Page 1

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


THIS PUBLICATION HAS BEEN PRODUCED BY THE ENERGY REFORMS COALITION IN THE FRAMEWORK OF THE PROJECT «IMPROVING IMPLEMENTATION OF UKRAINE’S COMMITMENTS WITHIN THE ENERGY COMMUNITY THROUGH ENHANCING IMPACT OF CIVIL SOCIETY», IMPLEMENTED BY THE DIXI GROUP NGO JOINTLY WITH THE RESOURCE & ANALYSIS CENTER «SOCIETY AND ENVIRONMENT» WITH THE ASSISTANCE OF THE EUROPEAN UNION AND THE INTERNATIONAL RENAISSANCE FOUNDATION. THE CONTENT OF THIS PUBLICATION CAN IN NO WAY BE TAKEN TO REFLECT THE VIEWS OF THE EUROPEAN UNION. THE EUROPEAN UNION IS MADE UP OF 28 COUNTRIES AND THE PEOPLE OF THOSE COUNTRIES. IT IS A UNIQUE POLITICAL AND ECONOMIC PARTNERSHIP FOUNDED ON THE VALUES OF RESPECT FOR HUMAN DIGNITY, FREEDOM, EQUALITY, THE RULE OF LAW AND HUMAN RIGHTS. OVER MORE THAN FIFTY YEARS WE HAVE CREATED A ZONE OF PEACE, DEMOCRACY, STABILITY AND PROSPERITY ON OUR CONTINENT WHILE MAINTAINING CULTURAL DIVERSITY, TOLERANCE AND INDIVIDUAL FREEDOMS. THE EU LOOKS TO SHARE ITS VALUES AND ACHIEVEMENTS WITH NEIGHBOURING COUNTRIES AND PEOPLES AND THOSE FARTHER AFIELD.

Contacts: DiXi Group NGO UKRAINE 02095 Kyiv Sribnokilska Str. 24, P.O. Box 68 author@dixigroup.org energyreforms@googlegroups.com www.enref.org

© Energy Reforms coalition, 2015 Layout – Taras Mosienko Print — SiLa LLC Translation – Alesco Translations


TABLE OF CONTENTS Key conclusions

4

Recommendations

6

Implementation process Gas

10

Electricity

22

8

30 34

Regulatory authority Security of supply Renewables

46 56 68

Environment

Energy efficiency Oil

94

Statistics

98 102 106

Competition Social issues

Reference to laws and regulations

112


KEY CONCLUSIONS

The closer cooperation between the “reform champions” among public authority branches is, the faster and better reforms are. Peculiarity of reforms implemented after 2014 is improved social mobility as well as arrival of new politicians and officials both in public authorities, i.e. the government, the parliament, and sectoral ministries. Many of them are motivated to carry out reforms and to demonstrate results. The key laws, namely on natural gas market, on promotion of renewable energy, on energy service contracts, were adopted first and foremost due to such “champions”. And vice versa, once such “champions” in different branches have political or other controversies, the issues remain unsettled and, as a rule, the results of decision making are poor.

4

External factor remains important for keeping reforms fast. The more international financial organizations set certain reform as a requirement for granting a loan or aid, and the bigger the amount of such aid is, the higher chances to be implemented such a reform has. Adoption of the gas market law was one of the World Bank requirements for granting the next tranche to the government, this encouraged both the parliament and the government to accelerate its consideration and adoption. Reference between clear changes in the energy sector to financial assistance under the “more for more” principle shall continue.

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Cooperation between stakeholders and experts, namely with the Secretariat of the Energy Community, increases the possibilities for better reforms. Reform process was faster and dialogue between the main political forces was more efficient in the sectors, where experts of the Energy Community Secretariat were involved. Introduction of world practices, transfer from discussions to clear mechanisms, and even development of draft laws and key regulations on the initiative of the Energy Community Secretariat mitigated political factors and allowed key stakeholders (MPs, as a rule) reaching agreement faster. Despite strong political will, there is still the “second level” of barriers for successful reforms existing, i.e. decision-making system, influence of financial and industrial groups, and politicization of the process. Starting from 2014, all the public authority branches declared their commitment to make reforms to ensure real European integration of Ukraine. For this purpose, plans with clear objectives, schedules and relevant indicators have been developed. At the same time, despite numerous efforts to make the process automatic, namely through adoption of acquis implementation plans, it still requires continuous adjustment and control. Among the main reasons – the unreformed systems of state service, which allows delaying decision-making, the extremely high influence of business on political decisions and the use of unpopular reforms for the purposes of political struggle, which hampers consensus between political players.

although having common objectives, most of such mechanisms exist separately of each other and do not encourage communication among the main stakeholders. Harmonization of such initiatives, promotion of better communications among involved authorities may improve not only monitoring and progress of the reforms, but also quality and pace of the decisions’ expertise. The major challenge for Ukraine will be the way from adoption of reforms to their practical implementation. If the process of adopting new “rules of the game” in energy sector is already commenced on the level of laws and regulations, their implementation is still the challenge for the government, business and the public. While addressing this challenge, it is very important to monitor implementation and to prevent distortion of concepts and values, which are envisaged by the European legislation and which are the aim of reforms. Reinforcement of publicity and transparency of the public authorities and business in energy sector is one of the main tasks. Substantial progress was made in increasing the level of transparency of public authorities and state-owned companies during 20142015. However, the growth of energy prices and tariffs, opening of the markets for foreign companies require further changes, namely building better communication with consumers, promptly responding on complaints and facilitating access to all information, which is not confidential or secret.

Efforts for reform automatization created lots of overlapping initiatives, which need harmonization. Trying to keep a “single framework” in the reform process, different authorities initiated a range of initiatives for promotion and monitoring of reforms, including those in energy sector. However, UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

5


RECOMMENDATIONS

The reforms commenced require from Ukraine even more involvement in the European energy policy. The 2014-2015 situation in the gas sector demonstrated interdependence between Ukrainian and European markets, as well as potential benefits from their integration. To achieve this, the Ukrainian party shall be more actively engaged in the discussion of new priorities of the EU energy policy and future rules, the infrastructure projects for integration of Ukrainian and European markets shall be included into projects of the EU common interest, etc. Positive conditionality principle shall be kept in the dialog between the government and international partners. Establishing clear deadlines and conditions promotes activation of the governmental resources and better reform planning, as well as limitation of discussions in the parliament in time. Improved dialogue between the key international partners and coordinated reform actions can make the process more precise and structured. Upon start of reforms implementation, the need in improved monitoring and control of the implementation quality does increase. Monitoring and control of the reforms implementation quality, in turn, require better public awareness on original objectives and values of the changes. There are still little public initiatives and organizations in the energy sector which have relevant knowledge; therefore, the task is to teach and to improve awareness of the stakeholders.

6

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


In order to overcome the “second level” barriers it would be helpful to develop platforms for dialogue among public authorities and the “reform champions”. Better communication among all the stakeholders and their involvement to the discussion of changes from the very first stages will help accelerating the document flow through official channels, preventing the misuse of political interests and minimizing the influence of certain financial and industrial groups. Moreover, closer cooperation between the “reform champions” will help to develop consolidated list of reform priorities without scattering objectives and tasks, and to define the optimal schedule for their implementation. New platforms for information sharing and coordination are to improve communication between public authorities. In particular, the Multi-Stakeholder Group, set up by the Ministry of Energy and Coal Industry in 2014, can become such a platform. The group has not started its operation until September 2015; however, it could substantially improve operative information sharing both among the Ukrainian public authorities and between the Ukrainian government and the EU.

