermal power plants for the summer high, and therefore, in the second half of June, one of the seven units of the Kryvyi Rih TPP was plugged in to the power grid. The Prydniprovska TPP is also fully ready to activate its power units. 86 According to the media, the U.S. president Donald Trump announced plans 87to export coal to Ukraine. 88 In turn, the acting director of Ukrenergo NEC said on June 30 that Ukraine and the U.S. had agreed on all
http://www.kmu.gov.ua/control/uk/publish/article?art_id=250068332&cat_id=244276429 http://www.kmu.gov.ua/control/ru/cardnpd?docid=250076430 79 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245217780&cat_id=35109 80 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250094752&cat_id=244276429 81 https://economics.unian.ua/energetics/1964851-odin-z-blokiv-tripilskoji-tes-perevedut-na-gazove-vugillya-poroshenko.html 82 http://energo.dtek.com/media-center/press/dtek-pridneprovskaya-tes-perekhodit-na-gazovyy-ugol-uvelichenie-vybrosov-vatmosferu-ne-ozhidaetsya/ 83 http://zakon2.rada.gov.ua/laws/show/133-2017-%D1%80/paran12#n12 84 http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=245199572 85 https://economics.unian.ua/energetics/2002806-na-dva-novi-bloki-na-gazovomu-vugilli-slovyanskoji-tes-vitratyat-pyat-rokiv-i716-milyoniv.html 86 https://economics.unian.ua/energetics/2002079-v-ahmetova-zayavili-pro-gotovnist-svojih-antratsitovih-tes-do-litnogo-pikuspojivannya-elektroenergiji.html 87 https://www.bloomberg.com/news/articles/2017-06-29/trump-said-to-tout-coal-projects-nuclear-aid-in-energy-week 88 https://www.rbc.ua/ukr/news/ssha-budet-postavlyat-ugol-ukraine-tramp-1498791719.html 77 78
Electricity and Nuclear Safety details of the agreement and Ukraine should expect the first 120,000 tonnes of coal from the U.S. by August.89 According to Interfax-Ukraine, to prevent coal supplies from the occupied territories to other countries, the MECI prepared and sent a letter to the Ministry of Foreign Affairs of Ukraine, asking Ukraine's embassies in Turkey, the Netherlands, Spain, Moldova, Bulgaria, Belgium, Poland, and Romania to warn everybody of the risk of illegal coal supplies to these countries from the separate districts of Donetsk and Luhansk regions. 90
Article 342, Chapter 1, Section V of the EU-Ukraine Association Agreement, Nuclear Cooperation, Council Directive 2014/87/Euratom, Council Directive 2013/59/Euratom, Council Directive 2006/117/Euratom On June 7, the government issued CMU Instruction No. 380-p "On Approval of the Project "Construction of a Centralized Storage Facility for Spent Nuclear Fuel from PWR Type Reactors of Domestic Nuclear Power Plants." 91 The CSNFSF construction is underway in cooperation with Energoatom and financial institutions. In this connection, MECI representatives met on June 8 with representatives of the Bank of America Merril Lynch, the Overseas Private Investment Corporation (OPIC), and the U.S. Embassy in Ukraine to discuss the implementation of this project. 92 In June, measures were carried out at energy units No. 3 of the Rivne NPP (RNPP) and No. 3 of the YuzhnoUkrainsk NPP (YuUNPP) within the framework of the Life Extension Program (LEP) and the CcSUP for NPP power units. The LEP program has 96 measures planned for implementation at the RNPP, of which 49 have already been implemented. Also, it will be necessary to fully implement 33 more CcSUP measures before the decision to extend the service life of unit No. 3 of the RNPP.93 At Unit No. 3 of the YuUNPP, the autonomous air conditioners were replaced with air conditioners qualified for harsh operating conditions and seismic activity. 94 To control the fulfillment of the CCSUP measures, EBRD consultants-inspectors visited on June 27 the YuUNPP site. The inspection found no problems. 95 The Zaporizhzhya NPP has started preparations for the project of integration of the United Energy System of Ukraine with the united energy systems of the EU countries. In particular, modernization of the relevant equipment is already scheduled at power unit No. 3, with the outlook for participation in the initial regulation of the frequency and wattage during parallel operation with the power grids. 96 To further improve the safety and reliability of the nuclear power plant, the Khmelnytskyi NPP received on June 13-16 a technical support mission of the WANO to discuss radiation protection and radiation pollution monitoring, as well as development of recommendations for improving the operation of the NPP in these areas. 97 International IAEA ConvEx-3 training sessions were held on June 21-22 under a scenario of make-believe severe accident at the Paks NPP (Hungary) in pursuance of the obligations assumed under the Convention on Early Notification of a Nuclear Accident and the Convention on Assistance in the Case of a Nuclear https://www.rbc.ua/ukr/news/pervaya-partiya-uglya-ssha-pribudet-ukrainu-1498807936.html http://ua.interfax.com.ua/news/general/428645.html 91 http://zakon3.rada.gov.ua/laws/show/380-2017-%D1%80 92 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245215470&cat_id=35109 93 http://www.energoatom.kiev.ua/ua/press/nngc/46814na_raes_vdbulas_perevrka_stanu_robt_z_prodovjennya_termnu_ekspluatatc_energobloku_/ 94 http://www.energoatom.kiev.ua/ua/press/nngc/46840-na_energoblotc__yuuaes_provoditsya_zamna_konditconerv/ 95 http://www.energoatom.kiev.ua/ua/press/nngc/46865yujnoukransku_aes_z_metoyu_kontrolyu_vikonannya_zahodv_kzpb_vdvdali_konsultantinspektori_brr/ 96 http://www.energoatom.kiev.ua/ua/press/nngc/46815na_energoblotc__zaes_provoditsya_modernzatcya_obladnannya_z_metoyu_uchast_v_pervinnomu_regulyuvann_chastoti__pot ujnost_pri_paralelnyi_robot_z_energosistemoyu_s/ 97 http://www.energoatom.kiev.ua/ua/press/nngc/46827na_hmelnitckyi_aes_zavershila_robotu_msya_tehnchno_pdtrimki_vao_aes/ 89 90
Electricity and Nuclear Safety Accident or Radiological Emergency and in relation to mechanisms of emergency information exchange among IAEA Member States, procedures for requesting assistance and assistance provision, and coordinated assessment, forecasting, and public information. The purpose of the training was to test and check the full-scale operation of the international emergency preparedness and response system. 98 SNRIU specialists and experts of the SSTC NRS took part in the training sessions in real time. 99 As regards diversification of nuclear fuel supply sources, Energoatom reported its preliminary negotiations with a foreign company that expressed the desire to enter Ukraine's market.100 At the same time, the President of Ukraine P. Poroshenko announced that already in 2017 Ukraine would reduce nuclear fuel supplies from Russia to 45 percent. 101 In June, Energoatom inspected by itself nuclear fuel TB3-W/WR, using the Fuel Assembly Inspection and Repair Stand (FAIRS), thus saving approximately UAH 7.5 million because earlier such inspections had been provided by Westinghouse specialists. 102
Article 342, Chapter 1, Section V of the EU-Ukraine Association Agreement, Cooperation in the Nuclear Safety Sector. Cooperation aims at resolving problems caused by the Chornobyl accident and putting Chornobyl NPP out of operation On June 14, the CMU issued CMU Instruction No. 395-Ń€ "On Signing Agreement No. 13 on Amendments to Grant Agreement No. 006 (Nuclear Safety Project for the Chornobyl NPP) between the European Bank for Reconstruction and Development as Administrator of the Funds Provided under the Grant Agreement from the Nuclear Safety Account and the Cabinet of Ministers of Ukraine and State Specialized Enterprise "Chornobyl NPP" as Recipient." 103 Also on the same day, the CMU issued Resolution No. 415 "On Amending Clause 3 of the Procedure for Using the Allocations from the State Budget for the Maintenance of Environmentally Safe Conditions in the Exclusion and Unconditional (Mandatory) Resettlement Zones," 104 thereby allocating funds to finance measures to ensure the functioning of the Chornobyl Radiation and Environmental Biosphere Reserve. 105 On June 21, the Cabinet of Ministers approved a draft law titled "On Amendments to the National Programme for Decommissioning of the Chornobyl NPP and Transformation of the Shelter Object into an Ecologically Safe System."106 The adoption of this law will create the legal basis for further development and implementation by 2020 of steps to be taken to decommission the Chornobyl NPP, put into operation the NSC (New Safe Confinement), SNFSF-2 (Spent Nuclear Fuel Storage Facility-2), a liquid radioactive waste processing plant, and an industrial complex for solid radioactive wastes, create conditions for safe storage of damaged nuclear fuel assemblies, and design new facilities for radioactive waste management.
http://www.snrc.gov.ua/nuclear/uk/publish/article/367024 http://www.snrc.gov.ua/nuclear/uk/publish/article/367065 100 https://economics.unian.ua/energetics/1973744-energoatom-vede-poperedni-peregovori-z-inozemnoyu-kompanieyu-schodopostachannya-yadernogo-paliva-do-ukrajini.html 101 https://www.rbc.ua/ukr/news/ukraina-sokratit-postavki-dernogo-topliva-1496920257.html 102 http://www.energoatom.kiev.ua/ua/press/nngc/46861energoatom_rozpochav_samostyino_nspektuvati_palivo_westinghouse_z_vikoristannyam_stendu_nspektc_ta_remontu_paliva/ 103 http://zakon3.rada.gov.ua/laws/show/395-2017-%D1%80 104 http://zakon2.rada.gov.ua/laws/show/ru/415-2017-%D0%BF 105 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250068482&cat_id=244276429 106 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250085767&cat_id=244276429 98 99
total score: 20
ELECTRICITY AND NUCLEAR SAFETY
41.4 Degree of transposition of EU legislation into Ukraineâ€™s law
37.5 Degree of independence of the trunk network operator
Not applicable Degree of independence of distribution network operators (oblenergos)
8.5 Degree of market openness
Not applicable Presence of clearly regulated supplier change mechanisms
75 Terms of trade, including cross-border trade
45 Security of supplies
30 Creation of an irradiation monitoring and tracking system
Facts of non-compliance with EU acts, no implementation action
Electricity and Nuclear Safety Evaluation of Ukraine's progress: 20 of 100 Progress in electricity market reform is very well visible against the backdrop of Cases ECS-1/12 and ECS08/15 initiated against Ukraine for non-compliance with the Energy Community rules regulating auctions to distribute transboundary capacities. Ukraine (Ukrenergo NEC) is required to present its case in the matter by July 24, 2017. The NEURC approved a new procedure for such auctions, and a fully set up electronic online platform has been put into operation since May 31, enabling Ukrenergo to hold not only annual and monthly, but also daily auctions. The launch of this system creates grounds for Ukraine to seek withdrawal of the initiated cases. At last, Ukraine has adopted and enacted the law "On the Electricity Market," introducing a new energy market model in accordance with the Third Energy Package and providing a procedure for transition to it. Also, the first of the draft bylaws required by the law was published (Procedure for Certification of the Electricity Transmission System Operator). Working groups have prepared drafts of network codes, commercial accounting code, etc. Taking into account the proposals made by the Ministry of Energy and Coal Industry and the donor community, a draft of a new Ukrenergo charter has been approved in continuation of the corporate reform of the UESU operator. There is still little competition on the market: According to the NEURC, the share of supply at unregulated tariffs was 10.8 percent in 2016, whereas according to SE Energorynok, the figure for the first half of 2017 is only 8.5 percent. Competition is also restricted by the provisional emergency measures on the electricity market, introduced in February and extended for several months in a row. The measures are explained by the need to accumulate coal at TPPs and CHPs for the 2017/2018 heating season. Security of coal supplies was put at risk in June when a number of enterprises became targets of cyber attacks and partially suspended their operation. Officials of the Ministry of Energy and Coal Industry and Ukrenergo maintained that the attacks had not affected the operation of the energy system. They also noted that enterprises had a sufficient number of backup channels to control the power grid and safely operate the equipment. Also, the draft CMU resolution on amendments to the Procedure for issuing permits for the international carriage of radioactive materials is yet to be approved. Representatives of the State Regulatory Service reported that the draft would be considered after bringing the Law "On Permissive Activities in the Nuclear Energy Sector" into compliance with the Law "On Administrative Services." Meanwhile, a second edition of the draft CMU resolution "On Approval of the Procedure for the Establishment of a Unified State System for the Control and Accounting of Individual Doses of Irradiation" was released at the end of 2016.