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

7


2014 3 SEPTEMBER 2014: the Law No. 1621VII, which abolished corporate profit tax exemption for companies generating electricity from RES, entered into force

4 SEPTEMBER 2014: the Law No. 1638VII, which abolished state monopoly for bioethanol manufacturing, entered into force

1 OCTOBER 2014: State program for compensation of a part of the loan for the purchase of non-gas boilers, which was further expanded to energy efficient equipment and materials, commenced

3 SEPTEMBER 2014: the Cabinet of Ministers approved Action Plan for Implementation of Directive 2009/28/EC (Ordinance No. 791)

1 OCTOBER 2014: New National Renewable Energy Action Plan until 2020 is approved (Ordinance of the CoM No. 902)

26 OCTOBER 2014: the Government approved Regulation on State Agency on Energy Efficiency and Energy Saving of Ukraine

1 DECEMBER 2014: Loan agreement on financing GTS reconstruction is signed with the European Investment Bank

15 APRIL 2015: the Government approved plans for implementation of the EU environmental legislation

20 MAY 2015: Draft Law on implementation of EU Directives concerning evaluation of environmental impact is registered in the Parliament

4 JUNE 2015: the Government approved plans for implementation of certain EU regulations in statistics

24 JUNE 2015: the Cabinet of Ministers created an energy stabilization fund in the amount of USD 1 billion

13 MAY 2015: the AMCU initiated investigation against Gazprom for violations of the legislation on the protection of economic competition 14 MAY 2015: the Verkhovna Rada adopted the Law “On Amendments to Certain Laws of Ukraine Regarding Stabilization of “Naftogaz of Ukraine” NJSC Financial Standing”

8

30 OCTOBER 2014: following trilateral negotiations between Ukraine, the EU and the RF the “winter package” was signed in Brussels

27 MAY 2015: the Government approved Technical Regulation on Energy Marking of Light Bulbs and Fixtures 29 MAY 2015: “Ukrtransgaz” and Hungarian FGSZ signed an interconnection agreement on the merger of cross-border gas pipelines

15 JUNE 2015: the Cabinet of Ministers approved Ordinance on launching UkraineEU Energy Bridge Pilot Project 23 JUNE 2015: report of international auditors on adequacy of natural gas price for household customers calculation is published

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

7, 12, 26 NOVEMBER 2014: by a range of Resolutions the Government obliged industry to buy natural gas exclusively from Naftogaz until February 28

In July a call-centre and a Communication Centre for information on compensation programs are established within State Agency on Energy Efficiency and Energy Saving of Ukraine (SAFE) 1 JULY 2015: separation of functions of natural gas distribution and supply is commenced in Oblgazes

11 DECEMBER 2014: the Secretariat of the Energy Community expressed concerns about monopolization of Ukrainian natural gas market 15 DECEMBER 2014: Loan agreement on financing GTS reconstruction is signed with the EBRD 29 DECEMBER 2014: the Cabinet of Ministers abolished exemptions on import of energy-saving materials, equipment and their components to the customs territory of Ukraine (Resolution No. 719)

2 JULY 2015: the MinEnergy set up a Working Group for elaboration of model for stockpiling of oil and oil products (Order No. 412) 3 JULY 2015: A new Draft Law “On Electricity Market” was presented by the Ministry of Energy and Coal Industry 6 JULY 2015: Draft Law “On Peculiarities of Repayment of Debts for Electricity in Ukrainian Wholesale Electricity Market”


IMPLEMENTATION PROCESS

31 DECEMBER 2014: State Standard DSTU-Н Б B.3.2-3:2014 “Guidelines on thermal modernization of residential buildings” is adopted 12 FEBRUARY 2015: the Regulator approved Procedure of E-Auctions for Distribution of Throughput Capacity of International Power Grids

16 JULY 2015: the Law of Ukraine No. 514-VIII, which cancels the “local content” rule, entered into force 16 JULY 2015: the Law of Ukraine No. 626-VIII “On Amendments to Certain Utility Laws of Ukraine”, which prohibits to set housing and utility services prices/tariffs lower than economically feasible expenses on production thereof, was adopted 17 JULY 2015: Draft Electricity Networks Code was published

26 FEBRUARY 2015: the NEURC approved Resolution providing for gradual increase of tariffs for electricity sold to household customers 28 FEBRUARY 2015: The Ministry of Social policy presented subsidies granting system reform

3 MARCH 2015: the NEURC increased gas price for household consumers to the level agreed with the IMF

1 APRIL 2015: following the consultations Naftogaz and Gazprom signed the “summer package”

15 MARCH 2015: the National Action Plan for Reduction of Emissions of Pollutants into the Air from Large Combustion Plants was presented

1 APRIL 2015: the NEURC approved increased housing and utility services tariffs

25 MARCH 2015: the Cabinet of Ministers approved Action plan for natural gas sector reform

17 JULY 2015: the Government approved Technical Regulation on Energy Marking of Domestic Dishwashers

28 AUGUST 2015: Natural Gas Supply Security Rules and Natural Gas Supply Emergency Action Plan are published

20 JULY 2015: the AMCU launched comprehensive examination of Ukrainian electricity markets

16 SEPTEMBER 2015: the MinEnergy approved new composition of the multilateral working group for development, implementation and monitoring of performance of reforms according to the commitments undertaken within the framework of participation in the Energy Community (Order No. 596)

27 AUGUST 2015: Draft Plan for United Energy Systems of Ukraine (UESU) Development for 20162025 is provided for pblic discussion

7 APRIL 2015: the Law On Peculiarities of Regulation of Relations in Electricity Sector in the Territory of Anti-Terrorist Operation is adopted

28 SEPTEMBER 2015: Governmental Committee on Economic Development and European Integration approved the Ordinance of the Cabinet of Ministers “On National Energy Efficiency Action Plan till 2020”

8 APRIL 2015: the Government approved plans for implementation of the EU energy legislation (Ordinance No. 346-p) 9 APRIL 2015: the Verkhovna Rada adopted the Law “On Natural Gas Market” 9 APRIL 2015: Laws on energy services are adopted, namely on introducing new investment opportunities, securing rights and legal interests of business entities for large-scale energy modernization

30 SEPTEMBER 2015: the NEURC approved gas transportation system code, gas distribution system code, natural gas storage facilities code, Natural gas supply rules and standard agreements 1 OCTOBER 2015: the Law “On Natural Gas Market” entered into force

2015

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

9


GAS

10

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

MARKET REFORM

Regulatory authority

Directive 2009/73/EC (the Third Energy Package) is aimed at creating fully operational internal market in natural gas within the EU. It provides for distinction of vertically integrated undertakings in terms of ownership structure (i.e. ownership rights). Governments define a direction of market development on their own behalf: either towards further liberalization (setting up an independent system operator or ISO) or towards reinforced regulation (separate owner and transmission system operator or ITO). Another important change concerns further strengthening of independence of national regulators, expanding market data sharing and emergence of retail market.

Security of supply

Pursuant to Decision of the Ministerial Council of the Energy Community D/2011/02/MC-EnC, the contracting parties shall introduce most provisions of the Third Energy Package (including Directive 2009/73/EC) into their laws and regulations by January 1, 2015.

1

http://zakon1.rada.gov.ua/laws/show/5/2015

2

http://zakon4.rada.gov.ua/laws/show/n0001001-15/paran2#n2

3

 ttp://zakon4.rada.gov.ua/laws/show/695-2014-%D0%BF/ h paran5#n5

The key document in the context of market liberalization was the action plan for the natural gas sector reform7, developed within the Trust Fund contract between the European Commission and the World Bank, and coordinated with the Secretariat of the Energy Community, and approved by the 4

http://program.kmu.gov.ua/organization/5

5

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=244978712&cat_id=244945102

6

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245039557&cat_id=244977866

7

http://zakon4.rada.gov.ua/laws/show/375-2015-%D1%80#n9

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Action Program of the Cabinet of Ministers of Ukraine and the Coalition Agreement 2 provide for a range of steps towards fulfilment of obligations3, including involvement of investors in GTS modernization and operation (including announcing international competition), implementation of GTS modernization project (by 2020) in cooperation with the EBRD and EIB, as well as LNG terminal and interconnection between Ukraine and Poland pro-

In January the Ministry of Energy and Coal Industry of Ukraine published the Action Plan for Implementation of the Action Program of the Cabinet of Ministers of Ukraine and the Coalition Agreement in 20155, which sets similar priorities. In September 2015 the Ministry of Energy published information as regards implementation of the aforesaid Action Plan6, which allows to evaluate progress by directions of natural gas sector reform.

Environment

Decree of the President of Ukraine No. 5/2015 approved the Sustainable Development Strategy “Ukraine — 2020”, which inter alia provides for reorganization of “Naftogaz of Ukraine” NJSC according to the EU Third Energy Package, comprehensive reform of the system of energy and fuel price an tariff setting, elimination of cross subsidies and state grants, attracting investments for gas transportation system (GTS) modernization1.

jects4, reorganization of Naftogaz of Ukraine NJSC (establishing a PJSC to operate main gas lines and underground gas storage facilities) and comprehensive financial rehabilitation of the company by 2017, including through elimination of cross subsidies and transfer to market pricing model.