Energy Efficiency and Social Issues June became the most successful month in terms of implementation of energy efficiency legislation in Ukraine. The Cabinet of Ministers approved four out of five technical regulations on energy labeling of household appliances, which remained to be "homework" for Ukraine. But further developments even surpassed these achievements. Due to extraordinary pressure on the part of the expert community and European partners of Ukraine, the last month before the parliamentary holidays saw significant success: almost all laws of the "energy-efficient package" were adopted as a whole, including the laws on the Energy Efficiency Fund, on commercial metering of utility services, and on energy performance of buildings. Despite the fact that Energy Community experts recognized the latter one as not fully implementing Directive 2010/31/EC, the provisions on energy performance certification of a substantial number of building categories, including new buildings, is expected to launch a fundamentally new market and enable the Energy Efficiency Fund to operate. It should be noted that each of the adopted laws requires numerous regulatory acts to be developed and adopted by executive authorities, and, first of all, by the Cabinet of Ministers. Ongoing monitoring and technical assistance are necessary to prevent delays in the creation of such a regulatory framework and ensure its full compliance with the purpose and provisions of the relevant EU directives. Directive 2012/27/EC on energy efficiency Energy Audits and Energy Management Systems (Article 8) The State Agency on Energy Efficiency and Energy Saving (SAEE) with the support of the Friedrich Ebert Foundation holds a series of regional seminars and training sessions for local authorities. 107 The purpose of these activities is to train competent personnel and explain the importance of local energy managers. The agency plans to expand this work and extend the information co-operation with local authorities in a similar format to more regions. Although such activities are certainly useful, there is no reason to expect any significant results without the adoption of appropriate sectoral legislation, because the creation of a system of local energy managers needs a systemic approach. However, the Government's Instruction "On Approval of the Plan of Measures to Implement Energy Management at Budgetary Institutions," adopted on April 26, 2017 precisely in order to introduce a more systematic approach to this issue, has not yet been made public on the government's web portal in violation of regulatory requirements. Similarly, there is not information about any intentions to amend the Plan, which implements the provisions of the Directive to a very limited extent. Metering (Article 9) The long-awaited "energy efficiency day" in the Verkhovna Rada, during which key laws were to be adopted to trigger the sectoral reform, was scheduled for June 22. The day before, a round table "Energy Efficiency Test of the Parliament" was held at the initiative of the project team, where experts of the Energy Efficiency group managed to bring together key stakeholders: acting Chairman of the VRU Committee on Fuel and Energy Complex O. Dombrovskyi, Head of Support Group for Ukraine at the European Commission P. Wagner, representatives of the State Agency on Energy Efficiency and Energy Saving, etc. On the eve of consideration in the Verkhovna Rada of the draft laws "On Energy Performance of Buildings" and "On Commercial Metering of Utility Services," the MPs and representatives of condominium associations, the expert community and the public agreed on the critical need to adopt these laws as soon as possible. 108 In addition, these draft laws, including the draft law "On Commercial Metering of Utility Services," a document earlier recommended by the relevant committee for adoption 109, received verbal support from H. Mingarelli, Head of the EU Delegation to Ukraine. 110
http://saee.gov.ua/uk/news/1841 https://www.facebook.com/EnergyreformUA/posts/1388923094519295 109 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250010393&cat_id=244276429 110 http://www.eurointegration.com.ua/news/2017/06/22/7067551/ 107 108
Energy Efficiency and Social Issues On June 22, following a long discussion and debate on secondary provisions, 238 MPs in the session hall voted in support of the Law "On Commercial Metering of Thermal Energy and Water Supply" with all the amendments on which the Committee on Construction, City Planning, Housing and Communal Services insisted111. In particular, judging by the discussion in the session hall, the law has retained such principled provisions as the condominium members' ownership of the metering units in their buildings and mandatory per-apartment heat metering, although the final conditions for implementing the latter provision, including technical and economic feasibility, remain for the Cabinet of Ministers to regulate. A success is the retained obligation of supplier companies to install for their own account heating meters in buildings, with subsequent reimbursement from the involved consumers. In response to strong criticism from some political parties, the law allows payment of the reimbursement amount by installments over time, as well as for local budgets to partly cover this amount, and consumers are also given freedom to choose and purchase by themselves a meter for their building. The monopolist is obligated to install building heat meters within a year and building water meters within two years. If this is not done, the monopolist will be fined, not the consumer. 112 It is also interesting to note that the relevant draft law No. 4901 broke a record of attempts to put it to vote in June: 50 attempts! 113 Industry experts emphasize the need to adopt another important legislative act, the draft law "On Housing and Communal Services" (No. 1581-ะด). Before voting on the draft law "On Commercial Metering of Thermal Energy and Water Supply," the MP D. Andriyevskyi put forth during a conciliation meeting proposals from the VRU sectoral committee, calling for putting on the agenda of the VRU session all draft laws of "energyefficiency package." However, only two drafts were actually admitted for consideration in the Verkhovna Rada - "On Commercial Metering of Utility Services" and "On Energy Performance of Buildings." Energy Service Market (Article 18) After improving the legislative framework to facilitate tendering for the procurement of energy services, their market of these commodities is rapidly developing. According to SAEE representatives, this year ESCO investors are considering contracting for at least 100 projects in the public sector. 114 Given the declared number of buildings of budget institutions alone that need modernization (70,000), one can expect an explosive growth in the energy service in the coming years. Specialists of the Agency note that considerable time needed for contracting and bureaucratic procedures is a problem that still lingers, especially in large cities. At the same time, according to the SAEE head, it is Kyiv that tops the list in terms of number of projects being implemented in this branch. 115 A number of seminars and workshops for the administrations of Cherkasy 116, Chernigiv117, Mykolayiv118, and Kirovograd119 regions were held with the support of the Friedrich Ebert Foundation and market participants. The main purpose of those events was to spread the work promoting the benefits of ESCO-contracts in the public sector, which is completely in line with the government functions as seen by the relevant articles of the Directive. Energy Efficiency National Fund, Financing and Technical Support (Article 20) The long-awaited Law "On the Energy Efficiency Fund" was adopted by the Verkhovna Rada on June 8. The idea of such a fund received 278 votes from the legislators. On June 23, 2017, Verkhovna Rada Speaker
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59553 http://www.minregion.gov.ua/press/news/postachalniki-poslug-za-vlasni-koshti-vstanovlyat-budinkovi-lichilniki-teplaprotyagom-roku-i-vodi-vprodovzh-dvoh-rokiv/ 113 https://scontent.fhen1-1.fna.fbcdn.net/v/t1.09/19554892_1318001528321669_7805125363050584250_n.jpg?oh=1417aa07b6f507199edb194f466fbece&oe=5A056419 114 http://saee.gov.ua/uk/news/1821 115 http://saee.gov.ua/uk/news/1801 116 http://saee.gov.ua/uk/news/1829 117 http://saee.gov.ua/uk/news/1848 118 http://saee.gov.ua/uk/news/1805 119 http://saee.gov.ua/uk/news/1862 111 112
Energy Efficiency and Social Issues A. Parubiy signed the law and forwarded it to the President P. Poroshenko for signature. According to the regulatory requirements, the President has to either sign the law or veto it. The present version of this law requires significant organizational and law-making efforts to implement it. First and foremost, the Cabinet of Ministers has to develop and approve a charter for the Fund. It also has to develop a regulation of the Supervisory Board that will actually set up and control the Board of Directors of the Energy Efficiency Fund. The Supervisory Board is required to consist of two CMU representatives, two independent members, and, if provided for by international treaties of Ukraine, one representative of international financial organizations or donors. The Supervisory Board, as the supreme governing body of the Fund, will have to develop and adopt organizational and administrative procedures and instructions for all structural units of the institution. It is clear that this preparatory stage will take a considerable amount of time, therefore one should not expect the Fund to start operating anytime before 2018. It is also important to remember that the Fund's regular functioning will not be possible without timely and full implementation of the other laws adopted in June, i.e. "On Commercial Metering of Thermal Energy and Water Supply" and "On Energy Performance of Buildings." 120 As regards financing of the Fund, considering the successful voting on the landmark laws to which many European partners have repeatedly pointed, 121 it seems possible to count on at least the promised EUR 100120 million from the European Commission. As to further financing, the Law sets a rather strict requirement for the State Budget to finance it at least to a minimum level of energy efficiency in accordance with the current international obligations of Ukraine. 122 Directive 2010/31/EU on the energy performance of buildings Thanks to the efforts of European partners and the public, 259 MPs in the Verkhovna Rada voted on June 22 in support of the second reading and as a whole of Law "On Energy Performance of Buildings" (No. 4941-ะด of December 14, 2016) 123. This vote ended a decade-long saga of a series of failures of this draft law and its predecessors to receive sufficient support in the Parliament. The implementation of this Law will require a number of regulatory acts to be developed and implemented, and this work is already underway involving experts and the main developer, the Ministry of Regional Development and Municipal Economies (MinRegion).
Directive 2010/30/EU on the indication by labeling and standard product information of the consumption of energy and other resources by energy-related products Following long-term reconciliation procedures, four of the five technical regulations required to fully implement the provisions of the Directive were approved at a May 31 government meeting. In particular, the Cabinet of Ministers issued resolutions adopting the regulations of energy labeling for TV sets, air conditioners, vacuum cleaners, and household drum dryers. It is noteworthy that all the four resolutions are due to come into force six months after their publication, that is, in December 2017. The regulations stipulate that all vacuum cleaners and drum dryers in Ukraine should be sold bearing European standard energy labels. Suppliers and distributors of such household appliances will be required to include information about energy efficiency classes of products in their promotional materials. The introduced system of energy labeling of such household appliances meets the requirements of the updated European legislation in this field. 124
http://rpr.org.ua/news/tetyana-bojko-fond-enerhoefektyvnosti-zakon-pro-stvorennya-pryjnyato-teper-potribni-koshty/ https://www.ukrinform.ua/rubric-economics/2250182-es-gotovij-vidiliti-grosi-fondu-energoefektivnosti-ukraini-ale-eumova.html 122 Article 9. See http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=60811 123 http://w1.c1.rada.gov.ua/pls/radan_gs09/ns_golos?g_id=13100 124 http://www.kmu.gov.ua/control/publish/article?art_id=250030077 120 121
Energy Efficiency and Social Issues Thus, the final step towards the exhaustive fulfillment of the obligations under the Directive will be the adoption of a technical regulation of energy labeling for ovens and cooker hoods. Social Issues On June 7, the VRU committee on housing and communal services met to discuss a set of agenda issues including the situation with housing and utility services. 125 Vice Prime Minister G. Zubko acknowledged the systemic problems in reimbursing both condominiums and utility companies for provided subsidies. In some regions, the failure to provide reimbursement for provided privileges and subsidies has become a rather painful issue, as the government's arrears in providing social guarantees have been an issue since January 2017, which makes it impossible to properly manage buildings, particularly condominiums. Six months on, the government finally decided to allocate additional funds in the state budget for this purpose, drafting amendments increasing by UAH 14.1 billion subventions from the state budget to local budgets for granting privileges and housing subsidies to households. But only UAH 100 million is offered in additional funding to support measures to improve energy efficiency of households, condominiums, and housing societies as part of the "warm loans" program. 126 Due to a number of critical comments from MPs, the Parliament was able to support the draft law only in the first reading. The next parliamentary session will take place only on July 11, 2017. That is, condominium associations will have to wait for at least 2 months for the social guarantees from the government. In pursuance of the Law "On Measures to Settle the Arrears for Consumed Energy Incurred by Heating and Heat-Generating Organizations and Enterprises of Centralized Water Supply and Sanitation" (No. 1730 of November 3, 2016), the register of the enterprises involved in settling debts for consumed energy was put into operation this month. 127 This important, albeit belated step unblocked accounts of certain categories of district heating companies. Yet, the register includes only 12 companies. The other debtors, especially those with accounts receivable from the state budget, remain dependent on actions and decisions of the responsible ministries.
http://kombud.rada.gov.ua/kombud/control/uk/publish/article?art_id=52871&cat_id=44825 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=62067 127 http://zhytlo.in.ua/ua/novini/zhkp1/restr_pdprimstv_shho_berut_uchast_u_procedur_vregulyuvannya_zaborgovanost_za_spozhit_energonos-_rozpochav_svoyu_robotu.html 125 126
total score: 30
ENERGY EFFICIENCY AND SOCIAL ISSUES
41.8 Degree of transposition of EU legislation into Ukraineâ€™s law
Not applicable Energy efficiency improvement trend at the national level
40 The amount invested under energy efficiency programs
0 Trend of growth in buildings with nearly zero energy consumption
0 Dynamics of growth in the space of budgetary institutions modernized to meet the energy performance requirements
35 Dynamics of installation of building and individual heat meters
Not applicable Number of cases and the total amount in fines charged in energy efficiency claims
Energy Efficiency and Social Issues Evaluation of Ukraine's progress: 30 of 100 Due to the adopted technical regulations, the Laws "On Energy Performance of Buildings" (although with somewhat incomplete compliance with EU legislation), "On the Energy Efficiency Fund," and "On Commercial Accounting of Thermal Energy and Water Supply," Ukraine has stepped onto a fairly confident track of transposing EU law into Ukraine's legislation. At the same time, there is no public information about the implementation of the goals set in the National Energy Efficiency Action Plan. Such indicators as growth in the number of buildings with nearly zero energy consumption and in modernized space of budgetary institution premises have shown zero values. Despite the fact that the relevant Directive 2010/31/EU has a transposition deadline in 2012, the framework law regulating the relevant policy was adopted in Ukraine as late as in June 2017. Regarding budgetary institutions, what counts here as progress is targeted efforts to implement the relevant acquis communautaire, not isolated repairs of premises at the owner's initiative. The amount invested in energy efficiency improvement programs is still insufficient to satisfy the demand for them, at least to a minimum level. UAH 800 million of the UAH 2 billion requested by the State Agency on Energy Efficiency and Energy Saving and the Ministry of Regional Development was actually allocated for financing the only existing state program to support the implementation of energy efficiency measures (the so-called "warm loans" program). As regards utility metering, an indisputable success was the adoption of the law introducing commercial heat metering. According to the latest data provided by the MinRegion, the number of building meters installed as of May 1, 2017 hit the 69 percent mark. At the same time, there is still no registered progress in planned installation of individual metering devices.
Environment and Renewable Energy Sources The greatest achievement of June 2017 was the signing by the President of the Law "On Environmental Impact Assessment." Now intensive work is expected to develop and adopt bylaws to implement the provisions of this law. The initiated reform of the environmental supervision system should be closely linked to the reform of the environmental monitoring system, in particular, the atmospheric air quality monitoring, as provided in the Directive on ambient air quality and cleaner air for Europe. Despite the high-profile statements by top officials at domestic and international events on the need for cooperation with foreign investors and more active work in the field of renewable energy, only the State Agency on Energy Efficiency and Energy Saving is making some real steps forward in this direction. The agency regularly holds meetings with potential investors and international financial institutions. But unfortunately, despite all efforts and due to the political instability and the imperfect legislation, investors are showing rather reserved interest in RES projects in Ukraine. They confirm that this energy sector in Ukraine has an enormous potential, but at the same time they are only considering opportunities and ways of cooperation. As regards the key legislative acts, their adoption remains to be in delay, despite all loud statements on the need to intensify the implementation of RES projects. Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (codification) (Article 363 of the AA) The Law of Ukraine "On Environmental Impact Assessment" is signed. The President P. Poroshenko signed the Law of Ukraine "On Environmental Impact Assessment." 128 Let us recall that on May 23, 2017, the Verkhovna Rada adopted as a whole the Law of Ukraine "On Environmental Impact Assessment" (No. 2009Đ°-Đ´). 129 The law received support from 232 MPs of the 351 present in the session hall. Now intensive work is needed to develop and adopt the necessary by-laws to ensure the practical implementation of the model proposed by this law. The government has bound subsoil users to provide an environmental impact expert opinion in order to obtain or extend special permits for subsoil use On June 19, the Cabinet of Ministers approved the draft resolution "On Amendments to the Procedures Approved by Resolutions No. 594 and No. 615 of the Cabinet of Ministers of Ukraine, dated May 30, 2011." 130 In the words of Minister of Ecology and Natural Resources O. Semerak, this resolution is intended to resolve certain problematic aspects of granting, refusing to grant or extend, or revoking special permits for subsoil use, and also address the issue of granting special permits for subsoil use. The minister also stressed that the important point here was the introduction of subsoil use rules that take into account the environmental aspect, which has long been a norm in the rest of the world. From now on, when seeking to extend its special permits for subsoil use, the subsoil user will have to provide an expert opinion assessing the environmental impact of its projects. The said requirement will become effective simultaneously with the enactment of the Law "On Environmental Impact Assessment" signed by the President this month. Directive 2008/50/EC on ambient air quality and cleaner air for Europe (Article 363 of the AA) Currently, intensive discussions and efforts to establish a legislative framework for reform of the environmental oversight system in Ukraine are underway. Apart from creating a new environmental service and updating the legislative framework, the concept approved on May 31, 2017 by the Cabinet of Ministers introduces a new monitoring system closely linked to the implementation of Directive 2008/50/EC on ambient air quality and cleaner air for Europe. http://www.president.gov.ua/news/prezident-pidpisav-zakon-pro-ocinku-vplivu-na-dovkillya-41838 http://w1.c1.rada.gov.ua/pls/radan_gs09/ns_golos?g_id=12494 130 http://menr.gov.ua/press-center/news/123-news1/6229-uriad-zobov-iazav-nadrokorystuvachiv-pry-otrymanni-chyprodovzhenni-dii-spetsialnykh-dozvoliv-na-korystuvannia-nadramy-nadavaty-vysnovok-ovd 128 129
Environment and Renewable Energy Sources On June 20, the VRU Committee on Environmental Policy, Use of Natural Resources and Chornobyl Aftermath Mitigation considered the draft law "On Amendments to the Law "On Principles of State Supervision (Control) of Economic Activity" and the Law "On Temporary Features of State Supervision (Control) of Economic Activity "(regarding strengthening state environmental supervision (control)) (No. 6563 of June 08, 2017) and recommended it for adoption in principle. 131 The need for the soonest possible implementation of the European standards of quality ambient air grows in importance in view of the fact that the emissions of pollutants into the atmosphere are on the rise in Ukraine. According to the State Statistics Committee, the volume of emissions in 2016 increased by 7.7 percent from the previous year's figure. 132 Directive 2009/147/EC on the Conservation of Wild Birds (Article 4.2) (Article 363 of the AA) The Law "On Amendments to Certain Legislative Acts of Ukraine on Conservation of the Primeval Forests under the Framework Convention on the Protection and Sustainable Development of the Carpathians" adopted by the Verkhovna Rada in May 2017 133 is still waiting for the President to sign it. This law is extremely important in view of the need to protect virgin forests in Ukraine and will have an indirect positive effect on the conservation of wild birds in Ukraine. The law makes cutting virgin forests impossible and will pave the way for the introduction of administrative responsibility for the destruction of and damage to virgin forests. The public has already petitioned the President, asking him to sign this law as soon as possible. 134 Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Article 338 of the AA) While in Astana (Kazakhstan) to attend the 13th Meeting of the Joint Interstate Ukraine-Kazakhstan Economic Cooperation Commission, Vice Prime Minister and Minister of Regional Development and Municipal Economies H. Zubko stressed that Ukraine was serious about "green" projects to be implemented in the Chornobyl exclusion zone135, because such solar electricity production in the exclusion zone promised at least 1.1 GW. At this meeting, the two countries reached a preliminary agreement concerning the possibility to attract Kazakhstan's investments and technologies to implement "green" projects in Ukraine 136. The State Agency on Energy Efficiency and Energy Saving keeps looking for investments in its alternative energy market. In particular, a meeting with IFC representatives was held in June137 to discuss various mechanisms for financing green projects in Ukraine and with representatives of the World Bank 138 to consider the launch of a program of assessing the domestic market of small hydropower plants. The program is intended to assess the potential of Ukraine's market for small hydropower units and to help develop legislation encouraging investments in this sector. The Agency also calls for the soonest possible adoption of the draft law "On Amendments to the Law of Ukraine â€œOn Regulation of Urban Developmentâ€? to Improve the Investment Potential of Electricity Production from Alternative Sources" (No. 6081 139), which aims to simplify the connection of green projects to power grids and resolve the problem of "endless redundancy of capacities." If adopted, this document will http://komekolog.rada.gov.ua/komekolog/control/uk/publish/article?art_id=62692&cat_id=48830 http://www.ukrstat.gov.ua/ 133 http://w1.c1.rada.gov.ua/pls/radan_gs09/ns_golos?g_id=12509 134 https://petition.president.gov.ua/petition/37906 135 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250069899&cat_id=244276429 136 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250075831&cat_id=244276429 137 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250088962&cat_id=244277212 138 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250087534&cat_id=244277212 139 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61140 131 132
Environment and Renewable Energy Sources introduce a 3-year period of validity of technical specifications for the connection of a renewable energy project to a power grid. This will not only unlock more than 4 GW of reserve capacity of RES facilities, but will also become a good incentive for investors to meet the committed construction deadlines for such projects. This document is currently pending consideration. Meanwhile, the Ministry of Energy and Coal Industry is set to move to another stage of cooperation with foreign partners. In particular, the ministry wants a group of investors from Denmark to join the coordination committee of the Ukraine-Denmark Energy Centre to assist in implementing "green" projects.
total score: 12
ENVIRONMENT AND RENEWABLE ENERGY SOURCES
23.3 Degree of transposition of EU legislation into Ukraineâ€™s law
35 Practical application of the environmental impact assessment system
0 Practical application of the strategic environmental assessment system
0 Dynamics of the creation of special conservation areas (SCA) for birds
20 Access to environmental information in practice Not applicable Reformed system of monitoring of the environment, including ambient air quality
0 Control over emissions from stationary sources, in particular sulfur dioxide emissions Not applicable Availability and implementation of a national plan of action to reduce pollutant emissions from large combustion plants
73.5 Availability and usage of metering methods and monitoring of RES usage
23.3 Programs and mechanisms for promoting renewable energy production, investments in these programs
Facts of non-compliance with EU acts, no implementation action
Environment and Renewable Energy Sources Evaluation of Ukraine's progress: 12 of 100 The low score is due to the fact that there are currently two cases under consideration in the Energy Community Secretariat regarding environmental issues, in particular, the sulfur content in certain fuels and environmental impact assessment, connected with Ukraine's delay in implementing the relevant directives in its legislation. However, in view of the de-facto compliance with the requirement raised in the environmental impact assessment case - the adoption of the Law "On Environmental Impact Assessment," the Energy Community is likely to close the proceedings in this case. The draft law "On Strategic Environmental Assessment" has been adopted in the first reading, and, as a result, no SEAs are carried out at the national and local levels. At the same time, a number of draft legal acts developed by working groups at the Ministry of Ecology and Natural Resources of Ukraine have not been published. The drafted legislative and regulatory act on sulfur content in fuels, as well as the National Emission Reduction Plan for Large Combustion Plants, have not been approved. Laws regulating nature conservation and the nature reserve fund were adopted in the first reading, but they do not have any direct relation to the Directive on the conservation of wild birds. In the absence of the necessary legislation, no special protected areas have been created for the protection of birds. Concerning the opinions of state environmental experts issued to oblast state administrations, such opinions are only available for Zakarpattia, Kirovograd, Lugansk, Poltava, Sumy, Kharkiv, and Khmelnytskyi regions (16 opinions issued in January-June 2017). The volume of environmental information available in electronic format remains insignificant. The Environment section of the single state open data web-portal data.gov.ua contains 198 data sets (last update - June 22, 2017). According to the statistics released in June 2017, an increase was observed in 2016 in pollutant emissions from stationary sources into the atmosphere to 3,078,100 tonnes (up 7.7 percent as compared with 2015), including in sulfur dioxide emissions (1,076,400 tonnes, up 29.6 percent). Accordingly, the total capacity of RES generation (excluding those located on the occupied territory of the Autonomous Republic of Crimea and large HPPs and HPSPPs) equaled 1,117.692 MW. The capacity of large HPPs and HPSPPs totaled 6,063.3 MW. Thus, the total capacity of RES generation at the end of 2016 equaled 7,180.992 MW, or 90 percent of the targets set in the National Renewable Energy Action Plan. That is, the set targets have been achieved primarily due to the existing large hydropower plants. At the same time, the share of entire RES generation in wholesale electricity sales, according to Energorynok, was only 9 percent (6,500 GW/h) in the first half of 2017. The government has approved the Hydropower Development Program of Ukraine until 2026, which will allow bringing up to 15.5 percent the share of power cycling capacity of HPPs and HPSPPs in the overall energy balance of the branch. The Program is to be implemented without funding from the state budget of Ukraine, using only resources of the involved enterprises and loans from international financial organizations.
Oil During the reporting period, the Ministry of Ecology and Natural Resources of Ukraine adopted new rules for the development of oil and gas fields, which regulate public relations arising from the use of oil and gas bearing subsoil. The government has improved the procedure for granting special permits for subsoil use and for auctions to sell such permits. It has also become mandatory for subsoil users to provide expert opinions assessing the impact of their activities on the environment. The work intensified to select a model, most suitable for Ukraine, for the formation and maintenance of the minimum stocks of crude oil and/or petroleum products. On the other hand, the adoption of the new Energy Strategy of Ukraine by 2035 is delayed, as is the drafting of the Subsoil Code of Ukraine (new version) and implementation of Directive 98/70/EC regarding the quality of gasoline and diesel fuel and Directive 94/63/EC on the control of volatile organic compound emissions from storages of petroleum products. Directive 2009/119/EC Imposing an Obligation on Member States to Maintain Minimum Stocks of Crude Oil and/or Petroleum Products (Article 338 of the Association Agreement) On June 16, 2017, the State Reserve Agency held a meeting for European and Ukrainian experts in the EU technical support project "Assisting Ukraine in Implementing Energy Sector Reform to Meet Its International Obligations" with representatives of concerned government authorities, special interest groups, and civil society institutions. 140 As the project's key expert A. Kalkavoura noted in her speech, her team had been unable to obtain "all the data needed to assess the volume and structure of the available stocks of oil and/or petroleum products 141 required for the implementation of the Directive." Nonetheless, the experts recommend: – arranging for backup oil stocks to be set up and made physically accessible at all times 142in the volumes equivalent to at least 90 days of average daily net imports; – setting the total volume of minimum stocks of oil and petroleum products in Ukraine at 2.00 million tonnes in oil equivalent, in particular 580,000 tonnes of crude oil, 460,000 tonnes of motor gasoline, and 930,000 tonnes of diesel fuel; – appraising the total cost of purchases and storage of backup oil stocks at USD 1.084 billion; – financing the creation of minimum backup oil and petroleum products stocks from an additional charge on petroleum products market operators in the amount of UAH 0.35-0.43 per liter of motor gasoline and diesel fuel sold in 2017-2022; - selecting a model of backup oil stock maintenance as basic for Ukraine, under which the backup oil stocks are managed by a special agency created as a state body and consisting of representatives of the public authorities and economic entities that are in charge of the oil stocks. The preliminary recommendations set out above generally coincide with those provided by the working group on the creation of oil and petroleum products stocks, established by Order No. 412 of the Ministry of Energy and Coal Industry, dated July 2, 2015 143. However, this group at its meetings held with the participation of experts from the Energy Community and the International Energy Agency established that: – the structure of the minimum stocks of oil and petroleum products in Ukraine should be as follows: 580,000 tonnes of crude oil, 460,000 tonnes of diesel fuel, and 930,000 tonnes of motor gasoline 144 (that is, the stock of motor gasoline should be twice as large as that of diesel fuel, and not the other way around); – the additional charge on petroleum products market operators should be equal to approximately UAH 0.40 per liter of sold motor gasoline and diesel fuel, only if the financing of the stock creation activities begins from January 1, 2016 and the national currency exchange rate remains at UAH 24 per USD 1.
http://rezerv.gov.ua/u-derzhrezervi-tryvae-robota-po-implementacii-dyrektyvy2009119ec/ http://www.kmu.gov.ua/document/248091904/Dir_2009_119.pdf 142 The physical accessibility means such location of the stock that guarantees their introduction into the economic turnover or actual delivery to end users and markets within the times and under the conditions that can mitigate potential supply problems. 143 Ceased to exist after the leadership of the Ministry of Energy and Coal Industry changed in April 2016. 144 http://interfax.com.ua/news/economic/346294.html 140 141
Oil Since the formation of minimum oil and petroleum products stocks in Ukraine is yet to begin, the draft resolution "On the Main Directions of Budget Policy for 2018-2020" submitted by the government to the Verkhovna Rada does not provide for the additional charge on petroleum products market operators, and the UAH exchange rate is expected to be in 2017-2020 at UAH 27.8; 29.3; 30.5, and 31.0 per USD 1, respectively145, the preliminary assessments of experts in the EU technical support project "Assisting Ukraine in Implementing Energy Sector Reform to Meet Its International Obligations" seem overly optimistic. There are doubts about the possible effective work of the new interdepartmental working group created under the State Reserve Agency, since it does not include representatives of the Ministry of Economic Development and Trade and the Ministry of Finance, the authorities responsible in accordance with Clause 2, Article 1 of the Law "On Central Bodies of Executive Power" 146 for the drafting of sectoral legislative acts. The updated implementation plan for Directive 2009/119/EC was not approved as of July 5, 2017, developed by the State Reserve Agency to replace the currently effective one 147, and the implementation terms of most of the tasks set therein expired in 2015-2016. The document proposes to 148 the Cabinet of Ministers to assign the State Reserve Agency the responsibility for "organizing the work to implement the action plan," releasing the Ministry of Energy and Coal Industry of this responsibility, and reschedule: – the adoption of the regulatory act of the Cabinet of Ministers regarding the model of minimum security stocks of oil and petroleum products from December 2015 to December 2017; – the adoption of the Law "On Minimum Security Stocks of Oil and Petroleum Products" from December 2016 to December 2017; – the implementation of all the organizational measures set in the action plan for a period following the enactment of the law "On Minimum Security Stocks of Oil and Petroleum Products." Despite the absence of any information about the adoption of the said document, State Reserve Agency Head V. Mosiychuk said on June 16, 2017 reporting progress in the implementation of Ukraine's international obligations that the document "was updated on April 24, 2017." Directive 99/32/ЕС on Reducing the Sulfur Content of Certain Liquid Fuels and Amending Directive 93/12/EC as Amended and Supplemented by Regulation (EC) 1882/2003 and Directive 2005/33/EC In pursuance of the requirements of Directive 99/32/EC as regards the authorized body, the Ministry of Energy and Coal Industry published on February 11, 2016 the draft CMU resolution "On Amendments to Cabinet of Ministers Resolutions No. 573 dated June 1, 2011 and No. 927 dated August 1, 2013." 149. This draft law ascribes motor gasolines, diesel, marine, and boiler fuels to the purview of the State Service for Food Safety and Consumer Protection as a state market supervision body. However, the said draft resolution was declined by Decision No. 604 of the State Regulatory Service, dated December 29, 2016, as developed without adherence to the key principles of state regulatory policy 150. The revised document was not made public as of July 5, 2017. Directive 98/70/ЄC Regarding the Quality of Gasoline and Diesel Fuel and Amending and Supplementing Directive 93/12/EЕС Supplemented by Directives 2000/71/EC, 2003/17/EC, and 2009/30/EC, and Regulation (EC) 1882/2003 (Annex ХХХ, Articles 360-363, 365, and 366 of the AA) According to the Directive 98/70/EC implementation plan (Articles 7 and 8, Clause 1.3), the Ministry of Energy and Coal Industry has undertaken to report from December 2015 on the operation of the petroleum products quality and safety monitoring system in Ukraine 151. However, as of July 5, 2017, no document was released. Only the draft resolution of the Cabinet of Ministers "On Amendments to Cabinet of Ministers Resolutions http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=62047 http://zakon5.rada.gov.ua/laws/show/3166-17 147 http://zakon0.rada.gov.ua/laws/show/346-2015-%D1%80 148 http://civic.kmu.gov.ua/consult_mvc_kmu/uploads/attach-3346-490347147.pdf 149http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245160232&cat_id=167475 150 http://www.drs.gov.ua/wp-content/uploads/2016/11/7994-29-12-2016.pdf 151 http://www.kmu.gov.ua/document/248091869/Dir_98_70.pdf 145 146
Oil No. 573 dated June 1, 2011 and No. 927 of August 1, 2013" was published 152. It provides that compliance control authorities must report twice a year to the Ministry of Energy and Coal Industry on the activity of checking conformity of fuels with the Technical Regulation requirements. However, the said draft resolution was declined by Decision No. 604 of the State Regulatory Service, dated December 29, 2016, as developed without adherence to the key principles of state regulatory policy 153. The national standardization program for 2017 154 provides for the adoption by the end of 2017 of 27 standards to implement Directive 98/70/EC. Three of them were approved as of June 15, 2017, nine were in the editing phase, and 15 were returned for revision155. On the whole, of the 36 national standards for motor fuels and testing methods, which are needed to enable the application of the Technical Regulation Regarding the Requirements for Motor Gasolines, Diesel, Marine, and Boiler Fuels156, only twelve have actually been approved. The Ministry of Energy and Coal Industry is obligated to develop by January 1, 2018 the Technical Regulation Regarding the Requirements for Aviation Gasolines and Jet Fuel in compliance with the requirements of Directive 98/70/EC (Clause 32 of the 2017 Plan to Develop Technical Regulations157). However, the implementation of this and the above-mentioned tasks in full is unlikely due to a lack of funding. Directive 94/63/EC on the Control of Volatile Organic Compound Emissions from Storages of Petroleum Products and Their Transportation from Oil Terminals to Service Stations, as Amended by Regulation (EC) 1882/2003 (Annex ХХХ, Articles 360-363, 365, and 366 of the AA): In November 2016, the tasks set in Clauses 1.1.1, 1.1.2, and 1.2.1 of the Directive 94/63/EC implementation plan became overdue158. Despite this, as of July 05, 2017, the Cabinet of Ministers had failed to adopt the resolution "On Approving the Technical Regulation of the Requirements for Storage, Transportation, and Transshipment of Fuel, Equipment and Service Stations," and the Ministry of Ecology and Natural Resources failed to approve the recommendations for controlling operation of filling stations and to take inventory of oil tank farms. Directive 94/22/EC on the Conditions for Granting and Using Authorizations for the Prospecting, Exploration and Production of Hydrocarbons (Annex XXVII, Articles 279, 280, and 341 of the AA) On June 6, 2017, the Verkhovna Rada Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety submitted a revised draft law "On Amendments to Certain Legislative Acts of Ukraine Regarding Simplification of Certain Aspects of the Oil and Gas Industry" (No. 3096-д) for a repeated first reading 159. In particular, the document provides the following amendments to: – Article 97 of the Land Code to enable legal entities, after the pilot development of fields and their entry into commercial development, to use land plots allocated to them on such fields under the agreements with the land owners or on the consent of the land user for the period of changing of their intended purpose and preparation of the documents certifying the right to use them; – Articles 98 and 99 of the Land Code to make it possible to use the easement mechanism to construct oil and gas production facilities and pipelines, thus allowing the use of land plots without changing their intended use; – Article 168 of the Land Code to establish that the removal and relocation of the soil cover of land plots in preparation for drilling works and equipping oil and gas wells, constructing and operating pipelines, etc. may be carried out without special permission on the basis of the detailed land management design;