Renewables

FRAMEWORK LAW ON MARKET IN NATURAL GAS PURSUANT TO REQUIREMENTS OF THE EU THIRD ENERGY PACKAGE IS ADOPTED

11


Ordinance of the Cabinet of Ministers of Ukraine of March 25, 2015 No. 375-р. The key priorities set by the action plan were arrangements with the IMF and adoption of the Law “On Natural Gas Market”, to be followed by increase of natural gas prices for households and thermal power producers, as well as procurement prices for state-owned extracting companies. Further steps included submission of draft law on strengthening of independence of the National Commission for State Energy and Public Utilities Regulation (NEURC), and a draft law on amendments to laws to create a separate regulatory framework for gas transportation. The Ministry of Social Policy was ordered to develop, within March – August 2015, a draft Resolution of the Cabinet of Ministers of Ukraine on definition of procedure of granting subsidies and other targeted aid to compensate costs to vulnerable consumers. The Ministry of Energy and Coal Industry was ordered to secure the right of consumers to free choice of natural gas supplier and prevent restriction of such right on a regular basis, as well as to develop, in cooperation with the NEURC, and approve regulations to implement the law on gas market (within April – July 2016). By October of the current year, the parties are supposed to develop and submit to the Secretariat of the Energy Community a draft plan of the Naftogaz restructuration, as well as to develop an action plan to prevent risks related to such reorganization; therewith, by January 2016 they shall develop a draft Resolution of the CabMin on choosing a model of unbundling for gas transportation system. On April 8 the Cabinet of Ministers approved plans for implementation of the EU energy legislation, developed by the MinEnergy (Ordinance No. 346p8). In particular, the above plans concerned such regulations of the Third Energy Package as Directive 2009/73/ЕС and Regulation 715/2009 on conditions for access to the natural gas transmission networks. On December 23 the Draft Law “On Natural Gas Market” was published on the MinEnergy official website9. It was noted that the law was developed to “create efficient competitive environment in natural gas market pursuant to the key requirements of the EU legislation”, namely of the Third Energy Package directives. The draft law was de-

12

veloped by the Working group10 in close cooperation with the Secretariat of the Energy Community, which presented a draft law for consideration of the Government in January 201511. It is important to note that adoption of this law was among the key conditions identified under the new IMF’s financing program for granting further tranches12. In February in order to discuss the draft law a round table meeting was held in Kyiv 13, the participants of which were members of the Parliament, representatives of the Government, the European Commission and the Secretariat of the Energy Community, as well as market players, experts and other stakeholders. On February 26, the Cabinet of Ministers registered the draft law in the Verkhovna Rada under the No. 225014. On March 5 it was approved as a basis, on April 9 it was approved in general and on April 30 it was signed by the President. The Law No. 329-VIII “On Natural Gas Market” enters into force from October 1, 2015 and lays down legal, economic and organizational principles of gas market functioning, provides for ensuring non-discriminating access of operators and consumers to the market, creation of a fully operational market based on the principles of free competition and ensuring sufficient consumer protection and security of supplies. It provides for, inter alia, the introduction of ownership unbundling models or ISO, however, does not require changing form of ownership (from state-owned to private or municipal) of the gas transportation system. Compliance with the requirements of legal and functional unbundling would be sufficient for operators of gas distribution systems, gas storage facilities and LNG facilities. The law provides for transposing the concept of public service obligations as “special obligations to ensure that general public interests are met in the process of natural gas market operation”. Such obligations will be applied to ensure sustainability, adequate quality and accessibility of natural gas, as well as to maintain appropriate security condi10

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=244972101&cat_id=35109

11

http://ua-energy.org/post/49908

12

http://economics.lb.ua/state/2015/03/12/298361_mvf_obnarodoval_memorandum.html

8

http://zakon2.rada.gov.ua/laws/show/346-2015-%D1%80

13

http://ua-energy.org/post/50817

9

 ttp://mpe.kmu.gov.ua/minugol/doccatalog/ h document?id=244975858

14

http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?id=&pf3511=54205

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56440

17

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56441

18

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56442

19

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245038231&cat_id=35082

20

 ttp://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ h id=245034700&cat_id=35082

Natural Gas Transportation System Code; Natural Gas Storage Facilities Code and criteria, according to which negotiated access or regulated access is applied to a natural gas storage facility; Standard agreement on natural gas distribution, transportation and supply to household customers, natural gas supply by a supplier of last resort, natural gas supply at a regulated tariff, natural gas storage (injection, offtake); Procedure for distribution of funds credited to special current accounts of natural gas suppliers, which undertook special obligations; d  raft resolutions on abolishment of certain resolutions of the Cabinet of Ministers and the NEURC (namely as regards abolishing procedures of calculation of prices and tariffs for household customers, procedures of calculation of wholesale and marginal prices and tariffs).

Therewith, rules of supply and network codes shall become a starting point for abolishing a range of resolutions of the Cabinet of Ministers and orders of the MinEnergy, which directly regulated the market. All in all, upon request the Ministry of Energy and Coal Industry provided a list including more than 50 regulations to be developed and approved, including new licencing conditions, methodologies of tariff calculation, settlement and review procedures, reporting forms, compliance programs etc.22 21

http://www.nerc.gov.ua/?id=13266

22

Development of secondary legislation is supported by the Secretariat of the Energy Community, as well as consultants within the

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

16

Natural Gas Distribution System Code;

Environment

These regulations are supposed to abolish all the resolutions of the Cabinet of Ministers, which regulated procedure of gas tariff setting and supply,

•

Natural gas supply rules;

Renewables

In August-September the MinEnergy and the NEURC published a set of draft regulations aimed at implementing the Law “On Natural Gas Market” in practice. Draft Regulations of the Cabinet of Ministers on approval of the procedure of imposing special obligations to ensure that general public interests are met19 and Temporary competitive procedure for “supplier of last resort” 20are among them.

http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?id=&pf3511=55939

•

•

INTENSE WORK ON SECONDARY LEGISLATION FOR THE NEW MARKET IS ABOUT TO FINISH

15

• • • •

Security of supply

In September a range of governmental draft regulations on setting a framework for a new model of natural gas market was registered in the Parliament, namely draft regulations No. № 307216 (alignment of provisions, possibility of paid use of gas distribution systems), No. №  307317 (amendments to the Tax Code), No. 307418 (amendments to the Customs Code, namely as regards natural gas backhaul).

The NEURC is no less active. For instance, the National Regulator has developed and published drafts of the following regulations21: Regulatory authority

The legislative process did not stop at that point. On July 7 a group of peoples’ deputies registered a draft law No. 2312а15 on peculiarities of activity on natural gas market during the transitional period. The draft law provides for eliminating potential conflicts and ambiguous interpretations of provisions of the legislation in force, particularly as regards licensing of undertakings, which carry out natural gas supply, as well as for excluding procedure of certification of gas transportation systems (main gas lines) operators from the framework of other laws.

however liberalization of the market will be carried out upon the transitional period, which will continue at least till April 1, 2017, when the Naftogaz will cease to bear responsibility for accumulation of natural gas resources for household customers. Instead, a supplier of last resort will be elected for 3 years, i.e. until October 2018.

Electricity

tions of supply to consumers; therewith, such an approach does not deprive consumers of the right to choose natural gas supplier and to buy gas at prices freely defined in contracts.

13


Support of the MinEnergy and the NEURC in revision and improvement of the gas sector legislation in accordance with the Law “On natural gas market” was provided with the assistance from the European Commission and the World Bank within the Trust Fund contract, and in cooperation with the Energy Community Secretariat.

THE KEY AND THE MOST SIGNIFICANT CHANGE IN THE GAS MARKET WAS INCREASE OF TARIFFS On January 27, the Procedure of assessment, calculation and setting of natural gas prices for economic operators, which carry out natural gas extraction, was approved by the NEURC Resolution No. 763 of 11.12.201423. According to the aforesaid Resolution, pricing shall be based on the annual plans for marketable products, economically feasible planned expenditures defined by the national standards, feasibility studies and budgets, rates of taxes and duties, as well as prices in planned period. On February 26, the NEURC set new natural gas prices for state-financed institutions and organizations (Resolution No. 22624) and industries (Resolution No. 22725), which increased by 56 %, as well as for religious organizations (Resolution No. 22826) which increased by 1/3. As regards prices for household customers, the Memorandum of Economic and Financial Policies of Ukraine 27provides for their increase up to UAH 3,600 in 2015 for households consuming up to 200 cubic meters per month28; in 2016 natural gas price for household consumers shall reach 75 % of the market level, to eventually reach the market level in 2017. These figures are mentioned in the Letter of Intent of the Government and the National Bank of Ukraine (NBU) to the International Monetary Fund, and in technical support project of the European Commission-World Bank Trust Fund. Network codes are developed by the NEURC working groups in cooperation with representatives of the MinEnergy, the AMCU, Ukrtransgaz and natural gas distributors. 23

http://www.nerc.gov.ua/index.php?id=13630

24

http://www.nerc.gov.ua/index.php?id=14112

25 26

14

http://www.nerc.gov.ua/index.php?id=14113 http://www.nerc.gov.ua/index.php?id=14114

27

 ttp://economics.lb.ua/state/2015/03/12/298361_mvf_obnarodovh al_memorandum.html

28

 ariff for natural gas consumption that exceeds 200 cubic meters T per month is paid shall be UAH 7,188 per 1000 cubic meters (including VAT).

the draft Memorandum of Economic and Financial Policies with the IMF, as approved by Ordinance of the Cabinet of Ministers of Ukraine of 27.02.2015 No. 129-p29. Starting from March, the NEURC set natural gas prices for household customers accordingly (Resolution No. 58330). Special working group, which included representatives of the NEURC and leading international audit companies Deloitte, PwC, EY and KPMG confirmed correctness31 of methodology of assessment and calculation of natural gas retail prices for household customers, set by the Regulator in the corresponding report32.

PROCESS OF LEGAL SEPARATION OF OBLGAZES’ FUNCTIONS IS ABOUT TO FINISH, THEREWITH DISCUSSION ON COMPLIANCE WITH REQUIREMENTS TO GAS DISTRIBUTION NETWORKS MANAGEMENT CONTINUES Back on October 30, 2014 the NEURC published draft Resolution of the Cabinet of Ministers “On Amendments to Standard Agreement on Natural Gas Supply Services Provided to Household Customers”33 pursuant to requirement as regards unbundling of natural gas distribution and supply. According to the Draft, a natural gas supply agreement shall be made between three parties, namely consumer, natural gas supplier and natural gas distributor. In January 2015 the NEURC approved the new Licensing Provisions on gas supply business activity34 brought in compliance with the Law of Ukraine “On Principles of Natural Gas Market Operation”, particularly in terms of unbundling supply and distribution functions. Licensing Provisions on gas distribution business activity35 were amended as well, namely supplemented with a standard form of report on condition of material and technical resources required for the purposes of such business activity. 29

http://zakon1.rada.gov.ua/laws/show/129-2015-%D1%80

30

http://www.nerc.gov.ua/index.php?id=14329

31

http://www.nerc.gov.ua/?news=4484

32

http://www.nerc.gov.ua/data/filearch/zvit_Robocha-grupa_2015.06.23.pdf

33

http://www.nerc.gov.ua/?id=12083

34

http://www.nerc.gov.ua/index.php?news=4165

35

http://www.nerc.gov.ua/index.php?id=14073

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

Pursuant to the Order of the Ministry of Energy and Coal Industry No. 150 of 17.03.2015, a working group was created to review the provisions of Guidelines for calculation of specific production and engineering loses of natural gas in course of transportation thereof through distribution networks43. Therewith, the NEURC has founded a special group for handling issues related to natural gas networks connections44, as well as Working group for handling issues of natural gas distributors45.

Renewables

EFFORTS AND MANAGEMENT OF THE GOVERNMENT ALLOWED THE NAFTOGAZ TO IMPROVE FINANCIAL STANDING AND LAUNCH CORPORATE GOVERNMENT REFORM

Environment

According to the Action Plan for Fulfilment of Obligations Under the Energy Community Treaty, the Ministry of Energy and Coal Industry, the NEURC and “Naftogaz of Ukraine” NJSC by January 1, 2015 had to ensure elaboration of documents (laws, programs and other regulations) for implementation of requirements of the Third Energy Package

36

http://www.nerc.gov.ua/index.php?news=4191

37

http://www.nerc.gov.ua/index.php?news=4305

38

http://zakon1.rada.gov.ua/laws/show/n0009525-15/paran2#n2

42

http://www.nerc.gov.ua/?id=16659

39

 ttp://www.kmu.gov.ua/control/uk/publish/article?art_ h id=248156731&cat_id=244823857

43

http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=244995344

40

http://glavcom.ua/articles/30510.html

44

41

 ttp://w1.c1.rada.gov.ua/pls/zweb2/ h webproc4_1?id=&pf3511=56157

http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247781938&cat_id=244277212

45

http://www.nerc.gov.ua/?news=4533

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

On July 21 the MP O. Kuzhel (VO Batkivshchyna parliamentary party) registered a Draft Law No. 2423a41, which offered to develop a procedure of involving private sector companies into operation of natural gas distribution system facilities in state and municipal ownership under lease. The Draft Law provides for a set of requirements to the lessees, defines terms and procedure of competition for the right to lease gas distribution system facilities, relevant contractual relations, measures to supervise fulfilment of obligation by the parties. Therewith, transitional provisions thereof set out that within six months from the date when the

Security of supply

Therewith, according to mass media, public officials have different views on the model of regional natural gas networks management40: the Government has developed Draft Resolution of the Cabinet of Ministers, which provides for transferring the network to “Gaz of Ukraine” SE (the Naftogaz subsidiary) and Step-by-step Action Plan to ensure paid use of natural gas distribution facilities; meanwhile the Minister has drawn a Special Instruction No. 01/12-1300 on founding of a new state enterprise by June 18 to accept transfer of all the public gas distribution networks.

Meanwhile, the process of unbundling of natural gas supply and distribution is commenced in the market. Oblgazes separate supply and transportation, founding separate supply companies; according to the Regulator, the majority thereof has already obtained licenses for natural gas supply at regulated tariff from July 1, 2015. On July 9 the NEURC published the Letter No. 6697/16/6115 “On conclusion of agreements on natural gas supply at a regulated tariff with public entities”42, which concerns agreements with natural gas suppliers founded as a result of unbundling of oblgazes’ natural gas distribution and supply activities. The agreement shall be made between three market players, namely natural gas supplier at a regulated tariff, natural gas distributor and a consumer.

Regulatory authority

Moreover, according to Decision of National Security and Defense Council of Ukraine (NSDC) of May 6, the Cabinet of Ministers and the State Property Fund were ordered to take measures as regards conclusion of agreements on use of gas distribution system on competitive basis38. On May 14 the Prime Minister A.Yatsenyuk ordered to the Minister V. Demchyshyn to prepare regulation on fees for use of public gas distribution networks39.

Law enters into force, current users shall have the priority right to conclude lease agreement without competition.

Electricity

At the same time by Resolutions No. 33 and 35 of the NEURC approved the Standard agreement on natural gas supply at a regulated tariff36 pursuant to the Law “On Principles of Natural Gas Market Operation”. According to the NEURC, these standard agreements came into force on March 17 and would allow for legal unbundling of market operators within the structure of a vertically integrated company37.

15


directives and regulations, including the Naftogaz restructuring. The Government dismissed the Inter-department working group for development of draft program of “Naftogaz of Ukraine” NJSC reforming46. Alongside, the Ministry of Energy and Coal Industry made a rotation in the working group for reviewing the Concept of Naftogaz restructuring and ordered this group to analyse reports on performance of relevant works47. On 30 March, the National Reform Council held a meeting, where information on the gas sector reform plan48 and the Naftogaz strategic plan49 were presented (analysis of the added value chain was deemed the key element of the latter). According to representatives of the Naftogaz the offered mechanisms, i.e. price and tariff reform, anti-corruption measures, improved market efficiency, are able to fully eliminate the company’s deficit already in 201550. Within the framework of the new IMF financing program, the Government is going to reduce the Naftogaz’s deficit to 3.1 % of GDP51 and help the holding to reach break-even by 2017. Within the framework of a large legislative initiative of the Cabinet of Minister of Ukraine aimed at receiving a loan from the IMF, on May 14 the Verkhovna Rada adopted the Law No. 423-VIII “On Amendments to Certain Laws of Ukraine Regarding Stabilization of “Naftogaz of Ukraine” NJSC Financial Standing”52. The law sets out strict requirements to payment discipline in the gas supply sector, particularly in respect to heat production and heat supply organizations, and provides for advance payments to a guaranteed supplier, a possibility to terminate supplies in case of payment delays or gas off-take above the established thresholds, a possibility to assign claims to third parties, etc. 46

http://zakon4.rada.gov.ua/laws/show/77-2015-%D0%BF

47

http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=244993964

48

49

50

16

 ttp://reforms.in.ua/Content/download/Sessions/s4/7.2. h reform Naftogaz_ENG_2015 03 30.pdf http://reforms.in.ua/Content/download/Sessions/s4/7.3. reform Naftogaz_ENG_2015 03 30.pdf

Energy Energy

 ttp://naftogaz.com/www/3/nakweb.nsf/0/7AA90665761277E8C22 h 57DA8003CD3C2?OpenDocument&year=2014&month=12&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