http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245160232&cat_id=167475 http://www.drs.gov.ua/wp-content/uploads/2016/11/7994-29-12-2016.pdf 154 http://uas.org.ua/wp-content/uploads/2017/04/Program_2017_nakaz_N64_2017-04-03.xlsx 155 http://uas.org.ua/wp-content/uploads/2017/06/Zvit_vikon-cherven_15_06_2017_Program_2017_na-sait.xlsx 156 http://zakon.rada.gov.ua/go/927-2013-п 157 http://www.me.gov.ua/Documents/Download?id=d8571d0b-53a6-4ade-88c1-75579be0cb39 158 http://www.kmu.gov.ua/document/248091862/Dir_94_63.pdf 159 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61900 152 153
Oil – Articles 156 and 207 of the Land Code to compensate land owners and land users for losses from the use of agricultural land for the needs of the oil and gas industry and the loss of farmlands; – the Subsoil Code (Articles 17, 24, and 48), the Law "On Oil and Gas" (Articles 1 and 36), and the Mining Law of Ukraine (Article 24) to abolish the provision for mandatory obtainment of a mining allotment permit; – Article 4 of the Law "On Regulation of Urban Development" to abolish the requirement necessitating registration of oil and gas construction projects as urban development projects. – Article 35 of the Law "On Oil and Gas" to introduce the declarative principle in approving field development projects; – Article 39 of the Law "On Oil and Gas" to grant to subsoil users the right to dispose of the geological information that belongs to them by right of ownership without consulting central government and local self government authorities for this purpose; – Article 45 of the Law "On Oil and Gas" to expand the circle of entities engaged in geological and feasibility study of oil and gas reserves. The new version of the draft law: – has no provision excluding from the moratorium (Clause 15, Chapter X of the Transitional Provisions of the Land Code of Ukraine) cases of changing of the intended use and alienation of land for the needs of the oil and gas industry, as well as preemptive right to acquire land for the oil and gas industry if offered for sale by land owners; – includes provisions aimed at further deregulation of the sector (amending Articles 35, 39, and 45 of the Law of Ukraine "On Oil and Gas"), and establishing that all losses connected with the change of intended use and loss of agricultural production must be subject to compensation, and the land to reclamation. On June 22, 2017, the Cabinet of Ministers approved the draft resolution "On Amendments to the Procedures Approved by Resolutions No. 594 and No. 615 of the Cabinet of Ministers of Ukraine, dated May 30, 2011." 160 The document concerns the procedure for granting special permits for subsoil use161 and the procedure for holding auctions to sell special permits for subsoil use162. In particular, the document: – makes it possible for producers of final products suitable for their intended use to conduct geological exploration and pilot development without the lengthy auction procedure; – binds subsoil users seeking to extend their special permits for subsoil use to provide an expert opinion regarding the impact of their activities on the environment (after the enactment of the Law "On Environmental Impact Assessment" on December 18, 2017 163). It is still not possible to scrutinize the adopted resolution thoroughly, since, as of July 5, 2017, its text was not made public. In particular, it was unknown whether or not it: – cancels the obligation to purchase state geological information; – excludes surcharges for increased reserves; – has regulated the obtainment of permission from the State Fiscal Service for the special permit; – cancels the requirement for the consent of law enforcement agencies for the special permit ; – balances the amount of the fee for extending the special permit, which amount equals 20 percent of the current cost of the granted permit. On June 30, 2017, Order No. 118 of the Ministry of Environment "On Approval of the Rules for the Development of Oil and Gas Fields," dated March 15, 2017, came into force 164. These rules set out requirements for the pilot development of fields, production of hydrocarbons during the commercial development of oil and gas fields, well installation techniques and technologies, setting up fields with full http://www.kmu.gov.ua/control/uk/publish/article?art_id=250089618&cat_id=244276429 http://search.ligazakon.ua/l_doc2.nsf/link1/NT3128.html 162 http://zakon0.rada.gov.ua/laws/show/594-2011-%D0%BF 163 http://zakon2.rada.gov.ua/laws/show/2059-19 164 http://zakon2.rada.gov.ua/laws/show/z0692-17 160 161
Oil observance requirements guaranteeing safety for the population, environmental protection, and protection of property (buildings, structures, etc.). The document, in particular, provides: – classification of oil and gas fields, requirements for their preparation for development; – algorithms for assessing reserves and geological and feasibility study of fields; – rules of geological-commercial study, pilot and commercial development of fields; – specifics of geological study and development of unusual hydrocarbon deposits; – field development control and regulation mechanisms; – rules and methods for the construction, testing, setup, development, and operation of wells; and – oil, gas, and gas condensate accounting and use rules. There is a particular section in the document, devoted to the protection of the environment and subsoil during the installation, trial operation of wells, pilot and commercial development of oil and gas fields. In the fourth quarter of 2017, the Ministry of Ecology and Natural Resources is expected to submit a draft law and the Cabinet of Ministers to issue a resolution on amendments to the Regulation of the Procedure for the Disposal of Geological Information 165 (Objective І, Task 206 166). The content of the amendments is not specified, and the expected effect is described only as "legislation improvement." The Methodology of Determining the Value of the Mineral Reserves and Resources of a Field or Subsoil Block Granted for Use 167 and Methodology of Determining the Initial Auction Price for a Special Permit for Subsoil Use (Objective I, Tasks 203 and 204) 168 also need to be changed 169. Harmonization of the present methodologies with applicable legislative norms and the requirements of the UN Framework Classification of 2009 will: – simplify commercial, feasibility, and geological study, as well as taxation operations, in particular at the time of implementation of production-sharing agreements; – introduce a differentiated assessment approach depending on the intended purpose of the works (exploration or production), reliability degree of the geological material (resources or reserves), and type of deposits in terms of extraction complexity (traditional or non-traditional methods). According to the Implementation Plan of Directive 94/22/EC, a new version of the Subsoil Code should have been adopted by the end of 2016 170. The Cabinet of Ministers said that the draft of this document was "under review by concerned authorities" as of June 20, 2017, 171 since its submission to the Verkhovna Rada had been postponed to the fourth quarter of 2017 (Objective I, Task 202 172). There were also plans to develop a draft act of the Cabinet of Ministers, amending the Regulation of the Mining Allotment Granting Procedure 173in the section related to cancellation of mining allotments for the oil and gas industry (the implementation deadline: first quarter of 2017 174). However, the Ministry of Social Policy, which is responsible for the fulfillment of this task, delays its implementation. Currently, the key problems holding back the implementation of Directive 94/22/EC in Ukraine are connected with: – delay in adopting the Subsoil Code; – low quality of draft legislative and regulatory acts in the subsoil use field (since the beginning of 2017, the State Regulatory Service has not approved a single document developed by the State Service for Geology and Mineral Resources); http://zakon0.rada.gov.ua/laws/show/423-95-%D0%BF http://www.kmu.gov.ua/document/249935381/R0275.doc 167 http://zakon3.rada.gov.ua/laws/show/1117-2004-%D0%BF 168 http://zakon0.rada.gov.ua/laws/show/1374-2004-%D0%BF 169 http://www.kmu.gov.ua/document/249935381/R0275.doc 170 http://www.kmu.gov.ua/document/248102926/Dir_94_22.pdf 171 http://www.drs.gov.ua/deregulation/plan-deregulyatsiyi-2016-2017-rr/ 172 http://www.kmu.gov.ua/document/249935381/R0275.doc 173 http://zakon2.rada.gov.ua/laws/show/59-95-%D0%BF 174 http://zakon2.rada.gov.ua/laws/show/1079-2016-%D1%80/paran146#n146 165 166
Oil – delays in appointing the leadership of the State Service for Geology and Mineral Resources 175 and the numerous associated scandals, up to the seizure of the agency head's office 176 (on May 24, 2017, only the first deputy and deputy acting head were appointed, whereas the chair of the head of this organization remains vacant 177); – growing number of unscheduled audits of mining enterprises178, accompanied by suspension of their licenses179; – blocking by oblast councils of the issue of permits for the development of oil and gas fields 180 (in particular, on April 26, 2017, the Poltava Oblast Council declined for the eighth time (!) to approve the permits obtained by Ukrgazvydobuvannya PJSC 181); – the retained need to secure consent for works from 16 institutions, obtaining 44 documents 182 and the lack of acceptable forms of risk distribution between investors and state-owned enterprises under joint projects 183; – the impossibility of auctions to sell special permits for subsoil use under the new rules due to the lack of bids properly prepared and approved by the State Service for Geology and Mineral Resources (only two such hydrocarbon development auctions were held in the year 184). Following numerous complaints from subsoil users, the government initiated an audit of the State Service for Geology and Mineral Resources, whose results, in the words of the first deputy head of the service, M. Foshchiy, were "somewhat disappointing." The problem was the State Service for Geology and Mineral Resources' backlog of one and a half thousand packages of documents seeking special permits for hydrocarbon production 185. Article 280 of the AA regarding transparency in licensing hydrocarbon prospecting, exploration, or production In November 2016, the website of the State Geological Information Fund "Geoinform of Ukraine" posted an interactive map of subsoil blocks covered by issued special permits for subsoil use. The said map is part of the implemented simplified access in real time to the state geological information made available in the digital quality and volume necessary to evoke commercial interest on the part of private subsoil users 186. Yet, the Ministry of Ecology and Natural Resources delays drafting a Cabinet of Ministers resolution "On Amendments to Cabinet of Ministers Resolution No. 423 dated June 13, 1995" that simplifies digital access to secondary geological information in real time (the task deadline is the first quarter of 2017 187). Article 338 of the AA regarding continuation and intensification of the cooperation in the energy field In pursuance of Article 338, paragraph "a", regarding the implementation of energy strategies and policies, development/elaboration of relevant forecasts and scenarios, the Verkhovna Rada Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety on June 7, 2017 discussed the draft Energy Strategy of Ukraine by 2035 188. The final text of this document is planned to be approved in the second quarter of 2017
http://www.geo.gov.ua/novyna/zavtra-vidbudetsya-konkurs-na-posadu-golovy-derzhgeonadr https://www.ukrinform.ua/rubric-economics/2234887-kabinet-golovi-derzgeonadr-zahopili-nevidomi.html 177 http://www.geo.gov.ua/novyna/pryznachennya-kerivnyctva-derzhgeonadr 178 http://www.geo.gov.ua/novyna/chornomornaftogaz-zaborguvalo-derzhavi-ponad-23-mln-grn-rentnoyi-platy 179 http://www.geo.gov.ua/novyna/derzhgeonadra-iniciyuvala-zustrich-z-predstavnykamy-profspilky-ukrnafty 180 http://kolo.news/category/situatsiyi/3399 181 http://energolife.info/ua/2017/Energy/3237/Укргазвидобування-Полтавська-облрада-блокує-щорічний-видобуток-1-млрдкубометрів-газу.htm 182 http://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3511=61900&pf35401=424915 183 https://www.facebook.com/permalink.php?story_fbid=796726450503142&id=100004973836647 184 http://www.geo.gov.ua/novyna/vidbuvsya-aukcion-z-prodazhu-specdozvoliv-na-korystuvannya-nadramy 185 https://www.rbc.ua/ukr/news/predvaritelnye-rezultaty-audita-deyatelnosti-1498603282.html 186 http://www.drs.gov.ua/deregulation/plan-deregulyatsiyi-2016-2017-rr/ 187 http://zakon2.rada.gov.ua/laws/show/1079-2016-%D1%80/paran146#n146 188 http://kompek.rada.gov.ua/documents/zasid/73177.html 175 176
total score: 12
OIL 100 points
20 Degree of transposition of EU legislation into Ukraineâ€™s law
40 Degree of readiness of the oil and/or petroleum products storage infrastructure
0 Volumes of the created oil and/or petroleum products stocks
0 Transparency in granting subsoil for use
0 Fuel quality assurance system
Oil (Objective I, Task 163 189). Thereafter, the government will start developing a plan of actions to implement the strategy.
Evaluation of Ukraine's progress: 12 of 100 Ukraine is yet to create minimum stocks of oil and/or petroleum products to comply with Directive 2009/119/EC. The government has not implemented a single priority task of those set in the Directive implementation plan, neither has it approved the updated plan developed by the State Reserve Agency to replace the current one. Despite the fact that the relevant working groups have been created, there is still no decision made to determine a model and adopt a plan of action for creating minimum oil and petroleum products security stocks, as well as no regulatory acts needed to form such stocks and create a management system for them. So far, the government is able to provide only about half of the technical capacity needed for proper storage of such stocks. In June, the State Reserve Agency organized a meeting between European and Ukrainian experts working for the EU technical support project "Assisting Ukraine in Implementing Energy Sector Reform to Meet Its International Obligation," where a project implementation plan of action was presented to agree the proposed model of minimum oil and/or petroleum products security stocks. There is no system for assuring the petroleum products quality and safety on Ukraine's market meeting the requirements of EU directives. For this reason, within the framework of the Rules of Professional Ethics in Competition to Promote Honesty and Transparency on the Retail Market of Fuels in Ukraine, petroleum products market participants agreed on the voluntary creation of a non-governmental system. The first six months of 2017 saw no auction to sell special permits for subsoil use to produce oil, gas, and gas condensate. In June, Order No. 118 of the Ministry of Ecology and Natural Resources of Ukraine "On Approval of the Rules for the Development of Oil and Gas Fields," dated March 15, 2017, came into force, but the pace of implementation of Directive 94/22/EC remains unsatisfactory.