51

 ttp://economics.lb.ua/state/2015/03/12/298361_mvf_obnarodovh al_memorandum.html

52

http://zakon1.rada.gov.ua/laws/show/423-19

On July 16, the Verkhovna Rada fully adopted the Draft Law No. 2956 “On Amendments to the Law of Ukraine “On Moratorium on Forced Sale of Property” (as to mechanisms of influencing enterprises-debtors)”53. It is aimed at stabilizing financial standing of the Naftogas through providing it with tools to recover debts from customers and efficient mechanisms of influencing enterprisesdebtors. Pursuant to the agreement with the IMF, direct currency quotas equal to USD 3.172 billion in the current month were established for Naftogaz54. Capital of Naftogaz itself, pursuant to the Government’s decision, was increased through another issue of domestic government bonds amounted to UAH 31.5 billion55 as it is provided by the State budget 201556; on July 17 the Cabinet of Ministers reduced the aforesaid amount to UAH 29.7 billion. (Resolution No. 48857). In November 2014 the MinEnergy ordered to carry out extraordinary internal audit of the Naftogaz58; in March the NEURC obliged the company to disclose financial plan and cash flow indicators59 to improve transparency. Moreover, the Law “On Openness of Use of Public Funds”, which, inter alia, requires disclosure of financial statements of public companies, is applied to the Naftogaz60. At the same time the Naftogaz management moves the group towards improved transparency. Independent auditor Ernst&Young will carry out a set of assessments of fixed assets of the Naftogaz itself and enterprises where the aforesaid company owns a share of at least 51%61 to prepare consolidated financial statements, to transfer assets to newly founded operators of natural gas transportation system and underground natural gas storage facilities, to attract additional financing to natural gas extraction, to set economically feasible natural 53

http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_2?pf3516=2956&skl=9

54

http://ua-energy.org/post/51242

55

http://zakon1.rada.gov.ua/laws/show/13-2015-%D0%BF

56

http://zakon4.rada.gov.ua/laws/show/80-19

57

http://zakon2.rada.gov.ua/laws/show/488-2015-%D0%BF

58

http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=244969983

59

http://ua-energy.org/post/50995

60

http://zakon1.rada.gov.ua/laws/show/183-19

61

http://naftogaz.com/www/3/nakweb.nsf/0/C691B4AC9CD69CCCC 2257D500049BF72?OpenDocument&year=2014&month=09&nt=% D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

gas transportation and storage tariffs in transferring to incentive-based regulation.

http://www.naftogaz.com/files/Information/NAK

64

http://naftogaz.com/www/3/nakweb.nsf/0/73F35D5DCDB1C5F8C2 257E3700618F50?OpenDocument&year=2015&month=04&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

65

http://www.naftogaz.com/www/3/nakweb.nsf/0/D4B4BED453411 BABC2257ECF00468F89?OpenDocument&year=2015&month=09 &nt=Новини&

66

http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=245016911

67

http://naftogaz.com/www/3/nakweb.nsf/0/B5BF5F73EBFA2544C2 257E7E003EC500?OpenDocument&year=2015&month=07&nt=% D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

68

http://naftogaz-europe.com/ua

69

http://www.naftogaz.com/www/3/nakweb.nsf/0/C5A9209B28FFE4 68C2257E2F004D24C4?OpenDocument&year=2015&month=04&n t=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

70

http://naftogaz.com/www/3/nakweb.nsf/0/1AE067BC3E344D61C2 257E50005DEF13?OpenDocument&year=2015&month=05&nt=% D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

71

http://naftogaz.com/www/3/nakweb.nsf/0/D8E175404CEB97BAC2 257E8B003B49E7?OpenDocument&year=2015&month=07&nt=% D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

63

Ukraine is about to finish transposition of the Third Energy Package rules as regards Directive 2009/73/EC: the framework law is adopted, secondary legislation is almost developed. However, implementation thereof may be difficult or nonpracticable. Although financial transparency of “Naftogaz of Ukraine” NJSC was improved, the holding still has no public reform program. In particular, the process is slow because the government needs to define a model of reform for natural gas transportation system operator. As of regional players, requirement to separate functions of natural gas distribution and supply was fulfilled in law. However, in fact great efforts are needed to secure free choice of natural gas supplier for consumers. At the same time, fulfilment of obligation in this sphere by Ukraine is a real progress; some European officials call it “a success story” which deserves to be continued.

Environment

http://naftogaz.com/files/Information/NAK FS 2012-2013_UKR_FINAL_with all signatures.pdf

CONCLUSION

Renewables

62

Security of supply

Back in 2014 the Naftogaz launched special website Naftogaz Europe68, information and analytical platform to reflect position of the state holding and publish gas market data (on extraction, transportation, storage deposits etc.). Therewith

With the assistance from the European Commission and the World Bank within the Trust Fund contract, support is provided to “Naftogaz of Ukraine” NJSC in the development of financial models for “Mahistralni Gazoprovody Ukrainy” PJSC and “Pidzemni Gazovi Skhovyshcha Ukrainy” PJSC. The financial models will include original pro forma balance sheets and forecasts of financial performance prepared in accordance with the International Financial Reporting Standards (IFRS). Also, “Naftogaz” receives support in preparing separate accounts for the financial models developed for the mentioned PJSCs.

Regulatory authority

What is more, according to the MinEnergy report66, the Naftogaz launched a project related to up-todate European standards of corporate management in cooperation with PricewaterhouseCoopers (PwC) advisors and Baker & McKenzie lawyers, financed by the EBRD. On July 10 they presented draft Action Plan for reforming the Naftogaz corporate management67. The main provisions of the document include alignment of corporate management with the OECD principles, preventing unlawful political inferences, setting up a Supervisory Board and progressive extension of its independence, introducing up-to-date information disclosure, risk management and audit practices, setting up natural gas transportation system operator with separate corporate management structure.

Electricity

On March 27 the Naftogaz published consolidated financial statements of its group for 2012–2013 (in compliance with the International Financial Reporting Standards) prepared by Deloitte62. On April 30 financial statements 2014 reviewed by auditors were published63: The Naftogaz got net losses equal to UAH 85 billion, 71% of which is the loss due to depreciation of Ukrainian hryvnia, the Crimea annexation and war in the Eastern Ukraine, while the rest is the loss due to sale of natural gas to population. Therewith Deloitte experts expressed conditionally positive opinion as of the statements64, and the consolidated statements 2014 itself was published only September 2965.

the Naftogaz began to publish information on its debtors on the regular basis69, as well as quarterly data on imported natural gas actual prices and volumes70, confirmed by statements and customs declarations. At the same time, the company joined e-procurements carried out through public system ProZorro71.

17


NETWORK ACCESS Regulation 715/2009 (the Third Energy Package) sets out unified conditions for access to natural gas transmission networks, LNG terminals and storage facilities, taking into consideration specific characteristics of national and regional markets. The Regulation specifies procedure of certification of transmission system operators, as well as of development, agreement and implementation of network codes (in cooperation with ENTSO for Gas).

Pursuant to Decision of the Ministerial Council of the Energy Community D/2011/02/MC-EnC, the contracting parties shall introduce most provisions of the Third Energy Package (including Regulation 715/2009) into their laws and regulations by January 1, 2015.

ATTEMPT OF TRANSFER TO ENTRY-EXIT TARIFF SYSTEM FOR TRANSPORTATION IS FAILED, HOWEVER THE GOVERNMENT CONTINUED ITS INTRODUCTION WHILE DEVELOPING THE NETWORK CODES

to approve a permanent tariff setting procedure for gas transportation based on entry/exit tariff system taking into account incentive-based regulation objectives and introduce correspondent tariffs from January 1, 2015.

In September 2014 the Cabinet of Ministers adopted Temporary Tariff Setting Procedure for Gas Transportation for the GTS entry and exit points to align natural gas transportation rules with requirements of Directive 2009/73/EC72. According to the Naftogaz, the regulation is fully compliant with the Energy Community rules73, i.e. would allow to align contractual relations on natural gas transportation with the EU Third Energy Package rules. Therewith, the Prime Minister A.Yatsenyuk asked European partners to establish direct relations with Ukrainian natural gas transportation companies74.