Business Climate In June, the Energy Strategy by 2035 was finally presented. The mission of this document is to enhance the nation's energy security. Further work is expected to elaborate a detailed action plan to implement the Strategy. In addition, the Industry Development Priority Action Plan prepared by the Ministry of Economic Development and Trade was released. This Action Plan covers various sectors, including the energy sector, and proposes a number of important steps that are expected to have a direct positive effect on the development of the industry. These include RAB regulation to be introduced to increase the influx of investments into energy infrastructure. RAB regulation is also discussed in the submitted draft law No. 6635. Apart from this draft law, five more were registered in June, four of which propose legislative amendments to improve the business climate, and the fifth one proposes making financial information of companies transparent for consumers. The public procurement reform continues, and in June, the ProZorro system was integrated with the Unified State Register of Legal Entities, Individual Entrepreneurs and Non-Government Organizations. This allows both companies to accelerate registration data validation and customers to quickly verify information about auction/tender participants. Article 277 of the Law On the Regulator (provisions of Directives 2009/72/EC and 2009/73/EC regarding the regulatory authority) The Uryadovyi Kurier newspaper has published a number of previously adopted NEURC resolutions that now have come into force. These include license terms for conducting business activities - to transport oil and petroleum products by main pipelines, adopted on February 16 190; - to produce electricity, adopted on March 22 191; and - to supply electricity, adopted on April 13 192; Article 379 regarding creation of favorable business conditions The NEURC keeps optimizing its interaction with companies, experts, journalists, and other information consumers. This month, it has created the possibility for everybody to "subscribe to the NEURC"193 to receive email updates first-hand. The Regulator's website now features an online calculator 194for determining the cost of standard connection to the gas distribution network: by choosing the appropriate parameters, the consumer gets the estimated cost of such connection along with a list of companies (including their contact details) that provide the relevant services. The Minister of Energy and Coal Industry I. Nasalyk presented to the Verkhovna Rada Committee on Fuel and Energy Complex the updated Energy Strategy of Ukraine until 2035 195. After the meeting, comments were invited from all discussion participants to be sent to the working group. One may find more information about the document and its provisions in the previous monitoring reports. The gas TSO Ukrtransgaz has launched a new service known as "customs warehouse." It allows Ukrainian and foreign traders to keep their gas in Ukrainian gas storage facilities for up to 1,095 days. If the fuel is to be transported out of Ukraine, it can still be stored there without any taxes and customs duties 196. The Verkhovna Rada registered draft law No. 6547 197, supplementing the law on the specifics of access to information regarding electricity and natural gas supply, heating, centralized hot water supply, centralized http://www.nerc.gov.ua/index.php?news=6115 http://www.nerc.gov.ua/index.php?news=6125 192 http://www.nerc.gov.ua/index.php?news=6136 193 http://www.nerc.gov.ua/?news=6097 194 http://www.nerc.gov.ua/?news=6096 195 http://www.kmu.gov.ua/control/uk/publish/article?art_id=250048947&cat_id=244276429 196 http://utg.ua/utg/media/news/2017/06/ukrtransgaz-vidkruvae-sklad-dla-treideriv.html 197 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61957 190 191
Business Climate drinking water supply and sanitation. The changes concern business entities operating in the relevant fields, particularly, the document binds them to publish the following information: - their incomes and payments; - agreements concluded with other business entities, disclosing such information as the subject matter of each agreement, product quantity and unit price, price for the works and/or services, contractual financial obligations of the parties, including the deadlines of the obligations. The given changes are expected to increase transparency in the energy sectors and better protect consumer rights and interests. A package of draft laws (No. 6540 198, No. 6541 199, No. 6542 200, and No. 6543 201) improving the investment climate in general has been registered. Many changes and simplifications are projected, including: - abolition of the requirement to use a seal; - accelerated proceedings in bankruptcy cases; - protection and strengthening of the rights of shareholders, in particular, minority ones. In addition, the June agenda of the Verkhovna Rada featured twice draft law No. 4871 amending the Customs Code of Ukraine regarding introduction of a uniform customs receipt 202 and once draft law No. 6229 on transparency in the extractive industries 203, but their actual consideration never happened. Articles 263-267 on state aid to business entities In June, the AMCU made public a draft CMU resolution regulating certain issues related to the criteria of eligibility of business entities for state aid to help them protect the environment. The document specified the categories of entities that may be eligible for state aid for these purposes; it also set its ceiling amount, determined the provision terms and method. Comments to the draft Resolution will be accepted until July 21, 2017 204.
Articles 148-156 on public procurement (provisions of Directive 2014/25/EC) A report has been published on the Q1 2017 results of operation of the ProZorro public procurement system205. According to the report, most procurement orders were placed in such sectors as petroleum products, fuel, electricity, and other energy sources. Comparing the public procurement statistics for AugustDecember 2016 206 with the statistics for January-March 2017, one may notice the following changes: ● Over the past 5 months of last year, almost 22,000 agreements were concluded through the ProZorro system, totaling UAH 69 billion, while in the first quarter of 2017, 45,000 agreements were made totaling UAH 94 billion. In 2017, the number of executed agreements increased by 350 percent to more than 15,000 a month. ● Savings on completed lots in 2016 amounted to UAH 5.4 billion (for 5 months), and in 2017 to UAH 4.38 billion (for 3 months). ● In 2016, the AMCU received 1,846 complaints, of which 704 were actually accepted, including 76.1 percent complaining against the customer's decisions made during the public procurement process. http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61950 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61951 200 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61952 201 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61953 202 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_2?id=&pf3516=4871&skl=9 203 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_2?id=&pf3516=6229&skl=9 204 http://www.amc.gov.ua/amku/control/main/uk/publish/article/135961 205 https://www.slideshare.net/MaxNefyodov/12017-76792588 206 https://ti-ukraine.org/wp-content/uploads/2017/05/Zvit-ProZorro-2016.pdf 198 199
Business Climate In 2017, only 1.02 percent of all complaints submitted to the AMCU were against auction results, of which 82 percent were against the customer's decision and 18 percent against procurement terms and conditions. In June, the ProZorro system was integrated with the Unified State Register. As a result, the customer can now obtain all information about a company quickly and free of charge, and the company will be able to pass the verification much faster and get registered on the procurement site 207. In mid-June, the work continued to improve the DoZorro system's "Complaints" page, which, as a result, now has an additional function to record notifications about non-compliance with the procurement procedures, as well as about submitted appeals and responses to them. IT lawyers are set to analyze more than 2,000 procurements in response to received complaints, appeals, and results. The information will be freely accessible on the DoZorro web portal, which will make it even more accessible for analysis and public control 208.
Articles 27-49 regarding access of commodities to markets The Ministry of Economic Development and Trade has published the Top Priority Action Plan for the Development of Industry, which covers six branches, including the energy sector. The Action Plan abolishes grant certificates for electricity exports and covers the subject of determining the G-grade coal demand and supply in Ukraine and the issue of increasing the wholesale market price for electricity in the event of an increase in electricity exports. The plan of action also provides for the introduction of RAB tariffs as encouraging businesses to invest in the development of networks and for the replacement of gas boilers with new electric ones. The plan of action also covers the extractive industry. It raises the need to develop new draft laws to establish a new type of cooperation between public and private companies. The plan also provides amendments to currently effective CMU resolutions No. 594, 615, 865, 321, 870, 302, and 423. These regulations annul a number of permits and mandatory expert opinions, including those assigning the duty to approve projects to the State Service for Geology and Mineral Resources and setting the project consideration term at 1 month based on the tacit consent principle; abolishing the mandatory purchase of geological information from the State Service for Geology and Mineral Resources; and canceling the requirement to obtain consent for special permits from the Ministry of Internal Affairs and the State Fiscal Service. It is also proposed to adopt law No. 5459 introducing an incentive-based royalty rate. In particular, the royalty (rent) is planned to be reduced from 29/14 percent to 12 percent, which is the average rate in Europe 209.
Article 93 regarding access to energy markets In June, draft law No. 6635 was registered, proposing RAB-regulation in relation to the connection of electrical installations to power grids. The amendments are proposed to be made to the adopted electricity market law. According to the authors, such incentive regulation will boost investments in new construction and modernization of the existing power grid infrastructure 210.
https://dozorro.org/news/prozorro-integruvalos-z-yedr https://dozorro.org/blog/dozorro-spilnota-na-storozhi-chesnih-zakupivel 209 https://issuu.com/mineconomdev/docs/____________________________________cb6cf305a214c7 210 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=62117 207 208
total score: 40
BUSINESS CLIMATE 0
52.8 Degree of transposition of EU legislation into Ukraineâ€™s law
38.2 Investment attractiveness of energy markets (dynamics)
52.7 Degree of excessive regulation
51 Compliance with the competition rules
54 The state aid system is brought into compliance
Facts of non-compliance with EU acts, no implementation action
Business Climate Evaluation of Ukraine's progress: 40 of 100 The Energy Community Secretariat has not yet closed the case initiated in 2014 and concerning provision of state aid. Nonetheless, this area shows some progress due to the enactment of the Law "On State Aid to Business Entities" in August 2017. The necessary rules of control over the provision of state aid are almost prepared: only 6 of 12 regulatory acts remain to be adopted, and at the end of last year, a pilot state aid monitoring project in the energy sector was completed. As regards implementation of the obligations regarding public procurements, currently under consideration are a draft law on procurements monitoring, draft order on the development of national classifiers, and draft government resolution intended to regulate certain provisions on electronic platforms. Systemic analysis of procurements is also underway now. In pursuance of the Law "On the National Energy and Public Utilities Regulatory Commission," the regulator has developed a number of regulatory acts, including those related to the calculation and introduction of the regulation charge rate, license terms, service quality standards, and open discussions of draft decisions. However, the provisions of the Law on the rotation of the regulator's members are not being complied with. In comparison with the estimates for the previous period, the investment attractiveness of energy markets has somewhat improved. According to the State Statistics Service data for September 2016 March 2017, compared to the previous six months, the growth of capital investments in the extractive industry amounted to 115 percent (UAH 12,670.6 million), in coke and petroleum products production 153 percent (UAH 438.6 million),and in electricity, gas, steam and conditioned air supply - 129 percent (UAH 6,702.5 million). The past statistical assessment period showed a negative trend in foreign direct investments in all three areas of economic activity. However, as of April 1, 2017 in comparison with October 1, 2016 foreign direct investments in extraction showed a positive trend, growing by 152 percent (USD 1,781.8 million), whereas the other sectors retained the negative trend. All information regarding the procedures and requirements for licensing and connection is freely available on the NEURC website, in the Licensing (Administration Services) section. According to official data, Ukraine is far behind the EU (in particular, Germany) in terms of connections to gas supply and electricity networks. In particular, in order to connect to the gas network (Code of Gas Distribution Systems), one needed to undergo seven procedures taking 115 days, and if to the power grid (Doing Business rating), five procedures taking 281 days.
Methodology The Project is being implemented by five partners and two invited permanent experts. The Project is being implemented by the following five partners: NGO “DIXI GROUP”, Resource & Analysis Center “Society and Environment”, Civil Network “OPORA”, Association “European-Ukrainian Energy Agency”, and All-Ukrainian NGO “Energy Association of Ukraine”. Among the project permanent members are L. Unigovskyi, General Director of Naftogazbudinformatyka LLC, and G. Riabtsev, Social Program Director of Psycheа Scientific and Technical Centre. For the purpose of monitoring the implementation of the Association Agreement, the project participants have been divided into six working groups. These are, in particular, Gas group: L. Unigovskyi and R. Nitsovych (DiXi Group); Electricity group: S. Golikova (Energy Association of Ukraine) and O. Shumilo; Energy Efficiency and Social Issues group: T. Boyko (OPORA) and D. Nazarenko (DiXi Group); Environment and Renewable Energy Sources group: N. Andrusevych (Society and Environment) and N. Yermakova (DiXi Group); Business Climate and Investments group: V. Beliakova (European-Ukrainian Energy Agency) and A. Bilous (DiXi Group), Oil group: G. Riabtsev (Psychea) and T. Tkachuk (DiXi Group). The Project participants identified the monitoring framework for each working group based on the results of their analysis of the Association Agreement. This framework is described in Annex 1. The main source of information for monitoring purposes is official information provided by public authorities. These include, in particular, adopted regulatory and legal acts, statements by top officials, information about meetings and events with the participation of representatives of public authorities. Also, monitoring could be based on messages by key energy market players, their decisions and initiatives. Other sources of information can include published articles, interviews, news, as well as results of bilateral meetings between experts and energy market players. The subject of monitoring is transposition and, if appropriate, implementation of Directives. The groups and experts monitor, first of all, transposition of acquis into the Ukrainian legislation and compliance therewith. If appropriate, but only as an option, the quality of implementation of acquis and the effect of their implementation on the market and/or consumers can be subject to monitoring.