Pursuant to the aforesaid governmental resolution “Naftogaz of Ukraine” NJSC and “Ukrtransgaz” PJSC had to take measures necessary to align transportation contractual relations with new rules. The Naftogaz CEO A. Kobolev explained in an interview75 that the aforesaid process would involve the following changes:

Also, the government approved gas transportation tariffs and quotas of production and engineering loses for the period from November 1 to December 31, 2014. The Regulator was “recommended”

18

72

http://zakon4.rada.gov.ua/laws/show/510-2014-%D0%BF

73

http://naftogaz-europe.com/article/ua/%D0%BF%D0%BE%D1%8 1%D1%82%D0%B0%D0%BD%D0%BE%D0%B2%D0%B0%D1%82 %D0%B0%D1%80%D0%B8%D1%84%D0%B8

74

 ttp://www.kmu.gov.ua/control/uk/publish/article?art_ h id=247621533

• • •

75

a party of transportation contract with Gazprom should be “Ukrtransgaz” as the GTS operator, instead of the Naftogaz; Gazprom might not remain the virtual operator between “Ukrtransgaz” and GTS operators in Slovakia, Hungary, Poland, Romania; standard agreements on gas transportation networks balancing and connection should be signed;

http://naftogaz.com/www/3/nakweb.nsf/0/67AA622EEBD1F249C2 257D5400277B38?OpenDocument&year=2014&month=09&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

Electricity Regulatory authority

Security of supply Renewables

Environment

Energy efficiency

19

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


• •

t ariff policy should be also brought in line with European standards; t echnical, legal and economic conditions of natural gas transportation throughout the territory of Ukraine should be non-discriminative for all the market players.

Certain tasks were fulfilled back in October 2014. For instance, the government allowed Naftogaz making expenditures on audit and advisory services76, including on assessment within the framework of reform of management system of the Unified Gas Transportation System. The Ministry of Energy and Coal Industry approved standardform contract on natural gas transportation and recommended to “Ukrtransgaz” to transfer to the new contractual framework, while the NEURC published draft resolution to approve methodology of definition and calculation of natural gas transportation entry-exit tariffs taking into account incentive-based regulation objectives. That time the Government was going to launch preparation to competition to involve EU and USA investors to operation and modernization of GTS and natural gas storage facilities77. Therewith, as Business Development Manager of the Naftogaz Yu. Vitrenko predicted, 49% share in the GTS operator would be sold in 2017 at the earliest78. However, on December 1, 2014 Ukraine and the European Investment Bank79 signed EUR 150 million loan agreement to finance modernization of the Urengoy-Pomary-Uzhgorod trunk gas pipeline; then December 15 a similar agreement was signed with the EBRD80. EU-Ukraine Association Council welcomed the aforesaid agreements: according to it, alongside with recently launched European Commission-World Bank Trust Fund on the reform of Naftogaz, it is a very significant step forward in ensuring that the Ukrainian gas transmission system remains a reliable transportation route81. However, already in Spring 2015 the government declared impossible to apply entry-exit tariff sys-

20

76

http://zakon1.rada.gov.ua/laws/show/577-2014-%D0%BF

77

 ttp://www.kmu.gov.ua/control/uk/publish/article?art_ h id=247721427&cat_id=244276429

78

http://ua-energy.org/post/48823

79

http://ua-energy.org/post/49111

80

http://www.eurointegration.com.ua/news/2014/12/15/7028766/

81

 ttp://www.kmu.gov.ua/control/uk/publish/article?art_ h id=247820028&cat_id=244276429

tem for transportation. Resolution of April 22 No. 243 substantially amended Resolution No. 51082, namely removed temporary tariff setting procedure and established that the mechanism shall not apply to transit gas transportation. It also eliminated requirement to align transportation contracts with new requirements. It should be noted that remaining tasks are fulfilled, although behind the schedule. For instance, on April 29 the MEDT approved the threshold of regular rate of return on natural gas transportation through main pipelines for 2015 equal to 15.13 percent83. Value of assets of the Naftogaz group is still being assessed by Ernst & Young audit company84. The holding also offered85 the Concept of corporate management principles at Ukrainian state enterprises86 to be implemented in 2015-2016. Actually, this document is a set of recommendations for “Mahistralni Gazoprovody Ukrainy” PJSC, which will be followed up by the Naftogaz together with EC, World Bank, EIB and EBRR specialists, Deloitte Company and other experts. According to data provided by the NEURC upon request, draft tariff setting procedure for gas transportation based on entry/exit tariff system was developed and is currently being followed up. At the same time discussion over other framework regulations, i.e. network codes, have been commenced. In August the NEURC published a range of draft resolutions 87 to adopt Natural Gas Distribution System Code, Natural Gas Transportation System Code and Natural Gas Storage Facilities Code. Network codes as framework documents are expected to be approved by the Regulator and brought into force from October 1 simultaneously with the Law “On Natural Gas Market”. Also, upon request the MinEnergy noted preparation of such important documents as Procedure of vulnerable customers protection, Rules on main 82

http://zakon4.rada.gov.ua/laws/show/243-2015-%D0%BF/

83

http://www.me.gov.ua/Documents/Download?id=aa47c4ed-f0de4c7c-a35e-106f2fce7a06

84

http://ukr.segodnya.ua/economics/enews/ernst-young-zaymetsya-ocenkoy-aktivov-naftogaza-ukrainy--545160.html

85

http://naftogaz.com/www/3/nakweb.nsf/0/5472028E944D4744C22 57DA5003ADAA4?OpenDocument&year=2014&month=12&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

86

http://naftogaz.com/files/Information/Corporate_Reform_Naftogaz_Concept_UKR_v2.pdf

87

http://www.nerc.gov.ua/?id=13266

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

CONCLUSION Entry/exit tariff system in gas transportation system was not actually introduced, since it depends on flexibility of external natural gas suppliers, particularly on Gazprom. Results may be reached through negotiations between Ukraine, the EU and Russia, in course of which the parties shall agree on the new model of payment for gas transportation. Therewith, free access to natural gas transportation through main gas lines will depend on strengthening independence of “Ukrtransgaz” as operator (until these functions are transferred to “Mahistralni Gazoprovody Ukrainy” PJSC) and cooperation between the market players in terms of compliance with requirements of new network codes.

Electricity

gas lines safeguard, Program of compliance for GTS and storage facilities operators, as well as 2015 Report on results of natural gas supply safety monitoring and planned measures taken in this regard.

Regulatory authority Security of supply Renewables Environment Energy efficiency

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

21


ELECTRICITY

22

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

Directive 2009/72/EC concerning common rules for the internal market in electricity. The Directive requires equal and guaranteed access to networks, competition in electricity supply, clear and transparent tariff setting. Compared to Directive 2003/54/EC the new one contains extended requirements as regards separation of distribution system operator and more detailed description of regulator powers.

THE THIRD ENERGY PACKAGE SHALL BE FULLY IMPLEMENTED IN UKRAINE WITH ADOPTION OF A NEW LAW “ON ELECTRICITY MARKET”

At the same time, in June 2015 the Parliament registered the Draft Law No. 2199а On Amendments to the Law of Ukraine “On Operating Principles of Electricity Market of Ukraine” As Regards Fulfilment of Requirements of the Energy Community 3

4

Energy efficiency

Notice of publication / Ministry of Energy and Coal Industry — 08.07.2015 — http://mpe.kmu.gov.ua/minugol/control/uk/publish/ article?art_id=245022886

The MinEnergy offered “DIXI Group” to set up a platform for involving experts and non-governmental organizations into discussion; as a result a special section was created on the “Energy reforms” website4, commentaries were collected and two working meetings with the MinEnergy were held in July and August 2015. Also, experts of the “Energy Reforms” coalition participated in public discussion, having send their proposals and comments as to the contents of the Draft Law, which together with comments from other experts are available on the “Energy reforms” website.

Environment

2

Speech of Director of Secretariat of the Energy Community Ja. Kopac at Committee hearings “State of fulfillment of Ukrainian obligations undertaken under Energy Community Accession Protocol, ratified by the Law of Ukraine of December 15, 2010 No. 2787-VI” of September 24, 2014. http://kompek.rada.gov.ua/kompek/control/ uk/publish/article;jsessionid=450028CFF91753BB298F2F55630585 81?art_id=48742&cat_id=48709&search_param=%D0%B3%D0%B E%D0%BB%D0%BE%D0%B2%D0%B0&searchPublishing=1

The MinEnergy created a working group, which started to follow up the draft law offered by the Secretariat. The most substantial efforts for development of the Draft Law were made in March-May 2015, and already in June 2015 the draft was published3 and opened for public discussion.

Renewables

According to the Ministry of Energy and Coal Industry2, the new draft law shall unify all the requirements of Directive 2009/72/EC concerning common rules for the internal market in electricity, Regulation (EC) 714/2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No.

Security of supply

1228/2003; Directive 2005/89/EC concerning measures to safeguard security of electricity supply and infrastructure investment.