Methodology ANNEX 1. List of Articles of the Association Agreement and Acquis Subject to Monitoring The group Electricity and Nuclear Security conducts monitoring and assessment of issues relating to electricity, nuclear energy, coal and elimination of consequences of the Chornobyl accident. Acquis concerned: Article 269, Chapter 11, Title IV, Directive 2009/72/EC (market-related provisions) Article 270, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 271, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 273, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 274, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 305, Chapter 14, Title IV, Directive 2009/72/EC, Directive 2005/89/EC Article 338, Chapter 1, Title V Article 338, Chapter 1, Title V, Cooperation Agreements with IFIs Article 339, Chapter 1, Title V, coal market Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector, Council Directive 2014/87/Euratom, Council Directive 2013/59/Euratom, Council Directive 2006/117/Euratom Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector The group Gas conducts monitoring and assessment of issues relating to gas, in particular, the implementation of the following acquis: Articles 338, 341, Directive 2009/73/EC (market-related provisions) Articles 338, 341, Regulation (EC) 715/2009 Articles 338, 341, Directive 2004/67/EC + Annex XXVI (Early Warning Mechanism), Articles 275 (Unauthorised taking of energy goods), 276 (Interruption), 309 and 314 (resolution of disputes) of the Association Agreement Chapter 11 Trade-related energy, in particular Articles 269 (Domestic regulated prices), 270 (Prohibition of dual pricing), 271 (Customs duties and quantitative restrictions), 272 (Transit) and 273–274 (Transport, cooperation on infrastructure) Annex XXVII to Chapter 1 Energy cooperation, including nuclear issues — Directive 94/22/EC + Articles 279– 280 (Access to and exercise of the activities of prospecting, exploring for and producing hydrocarbons, and licensing conditions) The group Energy Efficiency and Social Issues conducts monitoring and assessment of the implementation of the following acquis: Directive 2010/30/EU Directive 2010/31/EU Directive 2006/32/EU Directive 2012/27/EU Directive 2009/72/EC (social issues) Articles 338, 341 of the Association Agreement Directive 2009/73/EC (social issues) Articles 338, 341 of the Association Agreement
Methodology The group Environment and Renewable Energy Sources conducts monitoring and assessment of the implementation of the following acquis: Article 363, Directive 2011/92/EU Article 363, Directive 2001/42/EC Article 363, Directive 2003/42/EC Article 363, Directive 2003/35/EC Directives 85/337/EEC and 96/61/EC Article 363, Directive 2008/50/EC Article 363, Directive 1999/32/EC Article 363, Directive 94/63/EC Article 363, Directive 2009/147/EC Article 363, Directive 2010/75/EU Article 338, Directive 2009/28/EC The group Oil conducts monitoring and assessment of the implementation of the following acquis: Directive 2009/119/EC Directive 94/22/EC Directive 98/70/EC Articles 274, Chapter 11 of the Association Agreement (Trade-related energy) Articles 275, Chapter 11 of the Association Agreement (Trade-related energy) Articles 276, Chapter 11 of the Association Agreement (Trade-related energy) Articles 279, Chapter 11 of the Association Agreement (Trade-related energy) Articles 280, Chapter 11 of the Association Agreement (Trade-related energy) Article 337 of the Association Agreement Article 338 of the Association Agreement Article 339 of the Association Agreement The group Business Climate conducts monitoring and assessment of the implementation of the following acquis: Article 27, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 28, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 29, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 88, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 93, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 97-102, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 104, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 105, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 107, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 144-147, Chapter 7 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Chapter 8 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and the Directive 2014/25/EU Article 255, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 256, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 258, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement
Methodology Article 263, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 267, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 277, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and Directives 2003/54/EC and 2003/55/EC (as regards the regulatory authority) Articles 355-359, Chapter 5, (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement and Directive 2008/92/EC Article 379, Chapter 10 (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement
Glossary ANNEX 2. Glossary (Short Description) of EU Acquis Subject to Implementation Monitoring
Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive establishes common rules for the transmission, distribution, supply and storage of natural gas. The rules established by this Directive apply to natural gas, liquefied natural gas (LNG), biogas and gas from biomass. They aim to achieve a competitive, secure and environmentally sustainable market. This Directive provides for compulsory functional unbinding (supply) of transmission system operators (TSO) in vertically integrated undertakings. EU Member States must ensure that all customers are entitled to freely choose natural gas supplier and can easily change supplier within three weeks. At the same time, Member States may impose on suppliers selling gas to household customers obligations which may relate to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency. Regulation (EU) No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005 This Regulation sets common rules for access to gas transmission systems, LNG terminals and storage facilities taking into account the special characteristics of national and regional markets. The document establishes the procedures of certification of transmission system operators, as well as development, elaboration and implementation of network codes (with the participation of the European Network of Transmission System Operators — ENTSO — for Gas). The key objective of this Regulation is to ensure that all market participants have free and non-discriminatory access to relevant infrastructure and capacities. Directive 2004/67/EC concerning measures to safeguard security of natural gas supply This Directive establishes a common framework within which Member States must define general, transparent and non-discriminatory security of supply policies compatible with the requirements of a competitive market, and clarify the roles and responsibilities of market players (including in case of emergency). The government must specify minimum security of supply standards to be complied with by the market players, prepare and update national emergency measures, identify “vulnerable” customers and ensure adequate security for them, establish cooperation with the European Commission and other stakeholders.
Electricity and Nuclear Security Council Directive 2014/87/Euratom of 8 July 2014 amending Directive 2009/71/Euratom establishing a Community framework for the nuclear safety of nuclear installations The Directive establishes a European framework for maintaining and promoting consistent improvement of nuclear safety and its regulation. It sets an ambitious safety goal across the EU in order to prevent accidents and avoid radioactive waste from nuclear installations. The directive applies to any nuclear installation subject to licensing. Council Directive 2013/59/Euratom laying down basic safety standards for protection against the dangers arising from exposure to ionising radiation The Directive establishes basic safety standards to protect the health of employees, the general public, patients and others from the dangers of exposure to ionising radiation. The Directive applies to any planned, existing or emergency situation which involves a risk to ionising radiation. In particular, it applies to: the manufacture, production, processing, handling, disposal, use, storage, holding, transport, import to and export from the EU of radioactive material; the manufacture and operation of electrical equipment emitting ionising radiation; human activities withnatural radiation sources that could lead to a significant increase in
Glossary the exposure of employees or the public, such as the exposure of space crew to cosmic radiation; domestic exposure to radon gas in indoor air and external exposure to gamma radiation from building materials; managing emergency exposure situations that require measures to protect the public and workers. Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive establishes common rules for the generation, transmission, distribution and supply of electricity. It also lays down universal service obligations and the rights of electricity consumers and clarifies competition requirements. Open internal market enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers (free movement of goods, the freedom of establishment and the freedom to provide services). At the same time, this Directive sets stricter requirements to unbundling of transmission system operators (TSO) in vertically integrated undertakings. It also contains consumer rights provisions, reinforces and clarifies the functions and powers of regulatory authorities. Regulation (EC) No. 714/2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No. 1228/2003 This Regulation establishes the rules for cross-border exchanges of electricity with the view to enhancing competition and achieving harmonization within the internal market in electricity. Comparing to the previous Regulation No. 1228/2003, this Regulation contains additional provisions on certification of transmission system operators (TSO), introduction of network codes and publication of information by system operators. It also clarifies that the European Network of Transmission System Operators for Electricity (the ENTSO for Electricity) is responsible for the management of electricity transmission networks to allow trading and supplying electricity across borders within the EU. Directive 2005/89/EC concerning measures to safeguard security of electricity supply and infrastructure investment This Directive establishes measures aimed at safeguarding security of electricity supply so as to ensure the proper functioning of the internal market for electricity, an appropriate level of interconnection between Member States, an adequate level of generation capacity and an adequate balance between supply and demand. It establishes a framework within which Member States are to define general transparent and nondiscriminatory policies on security of electricity supply compatible with the requirements of a competitive market for electricity. They must define and publish roles and responsibilities of competent authorities and all relevant market actors. In implementing these measures, Member States are supposed to guarantee continuity of electricity supplies, explore possibilities for cross-border cooperation in relation to security of electricity supply, reduce the long-term effects of the growth of electricity demand, ensure diversity in electricity generation, encourage energy efficiency and the adoption of new technologies, ensure regular renewal of networks. Council Directive 2006/117/Euratom on the supervision and control of shipments of radioactive waste and spent fuel This Directive authorizes transboundary shipments of spent fuel between Member States for processing, requires prior authorization for transboundary shipments of radioactive waste and spent fuel where such fuel is moved from, through the territory of or to a Member State. This Directive also requires return of radioactive waste to its country of origin.
Energy Efficiency and Social Issues
Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products This Directive regulates labelling of energy-related products and provision of information to consumers relating to their consumption of electric energy. It applies to products which have a direct or indirect impact on the consumption of energy and on other resources during use. Suppliers placing products on the market must ensure that such products are labelled with the information about their consumption of energy and
Glossary other resources. Suppliers must also produce technical documentation to include: a general description of the product; the results of design calculations carried out; test reports; the references allowing identification of similar models. The technical documentation must be available for inspection purposes for a period ending five years. Suppliers must provide the labels and product-related information free of charge to dealers, and the latter must display labels properly, in a visible and legible manner. Directive 2010/31/EU on the energy performance of buildings This Directive promotes the improvement of the energy performance of buildings within the Union, taking into account outdoor climatic and local conditions. It lays down minimum requirements, common general framework for a methodology and covers energy used for heating, hot water, cooling, ventilation and lighting. National authorities must establish reasonable minimum requirements to energy efficiency to be reviewed every five years. They also establish a system of certification of the energy efficiency. Such certificates provide information to prospective buyers or tenants on the energy performance of buildings, and advice on enhancing it. Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC This Directive establishes a common framework of measures for the promotion of energy efficiency within the Union in order to ensure the achievement of the Union’s 2020 20% headline target on energy efficiency. Such measures include: • annual 1.5% energy savings resulting from implementing energy efficiency measures by distribution network operators and suppliers; • enhancing energy performance of heating systems, installation of double-glazed windows and roof insulation; • purchase of buildings, products and services with high energy-efficiency performance by public bodies; • annual energy modernization of at least 3% of the total floor area of buildings owned and occupied by public bodies; • expanding rights and possibilities of consumers in the area of energy management which includes easy and free access to the metering data on the actual consumption; • national incentives for small and medium-sized enterprises to conduct energy audit that should be mandatory for all large enterprises; • monitoring of the energy performance of new energy generating capacities.
Environment and Renewable Energy Sources
Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (codification) This Directive introduces an important instrument of the environmental policy — environmental impact assessment. Member States must ensure, first of all, that projects likely to have significant effects on the environment (by virtue, inter alia, of their nature, size or location) are made subject to a requirement for development consent and an assessment with regard to their effects. This Directive contains two lists of projects subject to environmental impact assessment (from nuclear power stations, gas pipelines, etc., to large pig farms). An important element is stricter publicity requirements, including to the public participation in the environmental impact assessment. Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment This Directive introduces an important instrument of environmental policy — strategic environmental assessment. An environmental assessment must be carried out of certain plans and programmes during their preparation. Such assessment includes preparation of the environmental report (that must contain detail information on the likely significant environmental effects and reasonable alternatives) and consultations with the relevant authorities and the public. Where a transboundary effect is possible, an assessment and consultations in a transboundary context must be carried out.
Glossary Directive 2003/4/EC on public access to environmental information and repealing Council Directive 90/313/EEC This Directive implements the provisions of the Aarhus Conventions relating to public access to environmental information. It aims to guarantee public access to environmental information owned by public authorities — both upon request and through active dissemination thereof. Environmental information must be made available to an applicant within one month after the receipt by the public authority of the applicant’s request. A request for environmental information may be refused if the request is manifestly unreasonable, or formulated in too general a manner, concerns an unfinished document or internal communications. Directive 2003/35/EC providing for public participation in respect of the drawing up of certain plans and programmes relating to the environment and amending with regard to public participation and access to justice Council Directives 85/337/EEC and 96/61/EC This Directive addresses the implementation of the Aarhus Convention in respect of public participation and access to justice. It sets the requirements to the introduction of mechanisms of informing the public, holding consultations with the public and taking account of comments and proposals of the public in decision-making. Member States must ensure that the public is given early and effective opportunities to participate in the preparation and modification or review of the plans or programmes required to be drawn up under the provisions listed in Annex I of the Directive. Directive 2008/50/EC on ambient air quality and cleaner air for Europe This Directive establishes ambient air quality and ambient air quality management standards. For this purpose, it establishes upper and lower assessment thresholds, target and threshold values, sets objectives for the reduction of the effect of particulate matters, defines and classifies zones and agglomerations, introduces the systems of informing the public and ambient air quality assessment with respect to various pollutants. Where, in a given zone or agglomeration, there is a risk that the levels of pollutants will exceed the alert thresholds, short-term action plans must be drawn up. Directive 1999/32/ЕС relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC, as amended by the Regulation (EC) No. 1882/2003 and Directive 2005/33/EC The purpose of this Directive is to reduce the emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels and thereby to reduce the harmful effects of such emissions on man and the environment. It sets the maximum sulphur content in heavy fuel oil, gas oil and marine gas oils. It also specifies methods of sampling and analysis of sulphur content in fuel to check compliance with the requirements. Directive 2009/147/EC on the conservation of wild birds (Article 4.2) This Directive relates to the conservation of all species of naturally occurring birds in the wild state in the European territory of the Member States. The mechanism of conservation of wild birds provides for the protection of their habitats; protection and use of birds; prevention of harm that can be caused by invasive species; research and reporting. According to Article 4.2, special protection areas need to be established based on ornitological criteria. Special measures also need to be taken to protect migratory species naturally occurring in the territory of a particular state, especially in wetlands. Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) This Directive lays down rules on integrated prevention and control of pollution arising from industrial activities. It requires using the integrated approach to activities referred to in Annex I thereto. All installations covered by this Directive must prevent or reduce pollution due to using best available techniques, efficient energy use, prevention and control of emissions. Transparency of the integrated approach is ensured by the public participation. Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC
Glossary This Directive provides for setting mandatory national targets for the overall share of energy from renewable sources in the overall energy balance to take account of statistics and potential of each particular country. These targets include the achievement of a 20% share of energy from renewable sources in overall Energy Community energy consumption by 2020 and a 10% target to be achieved for the share of RES in the transport sector. This Directive, among other, establishes rules for joint green energy projects between Member States and third countries and access to the grid-system of electricity produced from renewable energy sources.
Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products This Directive lays down rules aimed at ensuring a high level of security of oil supply in the Community through reliable and transparent mechanisms based on solidarity amongst Member States. It provides for the adoption of such laws, regulations or administrative provisions as may be appropriate in order to ensure that the total oil stocks maintained at all times within the Community for their benefit correspond, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. Directive 98/70/EC relating to the quality of petrol and diesel fuels The EU introduced rules prohibiting leaded petrol and limiting the permitted sulphur content in diesel fuel with the view to improving air quality and reducing greenhouse gas emissions. This Directive sets technical specifications applicable to petrol, diesel fuels and biofuels used in vehicles, as well as to gas oils used in nonroad mobile machinery. Apart from the prohibition of marketing leaded petrol, Member States must conduct assessment of national consumption of fuel, adopt laws and identify the authorized body (bodies) to introduce the fuel quality monitoring system. Directive 94/63/EC on the control of volatile organic compound (VOC) emissions resulting from the storage of petrol and its distribution from terminals to service stations, as amended by Regulation No. 1882/2003 211 This Directive provides for the registration of all terminals used for storage, loading and unloading of oil products, installation of technical means allowing reduction of VOC emissions from mobile containers with oil products, bringing all stationary tanks, rail, marine and motor vehicle tanks and loading installations in compliance with the established requirements. Directive 94/22/EC on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons This Directive establishes common rules to ensure the non-discriminatory access to and pursuit of activities relating to the prospection, exploration and production of hydrocarbons. These objective and transparent rules reinforce integration of the internal energy market, encourage greater competition and improve security of supply. The document provides for the implementation of measures to ensure: â€˘ equal access to all organizations possessing necessary resources for prospecting, exploring for and producing hydrocarbons; â€˘ granting authorizations on the basis of objective, published criteria; â€˘ communication of all necessary information to all organizations participating in the established procedures.
Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC This Directive aims to ensure market openness, as well as fair procurements, in particular in the energy sector: extraction (production), transmission and distribution of gas, heat, electricity. 211
The official translation has a lot of mistakes resulting from inaccurate translation
Glossary Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive provides for the implementation of laws on the electricity market which defines electricity as an energy-related product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures nondiscriminatory access to the existing infrastructure, creates favourable conditions for electricity producers to invest in new forms of energy (wind, solar, etc.). Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive provides for the implementation of laws on the gas market which defines gas as an energyrelated product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures that companies have nondiscriminatory access to distribution networks, gas storage facilities and cross-border gas pipelines. Directive 2008/92/Eะก concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users Pursuant to that Directive, open, generally accessible mechanisms of providing information on the prices of energy resources for customers must be introduced. A particular methodology of collection of respective information about gas and electricity prices is to be drawn up and the respective mechanism to that effect is to be introduced.