In 2013 the Law of Ukraine “On Operating Principles of Electricity Market of Ukraine” No. 663, introducing first reforms on the electricity market in accordance with the European rules but was not compliant with the Third Energy Package requirements, was adopted. However, in view of the obligation to implement the Third Energy Package fully by 2015, undertaken by the Ukrainian government, in September 20141 the Secretariat of the Energy Community presented to the MinEnergy a new Draft Law “On Electricity Market” compliant with new requirements.

1

Regulatory authority

Pursuant to Decision of the Ministerial Council of the Energy Community D/2011/02/MC-EnC, the contracting parties shall introduce most provisions of the Third Energy Package (including Directive 2009/72/EC) into their laws and regulations by January 1, 2015.

A new Draft Law “On Electricity Market” is published / Ministry of Energy and Coal Industry — 03.07.2015 — http://mpe.kmu.gov.ua/ minugol/control/uk/publish/article?art_id=245020543 Comments of participants of the discussion and minutes of the meetings are available on: http://enref.org/law-discussion

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

23


Treaty (author — Serhii Sazhko from the Opposition Bloc faction)5, containing an alternative version of the draft law on electricity market. The MP also initiated discussion of his version of the draft law, however it was not publicly supported by the Secretariat of the Energy Community. Alignment of Ukrainian legislation in the energy sector with requirements of the Third Package is one of the landmarks for World Bank funding and the second tranche of the EU’s Macro-Financial Assistance6. The Minister of Energy and Coal Industry V. Demchyshyn while presenting the draft law in June 2015 predicted its adoption in September-October7; however in view of delays in its follow-up, it is likely that it will be submitted to the Verkhovna Rada in October. Considering that an alternative version of the draft is actively promoted, the final version of the Law On Electricity Market may be potentially subject to long discussions in the Parliament, which would probably delay its adoption. On September 22 the MinEnergy formally submitted the draft law to the Cabinet of Ministers for consideration. The optimistic scenario assumes that the draft law may be adopted in NovemberDecember 2015. While the efforts to adopt the new framework law is being made, statements of state enterprises show their preparation to the new rules of game. For instance, new subdivisions with Market Operator and Guaranteed Customer functions were created within “Energorynok” SE. Until early 2016 Market Operator and Guaranteed Customer units will be set up within departments, however the new Law on electricity market may change their functions and configurations. 5

24

Draft Law “On Amendments to the Law of Ukraine “On Operating Principles of Electricity Market of Ukraine” As Regards Fulfillment of Requirements of the Energy Community Treaty” of 30.06.2015 No. 2199а — http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?id=&pf3511=55781

Pursuant to the Law of Ukraine “On Operating Principles of Electricity Market of Ukraine” in spring 2015 a draft Plan for United Energy Systems of Ukraine (UESU) Development for 20152024 was published and discussed with the public in May 2015 8 and available9 on “Ukrenergo” SE PEC website. At the end of 2015 the company published10 draft Plan for UESU Development for 2016-2025, which is also available on the website. As a result of Collegium meeting of July 7, 2015 the Ministry of Energy and Coal Industry undertook obligation to publish draft electricity networks code in July and follow it up based on received proposals in September 201511. Draft Electricity Networks Code12 was published on July 17. In addition, “Ukrenergo” PEC engaged financing included into the World Bank loan for procurement and putting into operation software and equipment, goods and services necessary to ensure functioning of the organization in a new market model. Within the framework of setting up conditions for operation of the new market, active work for development of secondary legislation commenced. Energy Community provided the NEURC and the MinEnergy with expert support for the period from September 1, 2015 to March 31, 2016, to help in development of more than 20 main regulations. Also, by the end of 2015, a contract should be signed for the Twinning project “Support the National Commission for State Energy and Public Utilities Regulation (NEURC) of Ukraine in the process of electric8

Updated Plan for UESU Development for 2015-2024 / “Ukrenergo” official website — 06.07.2015 — http://www.ukrenergo.energy.gov. ua/Pages/ua/DetailsNew.aspx?nID=667

9

Deputy Minister Oleksandr Svetelik participated in public discussion of the draft Plan for UESU Development for 2015-2024 / Ministry of Energy official website — 20.05.2015 — http://mpe.kmu.gov. ua/minugol/control/uk/publish/article;jsessionid=1BFCB379BD264 3330DC10459477BE24E.app2?art_id=245010230&cat_id=35109

10

Draft Plan for United Energy Systems of Ukraine (UESU) Development for 2016-2025 / “Ukrenergo” official website — 27.08.2015 — http://www.ukrenergo.energy.gov.ua/Pages/ua/DetailsNew.aspx?nID=1122&urlNews=/ pages/ua/developmentofgeneratingcapacitiesoftheipsofukraine.aspx

6

EU-Ukraine Memorandum of Understanding, ratified by the Law of 18.06.2015 No 538-VIII. — http://zakon4.rada.gov.ua/laws/show/984_015

11

Order of the Ministry of Energy and Coal Industry of 17.07.2015 No. 453 — http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=245025173

7

MinEnergy explained when the Draft Law on Electricity Market will be ready // Ukrainska Enerhetyka. — 03.07.2015. — http://ua-energy.org/post/53745

12

Draft Electricity Networks Code / Ministry of Energy and Coal Industry website — 17.07.2015 — http://mpe.kmu.gov.ua/minugol/ control/uk/publish/article?art_id=245024884&cat_id=193804

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

announced preparation of the above-mentioned facilities to privatization; however, the preparatory stage is still on.

Electricity

ity market reform” which is financed by the EU. Meanwhile, the NEURC and the Slovak regulator URSO finalize negotiations on a joint work plan under this project, taking into account the activity of the Energy Community Secretariat project office. The project will support the NEURC and other market participants in the process of the Third Energy Package implementation in the next two years.

Regulatory authority

It is also planned that13 the MinEnergy will test direct contracts market by October 30, 2015. Draft law on peculiarities of repayment of debts for electricity in the wholesale electricity market shall be prepared by September.

Order of the Ministry of Energy and Coal Industry of 17.07.2015 No. 453 — http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=245025173

14

Resolution of the Cabinet of Ministers of Ukraine “On Conducting a Transparent and Competitive Privatization in 2015” of 12.05.2015 — http://www.kmu.gov.ua/control/uk/cardnpd?docid=248152310

Renewables

13

Security of supply

Within the framework of electricity market reform the government also launched privatization of certain enterprises. The Cabinet of Ministers of Ukraine by its Resolution of May 12, 2015 No. 271 “On Conducting a Transparent and Competitive Privatization in 2015”14approved the list of state property subject to privatization including mines and a range of central thermal power plants (CHPP) and Oblenergos. The State Property Fund

Environment Energy efficiency

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

25


ALTHOUGH THE TARIFFS ARE ACTIVELY REGULATED IN EMERGENCY CONDITIONS, THE REGULATOR WORKS TO SET CONDITIONS FOR MARKET PRICING Like other authorities, the Regulator had to react on energetic emergency during heating season. In October, when trilateral negotiations in natural gas sector were on and the main issue was to secure the country with natural gas, the government incentivized population to transfer to electricity heating15, that time the NEURC increased volumes16 of electricity consumption for population residing in dwellings equipped with electric heaters from 3,600 to 5,000 Kwh (inclusively). Lower tariff of 26.7 kopecks for 1 kWh (VAT included) was applied to this population group. Then, in February 2015, the Resolution ceased to be in force, when the Regulator approved new electricity tariffs for population 17 and the schedule of increasing these tariffs for the period from April 1, 2015 to March 1, 2017. As the situation worsened, i.e. prices increased, particularly coal price, and in light of misbalance of producers the Regulator took decisions18 aimed at resolving the issue of financial misbalance of producers. For instance, the tariff for electricity transmission through main and cross-border electricity networks, as well as sale tariff of “Energoatom” PEC was lowered, and inclusion of investment component of the tariff for rehabilitation and modernization of TPP energy unit was suspended. Also, the government abolished its 2009-2011 decisions19, which set out electricity export preferen-

26

tial prices20 and electricity preferential prices21 for certain ferroalloy enterprises. In December 2014, when consumption issues became critical and rotating power cuts were launched, the NEURC took decision22 to optimize tariff coefficients for non-household customers for peak voltage electricity consumed through changing rates of two-zone and three-zone tariffs depending on time. In February the Regulator increased discount23 for electricity consumed at night. In August 2015 the NEURC published Draft Resolution of the Cabinet of Ministers24 for implementation of the Law “On Operating Principles of Electricity Market of Ukraine” in force, which offered gradual transfer from single electricity tariffs to market setting of tariffs for non-domestic consumers with progressive increase thereof (as of September 2015 the Resolution was not approved). Therewith, as regards tariffs, little was done to improve transparency thereof and openness of their structure. The NERC did not initiate draft regulations on opening electricity tariffs; only the President of Ukraine P. Poroshenko submitted25 to the Verkhovna Rada a Draft Law on improving transparency of tariffs in electricity and natural gas supply and utility services sectors in August 2015. The NEURC continues to work towards introduc20