Benchmarks ANNEX 3 Key Indicators for Assessing Ukraine's Progress in Implementing the EU-Ukraine Association Agreement in the Energy and Environmental Sectors
Outcomes Facts of non-compliance with EU acts, no implementation moves
Outputs, Effects Number of dispute settlement cases initiated by the Energy Community Secretariat
Degree of transposition of EU legislation into Ukraine's legislation
Number and level of legislative and regulatory acts adopted in pursuance of a specific directive/regulation212
Directive 2009/73/EC Regulation (EU) No. 715/2009
Degree of independence of TSOs/SSOs (transmission and storage systemsâ€™ operators)
Implementation of the plan for restructuring NJSC Naftogaz of Ukraine to unbundle natural gas
Assessment Presence/absence Present: -10 from the total points scored Absent: no change Assessment scale of 0 to 100 points 0: no LRA developed and adopted 1-20; some LRA developed, none adopted 21-40; most LRA developed, some adopted 41-60; all LRA developed, some adopted 61-80; most LRA developed and adopted 81-100; all LRA developed and adopted Total score - the arithmetic average for all directives in the section. Assessment scale of 0 to 100 points 0: no actual independence, complete vertical integration
Including laws and by-laws , as well as action plans, security reports, etc.; Does not include policy products, ie LRA preparation plans, implementation plans, etc.
Benchmarks transportation and storage (injection, withdrawal) operations.
Independence degree of DSOs
Number of documented discrimination violations by operators 213
Degree of market openness 5a
Share of the market with unregulated prices or no restrictions connected with the special duties
38 (MECI data: total consumed for the 5 months of 2017 â€“
1-30; preparatory stage completed (items 1-5 and 8 of the plan) 31-50; LRA developed and approved (item 6 of the plan) 51-70; assets have been transferred, the TSO certified (items 7 and 9 of the plan) 71-90; gas storage facilities allocated (items 10-15 of the plan) 91-100; the independence of both operators is confirmed by certification and relevant NEURC control acts Assessment scale of 0 to 100 points 1 point = the share of breaching operators in the total number of checked operators 0: 90-100% 1-20; 75-90% 21-40; 50-75% 41-60; 25-50% 61-80; 10-25% 81-100; 0-10% Assessment scale of 0 to 100 points 1 point = a share of open market
According to the NEURC data on the results of state control measures, particularly data reflecting facts of granting preferences to any customer or gas supply company when concluding agreements on gas transportation by distribution pipelines, facts of creating direct or indirect hindrance to or counter other gas supply companies in their efforts to supply natural gas, and other facts of monopoly abuse. 214 http://www.nerc.gov.ua/?id=19318 213
Indicators of market concentration on the retail market (number of operators, their shares) 216 5b
Presence of clearly regulated supplier change mechanisms 6
Degree of dependence on imported gas and diversification of imports
Actual possibility to choose a supplier (the share of households that have changed their suppliers, per year 219)
Share of imports in the total consumption
50+90)/2 = 70
Share of each supplier in total imports
http://184.108.40.206/minugol/doccatalog/document?id=245220005 NEURC monitoring data (to be assessable in the future). 217 http://www.nerc.gov.ua/data/filearch/Catalog3/Richnyi_zvit_NKREKP_2016.pdf 218 Sum of the market shares of the largest three suppliers. 219 NEURC monitoring data (to be assessable in the future). 215 216
16.5 billion cu m (inclusive of process losses), at non-regulated prices â€“ 6.2 billion cu m) 215 70 (NEURC data: the share of the largest three groups of suppliers on the retail gas market equaled 58% in 2016) 217
50 (import dependence: 41%
CR3 indicator measured on a scale of 218 0 to 100 points 0: 95-100% 1-20; 85-95% 21-40; 70-85% 41-60; 60-70% 61-80; 50-60% 81-100; up to 50% Switching rate measured on scale of 0 to 100 points 0: up to 0.5% 1-20; 0.5-1% 21-40; 1-4% 41-60; 4-6% 61-80; 6-8% 81-100; over 8% Assessment of import dependence on a scale of 0 to 100 points 0: complete dependence (95100%) 1-20; partial dependence (70-95%)
Benchmarks imported gas â€“7 billion 21-40; partial dependence (55cu m) 220 70%) 41-60; partial dependence (2590 50%) (diversification: 61-80; partial dependence (5-25%) at least 4 suppliers, 81-100; complete independence each accounting for a (0-5%) <30% share) Assessment of diversification on a scale of 0 to 100 points 0: monopoly dependence on a single supplier 1-20; share of alternative suppliers below 30% 21-40; share of alternative suppliers ranges between 30% and 50%, there are at least 2 such suppliers 41-60; share of alternative suppliers ranges between 50% and 66%, there are at least 3 such suppliers, with one or two accounting for a share exceeding 30% 61-80; share of alternative suppliers ranges between 66% and 75%, there are at least 4 such suppliers, with one or two accounting for a share exceeding 30%
Benchmarks 81-100; there are at least 4 suppliers, each accounting for a share below 30%
Impact of supply interruptions 8
Duration of emergency period, if any (in days) Status of settlements
Gas shortage as a result of supply interruptions (% of total consumption)
Trend of end consumers' (except industrial consumers) current payments to supplying companies 221
20 (Debts of DHU-CHP to Naftogaz for the first half of 2017 â€“ UAH 8.97 billion, 52% paid) 222
Total score: 58 223
Exclusive of debts incurred in earlier periods. http://www.naftogaz.com/files/Information/TKE-tabl-29-06-2017.pdf 223 Arithmetic average, discounting indicators, initial data (N/A), factoring in the weight of specific indicators. 221 222
1 point = arithmetic average (1 point for import dependence, 1 point for diversification) Assessment scale of 0 to 100 points 0: 65-100% 1-20; 20-65% 21-40; 15-20% 41-60; 10-15% 61-80; 5-10% 81-100; less than 5% Assessment scale of 0 to 100 points, % of total consumption for the period 0: less than 50% 1-20; 50-70% 21-40; 70-85% 41-60; 85-90% 61-80; 90-97% 81-100; 97-100%
Benchmarks ELECTRICITY AND NUCLEAR SAFETY
Outcomes Facts of non-compliance with EU acts, no implementation moves
Outputs, Effects Number of dispute settlement cases initiated by the Energy Community Secretariat
Degree of transposition of EU legislation into Ukraine's legislation
Number and level of legislative and regulatory acts adopted in pursuance of a specific directive/regulation:
Assessment Cases ECS-1/12 and ECS-08/15 against Ukraine for failure to comply with certain Energy Community rules, specifically, the Secretariat concluded that TSOs in the person of Ukrenergo NEC failed to follows the auction rules approved by the NEURC and concerning cross-border capacity distribution. Ukraine (Ukrenergo NEC) is required to submit its case to the Secretariat by July 24, 2017. The Law "On the Electricity Market" was adopted on April 13 and came into force on June 11, 2017, introducing a new energy market model in accordance with the Third Energy Package and providing a procedure for transition to it. The permanent group in the NEURC has a plan for drafting secondary legislation within the timeframe set by law. The first LRA draft (TSO certification) has been released. Working groups have prepared drafts of network codes,
Benchmarks Regulation 714/2009/EC
Directive 2013/59/Euratom Directive 2006/117/Euratom
commercial metering code, etc. Their publication and discussion will be held in accordance with the Transitional Provisions of the Law "On the Electricity Market." In accordance with the Transitional Provisions of the Law, the regulator made public its first LRA related to the Procedure for Certification of the Electricity Transmission System Operator. Some other LRA drafts have been developed, but only a few of them approved. The draft CMU resolution "On Amending the Procedure for Authorizing International Transportation of Radioactive Materials" was worked out back in late 2015. However, the State Regulatory Service (SRS) denied the approval of this draft resolution. SRS representatives reported that the draft would be considered after bringing the Law of Ukraine "On Permissive Activities in the Nuclear Energy Sector" into compliance with the Law of Ukraine "On Administrative Services."
Benchmarks Degree of independence of the trunk network operator
Implementation of the unbundling of power transmission and dispatch functions
avg. 37.5 40
Change of Ukrenergo's corporate governance Degree of independence of distribution network operators (oblenergos)
Degree of market openness
Number of documented discrimination violations by operators (under the license terms for electricity distribution and transmission) Share of the market with unregulated prices or no restrictions due to the special duties
http://www.nerc.gov.ua/?news=6162 Monitoring for the first half of 2017. There is no 6 month data for this item.
On June 30, the NEURC released to the media its draft Procedure for Certification of the Electricity Transmission System Operator. 224 Law of Ukraine "On the Electricity Market" provides for the Regulator to adopt this document by August 11, 2017. On June 19, the MECI agreed the draft of new charter of SE Ukrenergo NEC, taking into account the proposals from the Ministry and the donor community.
According to the data from the NEURC's annual report for 2016, the share of supplies supplying at uncontrolled tariffs (NRTSs) equaled 10.8% (7.7% for Ukrainian consumers and 3.1% for export) 225. The analysis of data of Energorynok for the first six months of 2017 shows only 8.5% of electricity purchased by NRTSs.
Presence of clearly regulated supplier change mechanisms Terms of trade, including cross-border trade
Decision-making regarding consultations on issues of electricity flow (transit)
Security of supply
Indicators of market concentration on the retail market (number of operators, their shares) Actual possibility to choose a supplier (the share of households that have changed their suppliers, per year) Non-discriminatory terms of electricity import/export (customs tariffs, restrictions, auctions, etc.)
Decision-making regarding declaration of the state of emergency in the electricity sector, UES, etc.
Duration of emergency period, if any (in days)
On March 23, 2017, the NEURC approved a new Procedure for Holding Electronic Auctions for Allocating the Transfer Capacity of Interstate Power Grids. Since May 31, an electronic online platform for auctions for access to the throughput capacity of the interstate power grids of Ukraine has been fully prepared for operation. It will enable SE NEC Ukrenergo to hold not only annual and monthly, but also daily auctions. Temporary emergency measures on the electricity market, which the Cabinet of Ministers introduced for a month starting from April 17, 2017 and prolonged in May. The measures are explained by the need to accumulate coal at power plants for the 2017/-2018 autumn-winter season. On June 27, a number of Ukrainian enterprises, including banks and
Adoption and implementation of a 10-year UES development plan Creation of an irradiation monitoring and tracking system 9
Implementation trend of the relevant state targeted program (national plan of action to reduce the risks of long-term irradiation by radon products)
Ukrainian Railways, became targets of cyberattacks and their operation was partially suspended. MECI and Ukrenergo NEC officials assured that the attacks on the computer networks had not affected the functioning of Ukraine's energy system. They also noted that enterprises had a sufficient number of backup channels to control the power grid and safely operate the exquipment. 90 30
Total score: 20 226
Arithmetic average, discounting indicators, initial data (N/A), factoring in the weight of specific indicators.
The plan is adopted and amended annually. By the end of 2016, a second edition of the draft CMU resolution "On Approval of the Procedure for the Establishment of a Unified State System for the Control and Accounting of Individual Doses of Irradiation" was developed.
Benchmarks ENERGY EFFICIENCY AND SOCIAL ISSUES
Outcomes Facts of non-compliance with EU acts, no implementation steps taken
Outputs, Effects Number of dispute settlement cases initiated by the Energy Community Secretariat
Degree of transposition of EU legislation into Ukraine's legislation
Number and level of legislative and regulatory acts adopted in pursuance of:
Directive 2010/30/EC 227
Directive 2010/31/EC 228
Assessment Presence/absence Present: -10 to the total points scored Absent: no change Assessment scale of 0 to 100 points (weight for Directive 2012/27/EC = 3) 0: no LRA developed and adopted 1-20; some LRA developed, none adopted 21-40; most LRA developed, some adopted 41-60; all LRA developed, some adopted 61-80; most LRA developed and adopted 81-100; all LRA developed and adopted
The final score is the arithmetic average for all directives in the section, factoring in the weight of Directive 2012/27/EC
Labeling and standard product information about the consumption of energy and other resources by energy-consuming products Introduction of the minimum energy performance requirements for buildings and their elements; a national plan to increase the number of buildings with nearly zero energy consumption; application the of minimum energy performance requirements to new buildings; energy performance certification; establishment of independent certification control systems.
Energy efficiency improvement trend at the national level (according to the National Action Plan for Energy Efficiency)
Percentage of energy saved through the implementation of energy efficiency measures GDP energy intensity indicator, if available The amount allocated for or attracted to all existing energy efficiency programs (e.g. "warm loans," Energy Efficiency Fund resources) Number buildings with nearly zero energy consumption
Dynamics of the total area of heated and/or cooled buildings owned and occupied by central government authorities and renovated to meet at least the minimum energy performance requirements Dynamics of installation of building and individual heat meters at apartment buildings and individual apartments
% of total area of energy performance upgraded public buildings
Percentage of consumers that have individual heat meters installed
Number of cases and the total amount in fines charged in claims for failure to comply with the implemented energy efficiency.
Number of cases and the total amount in fines charged in claims for failure to comply with the implemented energy efficiency.
The amount invested in energy efficiency programs
Trend of growth buildings with nearly zero energy consumption
Arithmetic average, discounting indicators, initial data (N/A), factoring in the weight of specific indicators.
Total score: 30 229
Assessment scale of 0 to 100 points __ according to the implementation percentage of the plan Assessment scale of 0 to 100 points __ according to the implementation percentage of expected financing indicators Assessment scale of 0 to 100 points __ according to the implementation percentage of expected indicators Assessment scale of 0 to 100 points __ 0 for a negative trend __ 100 for a positive trend Assessment scale of 0 to 100 points __ according to the percentage of the current value in the proportion of 50/50 between building and individual meters Assessment scale of 0 to 100 points __ according to the implementation percentage of expected indicators
Benchmarks ENVIRONMENT AND RENEWABLE ENERGY SOURCES
Outcomes Facts of non-compliance with EU acts, no implementation steps taken
Outputs, Effects Number of dispute settlement cases initiated by the Energy Community Secretariat
Degree of transposition of EU legislation into Ukraine's legislation
Number and level of legislative and regulatory acts adopted in pursuance of a specific directive/regulation230 (1) Directives 2011/92/EC, 2003/4/EC, 2003/35/EC (creation of an environmental impact assessment system)
2 (2) Directive 2001/42/EC (creation of a strategic environmental assessment system)
40 is the Directive implementation plan - adopted Law of Ukraine "On Environmental Impact Assessment"
30 - Directive implementation plan - Draft Law of Ukraine "On Strategic Environmental Assessment"
Assessment Presence/absence Present: -10 to the total points scored Absent: no change Assessment scale of 0 to 100 points 0: no LRA developed and adopted 1-20; some LRA developed, none adopted 21-40; most LRA developed, some adopted 41-60; all LRA developed, some adopted 61-80; most LRA developed and adopted 81-100; all LRA developed and adopted Total score - the arithmetic average for all directives in the section.
Including laws and by-laws , as well as action plans, security reports, etc.; Does not include policy products, ie LRA preparation plans, implementation plans, etc.
Benchmarks (3) Directive 2003/4/EC on public access to environmental information
(4) Directive 2003/35/EC on public participation in the preparation of specific plans and programs
adopted in the first reading 15 - Directive implementation plan - Draft Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine Regarding Access to Environmental Information" developed by the Working Group under the Ministry of Ecology and Natural Resources of Ukraine, but not published 30 - Directive implementation plan - Draft Law of Ukraine "On Strategic Environmental Assessment" adopted in the first reading (takes into account most of the
Benchmarks (5) Directive 2009/147 / EC on the conservation of wild birds
provisions on public participation in the preparation of plans and programs) 25 - Directive implementation plan - Draft Law of Ukraine "On the Conservation of Natural Habitats and of Wild Fauna and Flora Species" developed by the Working Group under the Ministry of Ecology and Natural Resources of Ukraine, but not published. - Adopted in the first reading, a number of legislative and regulatory acts in the fields of environmental protection and the natural reserve fund, which documents are not directly related to
(6) Directive 2008/50/EC on ambient air quality and cleaner air for Europe
(7) Directive 2010/75/EU on industrial emissions
birds, but if adopted and properly applied, will have a positive effect on the protection of birds Adopted Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine on the Conservation of Primeval Forests under the Framework Convention on the Protection and Sustainable Development of the Carpathians (the document does not directly affects the conservation of birds, but will promote their protection)
15 - Directive implementation plan - Draft CMU Instruction "On
Benchmarks (integrated pollution prevention and control)
Approval of the Concept of Reform of the State Environmental Monitoring System" 20 - Directive implementation plan - Adopted Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine Governing the Relations Connected with Obtaining Permissive Documents" - Draft National Emission Reduction Plan for Large Combustion Plants - Draft National Emission Reduction Plan for Enterprises of the Mining and Metallurgical Complex (not published)
Benchmarks (8) Directive 1999/32/EC on the reduction of sulfur content in certain types of liquid fuels
(9) Directive 2009/28/EC on the promotion of the use energy from renewable sources
15 - Directive implementation plan - Draft Resolution "On Amendments to CMU Resolutions No. 573 of June 1, 2011 and No. 927 of August 1, 2013 (released for public discussion) - Resolution "On Amendments to Clause 2 of the Technical Regulations Regarding Requirements for Motor Gasolines, Diesel, Marine, and Boiler Fuels" (-5 points)
20 - the government has approved the HydroPower Development Program of Ukraine until 2026, which will allow bringing up to 15.5 percent the share of power cycling capacity
Benchmarks of HPPs and HPSPPs in the overall energy balance of the branch; - Law "On Amendments to the Law of Ukraine 'On Heat Supply' to Promote Heat Production from Alternative Energy Sources" (No. 4334 ) was adopted and signed by the President of Ukraine P. Poroshenko. Practical application of the environmental impact assessment system
Presence of an electronic register of carried out environmental impact assessment measures
35 - the register relates to opinions rendered by the state environmental procedure (not a new environmental impact assessment procedure, which is not practices as yet) The register of opinions provided by the Ministry of Ecology and Natural Resources of Ukraine is available on the web site of the Ministry of Ecology and Natural Resources of Ukraine. As of June 9, 2017, 16 opinions of state environmental experts were available,
Assessment scale of 0 to 100 points 0-20 - the register is created 21-40 - it contains the minimum information required 41-100 - depending on the completeness of the presented information
Practical application of the strategic environmental assessment system
SEA carried out at the national and local levels
Dynamics of the creation of special conservation areas (SCA) for birds
Number and sufficiency of the projected SPTs
Access to environmental information in practice
Dynamics of the volume of environmental information available in electronic format
The environment monitoring system has been reformed and complies with Directive
Dynamics of the volume of environmental monitoring data available in electronic format
covering the period of January-June 2017. As regards opinions issued to oblast state administrations, such opinions are only available for the Transcarpathian, Kirovograd, Lugansk, Poltava, Sumy, Kharkiv, and Khmelnytsky Oblasts. 0 - not carried out 0 - not created due to the lack of special legislation 20 - the indicator is measured based on the availability of information on the unified state open data web portal data.gov.ua (the portal is currently operating in the test mode) The Ecology section contains 198 data sets. Last update - June 22, 2017 Not applied for the given period
Assessment scale of 0 to 100 points depending on the number and quality of the carried out SEA Assessment scale of 0 to 100 points depending on the number and sufficiency of the projected SPTs Assessment scale of 0 to 100 points depending on the completeness of the presented information
Assessment scale of 0 to 100 points depending on the completeness of the presented information
Benchmarks 2008/50/EC on ambient air quality and cleaner air for Europe Control over emissions from stationary sources, in particular sulfur dioxide emissions
Dynamics of sulfur dioxide emissions from stationary sources into atmospheric air
Availability and implementation of a national plan of action to reduce pollutant emissions into atmospheric air from large combustion plants
Dynamics of pollutant emissions from combustion plants with a capacity exceeding 50 MW
0 3,078,100 tonnes in 2016 as compared with 2,857,200 tonnes in 2015 (+ 7.7%) 0 1,076,400 tonnes in 2016 as compared with 830,300 tonnes in 2015 (+29.6%) Not applied for the given period
Availability and usage of metering methods and monitoring of usage of RES
Dynamics of the number and capacity of renewable energy facilities, and the amount and share of the electricity of their production in the consumption structure, outputs and sales of bioethanol, biofuels (according to the National Plan indicators)
Assessment scale of 0 to 100 points depending on the downward dynamics of pollutant emissions into the atmospheric air from stationary sources Assessment scale of 0 to 100 points depending on the downward dynamics of sulfur dioxide emissions from stationary sources into atmospheric air Assessment scale of 0 to 100 points depending on pollutant emissions from combustion plants with a capacity exceeding 50 MW Assessment scale of 0 to 100 points __ according to the implementation percentage of expected financing indicators
Dynamics of investments in the modernization of energy facilities to reduce the harm they cause to the environment and in the construction of new facilities
Dynamics of pollutant emissions from stationary sources into atmospheric air
avg. 73.5 90 - the capacity of RES facilities As of the end of 2016, Ukraine had 288 renewable energy facilities in operation (excluding the occupied
Final score is the arithmetic average Assessment scale of 0 to 100 points __ according to the implementation percentage of the expected indicators set in the National Plan
Benchmarks territory of the Autonomous Republic of Crimea). Capacity of the renewable energy facilities (except for large HPSs and HPSPPs)1,117.692 MW. Capacity of large HPPs and HPSPPs - 6,063.3 MW. Thus, the total capacity of RES generation as of the end of 2016 equaled 7,180.992 MW. According to the National Plan, the capacity of RES projects should have equaled 7,977 MW. 57 - Electricity production by RES projects In 2016, RES facilities produced 1,560.3 million kW/h and HPP and HPSPP electricity output âˆ’ 9,118.7 million kW/h. Thus, these facilities produced a total of 10 679 million kW/h. This makes up 6.9% of the total (154,817.4 million
Benchmarks kW/h). According to the National Plan, the target share of electricity output by these facilities in 2016 was 8.8% and thir target output - 18,726 million kW/h. Thus, the National Plan's target was achieved by 57% only. Programs and mechanisms for promoting renewable energy production, investments in these programs
Number of RES support schemes, evaluation of progress in implementing the National Action Plan
Assessment scale of 0 to 100 points __ according to the 10 - the Program for the implementation percentage of Development of the expected financing indicators Hydropower Sector of Ukraine until 2026 was approved, but the Program is to be implemented without funding from from the state budget of Ukraine, using only resources of the involved enterprises and loans from international financial organizations. 20 â€“ new Laws of Ukraine "On Amendments to the Law of Ukraine 'On Heat Supply' to Promote Heat Production from
Benchmarks Alternative Energy Sources"proposes setting the heat supply tariff for companies, which produce heat using installations based on alternative energy sources (including TPPs, CHPs, and cogeneration units), at 90% of the effective heat supply tariff for heat produced from natural gas. This move is expected to come as an incentive to replace gas with alternative fuels. The authority to set these tariffs was transferred from the NEURC to local self-government authorities. 40 - the NEURC issued the following two resolutions on "green" tariffs and surcharges to "green" tariffs for using Ukrainian-made equipment: No. 2380 dated December 29, 2016 (for the 1st quarter of 2017);
Benchmarks No. 427 dated March 30, 2017 (for the 2nd quarter of 2017). Resolution No. 427 increased by 4.6% the tariffs for land projects with an installed capacity exceeding 10 MW in comparison with the tariffs provided in Resolution No. 2380. Total score: 12 231
Arithmetic average, discounting indicators, initial data (N/A), factoring in the weight of specific indicators.
Outputs, Effects Number of dispute settlement cases initiated by the Energy Community Secretariat
Facts of non-compliance with EU acts, no implementation steps taken
Degree of transposition of EU legislation into Ukraine's legislation
Availability of technical capacity for the proper storage of the oil and/or Degree of readiness of the oil and/or petroleum petroleum products stocks products storage infrastructure required for compliance with Directive 2009/119/EC
Volumes of the created oil and/or petroleum products stocks.
Number and level of legislative and regulatory acts adopted in pursuance of a specific directive
Volumes of the oil and/or petroleum products stocks. 0
Assessment Presence/absence Present: -10 to the total points scored Absence: no change Assessment scale of 0 to 100 points 0: no LRA developed and adopted 120: some LRA developed, none adopted 21-40: most LRA developed, some adopted 41-60: all LRA developed, some adopted 61-80: most LRA developed and adopted 81-100: all LRA developed and adopted Total score - the arithmetic average for all directives in the section. Assessment scale of 0 to 100 points Point = readiness of the infrastructure (% of the necessary/indicative volumes) 0: 0-10% 1-20; 10-25% 21-40; 25-50% 41-60; 50-75% 61-80; 75-90% 81-100; 90-100% Assessment scale of 0 to 100 points Point = volume of the stocks (% of the necessary/indicative volumes) 0: 0-10% 1-20; 10-25%
Transparency of granting subsoil for use
Number of oil and gas subsoil plots put up for open auctions and granted for use under the new procedure (on an annualized basis)
Fuel quality assurance system
Number of violations registered by the petroleum products quality and safety monitoring system in accordance with EU requirements
Total score: 12
21-40; 25-50% 41-60; 50-75% 61-80; 75-90% 81-100; 90-100% Assessment scale of 0 to 100 points 0: less than 5 1-20; 5-10 21-40; 11-15 41-60; 16-20 61-80; 21-30 81-100; 30 and more Assessment scale of 0 to 100 points 0: No fuel quality assurance system available 1-100: depending on the number of violations and problem scale
Benchmarks BUSINESS CLIMATE
Outcomes Facts of non-compliance with EU acts, no implementation steps taken
Outputs, Effects Number of dispute settlement cases initiated by the Energy Community Secretariat
Degree of transposition of EU legislation into Ukraine's law
Number and level of legislative and regulatory acts adopted in pursuance of a specific directive/regulation232: 1) Directive 2014/25/EC 2) Directives 2009/72/EC and 2009/73/EC (as regards requirements for the regulator)
1) 2) 3) 4) 5)
80 20 25 75 64 Mean value: 52.8
3) Directive 2008/92/EC
5) Competition law 3.1 Capital investments 233: A) extractive industry (black and brown coal mining, crude oil and natural gas production, mining of metal ores and other minerals)
Total score - the arithmetic average for all directives in the section.
4) State aid to economic entities Investment attractiveness of energy markets (dynamics)
Assessment Presence/absence Present: -10 to the total points scored Absent: no change Assessment scale of 0 to 100 points 0: no LRA developed and adopted 1-20; some LRA developed, none adopted 21-40; most LRA developed, some adopted 41-60; all LRA developed, some adopted 61-80; most LRA developed and adopted 81-100; all LRA developed and adopted
A) 30 (115%) B) 100 (153%) C) 58 (129%) Mean value: 62.7
Assessment scale of 0 to 100 points 0: as compared with the previous period <100% 1-20; 100-110% 21-40; 110-120% 41-60; 120-130%
Including laws and by-laws , as well as action plans, security reports, etc.; Does not include policy products, i.e. LRA preparation plans, implementation plans, etc. For the period of September '16 - March '17 as compared with March '16 - September '16. State Statistics Committee data
Benchmarks B) Production of coke and petrochemicals C) Supply of electricity, gas, steam, and conditioned air
Degree of excessive regulation
61-80; 130-150% 81-100; >150%
3.2 Foreign direct investment (share capital) 234 in Ukraine: A) extractive industry (black and brown coal mining, crude oil and natural gas production, mining of metal ores and other minerals) B) Production of coke and petrochemicals C) Supply of electricity, gas, steam, and conditioned air
A) 41 (151%) B) 0 (98%) C) 0 (65%)
Total score 4.1 Connection of networks
38.2 А) 5 B) 6
1. Number of procedures for (Ukraine compared with Germany): А) Connection to a gas supply network; B) Connection to a power grid; 2. Time needed to process the necessary documents in Ukraine as compared with Germany: А) Connection to a gas supply network; B) Connection to a power grid;
Mean value: 13.7
А) 1 B) 1 1А * 2А = 5 1B * 2B = 6 Mean value: 5.5
Investments as of April 01, 2017 as compared with September 01, 2016. State Statistics Committee data
Total score - the arithmetic average for all indicators. Assessment scale of 0 to 100 points 0: as compared with the previous period <100% 1-20; 100-125% 21-40; 126-150% 41-60; 151-175% 61-80; 176-200% 81-100; >200%
Total score - the arithmetic average for all indicators. Assessment scale of 1 to 100 points, where 1 is an environment without any excessive regulation , meeting the European standards to a maximum degree; 100 is the opposite value. Determined as the product of the following two parameters: • Difference in the number of procedures 1-2: greater by >6 3-4: greater by >4-5 5-6: greater by 2-3 7-8: greater by 1 9-10: the same quantity as in Germany
Compliance with the competition rules
The state aid system is brought into compliance 237
4.2 Availability of public domain information about the licensing and connection procedures and requirements
Total score Operation of the AMCU in accordance with the EU regulations concerning cases regarding violations of competition law
Functioning of the electronic register of state aid mechanisms
â€˘ Difference in time taken by the connection procedure (calendar days) 1-2; >45 days 3-4; <45 days 5-6; <21 days 7-8; <14 days 9-10; <7 days Assessment scale of 0 to 5 points 1: accessible - <20% of necessary information 235 2: accessible <40% 3: accessible <60% 4: accessible <80% 5: accessible <100% Assessment scale of 0 to 100 points 0: The AMCU is non-functional 1-100; in view of the introduction and compliance with competition law (taking into account the positions in the Global Competitiveness Rating in the category "Effectiveness of Antitrust Policy"236, specific cases, judicial practice related to AMCU cases, and AMCU investigation data) Assessment scale of 0 to 100 points 0: no register created
Share of published online permission/licensing procedures in the total https://www.weforum.org/reports/the-global-competitiveness-report-2016-2017-1 237 See published draft CMU resolutions and CMU resolutions registered with the Ministry of Justice, as well as the report on the results of the Pilot Project of State Aid Control in the Energy Sector. 235 236
Benchmarks on the energy markets (and on related ones)
Total score: 40 238
Arithmetic average, discounting indicators, initial data (N/A), without giving more weight to specific indicators.
1-26; the main law adopted 27-50; all LRAs adopted (12 LRAs in total) 51-100; the register has been created, points to be awarded depending on its information completeness, update frequency, relevance depending on the current update status