Ordinance of the Cabinet of Ministers of 29.12. 2014 No. 1280-р “On Abolishment of Certain Ordinances of the Cabinet of Ministers of Ukraine” — http://zakon4.rada.gov.ua/laws/show/1280-2014%D1%80

21 15

 esolution of the Cabinet of Ministers of 16.10.2014 No. 540 “On R Incentives for Natural Gas and Heat Energy Consumers and Use of Electricity for Heating and Water Heating” — http://zakon4.rada. gov.ua/laws/show/540-2014-%D0%BF

Ferroalloy enterprises continue operation despite preferential tariff abolishment // Ukrainski Novyny — 31.12.2014 — http://ukranews. com/news/152275.Ferrosplavnie-predpriyatiya-prodolzhat-rabotu-nevziraya-na-otmenu-lgotnogo-tarifa.uk

22

16

 esolution of the NEURC of 23.10.2014 No. 164 “On Approval of R Amendments of Tariffs for Electricity Sold to Population” — http:// www.nerc.gov.ua/index.php?id=12259

Resolution of 09.12.2014 No. 752 “On Amendments to the NERC Resolution of December 20, 2014 No. 1241” — http://www.nerc.gov. ua/?id=12467

23

17

 esolution of the NEURC of 26.02.2015 No. 220 “On Setting Tariffs R for Electricity Sold to Population” — http://www.nerc.gov.ua/index. php?id=14359

Resolution of the NEURC of 26.02.2015 No. 221 “On Amendments to Procedure of Application of Electricity Tariffs” — http://zakon2. rada.gov.ua/laws/show/z0236-15

24

18

 he NEURC secured TPPs with fuel in October-December 2014 / T the NEURC official website — 21.10.2014 — http://www.nerc.gov. ua/index.php?news=4010

Notice of publication of regulation — Resolution of the Cabinet of Ministers of Ukraine “On Market Setting of Tariffs for Electricity Sold to Consumers” / the NEURC website — 13.07.2015 — http:// www.nerc.gov.ua/?news=4523

19

The Cabinet of Ministers abolished recommendations on setting electricity exportation preferential prices — ordinance // Finance. ua – 06.01.2015. — http://news.finance.ua/ua/news/-/341892/kabmin-skasuvav-rekomendatsiyi-shhodo-vstanovlennya-pilgovyhtsin-dlya-eksportu-elektroenergiyi-rozporyadzhennya

25

Draft Law of 14.08.2015 No. 2505 “On Peculiarities of Access to Information in Electricity and Natural Gas Supply, Heat Supply, Centralized Hot Water Supply, Centralized Drinking Water Supply and Sanitation Sectors” — http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=56266

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

CONCLUSION Despite the Law No. 633 “On Operating Principles of Electricity Market of Ukraine” is in force, its provisions were not implemented. Development an adoption of a new Law “On Electricity Market” will allow to fulfil obligations related to implementation of the Third Energy Package, and will define the terms and conditions of putting into operation the full-scale electricity market. Proactive attitude of the MinEnergy and expert support granted by the Energy Community are the positive aspects.

Electricity Regulatory authority

Proper respect shall be given to faithful attempts of the Government to fulfil obligations before the Energy Community, undertaken by Ukraine, despite instability and emergency, which often meant transfer to “manual guidance”. Unlike former governments and parliaments, the current team is more dynamic, operative and public, that substantially facilitates their cooperation with experts and civil society movements.

Security of supply

tion of incentive-based tariff setting. For this purpose in January 2014 the Regulator set up26 Working group “Improving methodology of incentivebased tariff setting for electricity supply and transmission companies”. At the meeting of the group27, long-term regulation parameters for the purposes of incentive-based tariff setting were preliminarily agreed. In August 2015 the Commission approved for public discussion28 draft resolutions, on longterm regulation parameters for the purposes of incentive-based tariff setting and amendments to Procedure of defining regulation asset base of natural monopoly undertakings in electricity sector, which are obliged to create conditions for incentive-based tariff setting from January 1, 2016. According to the NEURC report29, all the relevant regulations shall be adopted by November 30.

Renewables

27

The NEURC held meetings of the working groups with representatives of electricity supply and transmission companies and experts of the electricity sector / Governmental portal — 03.02.2015. — http:// www.kmu.gov.ua/control/uk/publish/article?art_id=247922487&cat_ id=244277212

28

The NEURC will improve legislation framework as regards incentive-based tariff setting for electricity supply companies / Energy Reforms website – 07.08.2015. — http://enref.org/news/nkrekpudoskonalyt-normatyvnu-bazu-schodo-zaprovadzhennya-stymulyuyuchoho-rehulyuvannya-taryfiv-dlya-enerhopostachalnyhkompanij/

29

Information provided by the National Energy and Public Utilities Regulatory Commission as regards implementation of the Action Program of the Cabinet of Ministers of Ukraine and Sustainable Development Strategy “Ukraine — 2020” in 2015 (June 2015) / the NEURC official website — 08.07.2015 — http://www.nerc.gov. ua/?id=16622

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

The NEURC sets up working groups for “Improving methodology of incentive-based tariff setting for electricity supply and transmission companies” and “Introducing two-rate for electricity consumers” / the NEURC website — 23.01.2015. — http://www.nerc.gov.ua/ index.php?news=4192

Environment

26

27


Regulation (EC) 714/2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No. 1228/2003. The Regulation requires transparent tariff setting, unification of standards, compensation of transmission operators’ expenditures in certain cases, and system of penalties in case of infringements. Compared to the Regulation, the aforesaid document additionally describes system of certification of transmission operators and introduction of network codes.

Main provisions of the Regulation shall be integrated in the new Draft Law On Electricity Market, procedure of development and adoption of which is described above. Therewith, a range of 20142015 events shows that changes, although slow, of rules to improve competition and quality of services in electricity transmission sector are made.

SECONDARY LEGISLATION FOR DEVELOPMENT OF CROSS-BORDER TRADE IS APPROVED On February 12, 2015 the NEURC by its Resolution30 approved Procedure of e-auctions31 for distribution of throughput capacity of international power grids, which entered into force in June 2015. It provides for the possibility to use e-auction, e-documents and electronic digital signatures, describes procedures for annual, monthly and daily auctions, requirements to participants of auctions, requirements as regards registration thereof, auction platform activity. In April the Regulator also approved32 a new version of sample agreement on access to throughput capacity of international power grids. At the same time “Ukrenergo” PEC started to develop and introduce auction system for distribution of throughput capacity of international power grids. Deadline for introduction of the system and putting it into operation is not established. Three leaders among the companies competing for export of electricity in 2014-2015 were DTEK (bought out electricity to Poland, Moldavia, Belarus), “Donbasenergo” (Moldavian direction) and “Zakarpattiaoblenergo” (Slovakia). As a rule, dis-

28

30

Resolution of the NEURC of 12.02.2015 No. 176 “On Approval of Procedure of E-Auctions for Distribution of Throughput Capacity of International Power Grids” — http://zakon4.rada.gov.ua/laws/ show/z0521-15

31

 he Commission approved new Procedure of E-Auctions for DistriT bution of Throughput Capacity of International Power Grids” / the NEURC official website — 12.02.2015 — http://www.nerc.gov.ua/ index.php?news=4236

32

New version of sample agreement on access to throughput capacity of Ukrainian international power grids is published / the Cabinet of Ministers of Ukraine website — 12.05.2015 — http://www. kmu.gov.ua/control/uk/publish/article?art_id=248240405&cat_ id=244277212

tribution of directions among these companies was unchanged. In December 2014 5 companies participated in the auction, in April “Ukrintenergo” SE bought 50 MW to Slovakia and Romania, however soon export again was distributed among the above-mentioned companies. Therewith, in July Ukraine was forces to buy electricity from Russia33 and suspend export thereof to Poland; in September 2015 electricity supplies to Poland were renewed34. In August the Cabinet of Ministers took decision35 on partial “return” of the Burshtyn thermal power plant (TPP) to the Unified Energy System of Ukraine.

PREPARATION TO SYNCHRONIZATION OF UKRAINIAN AND EUROPEAN ENERGY SYSTEMS CONTINUES, HOWEVER THE ISSUE OF ENERGY SUPPLY FOR UKRAINE MUST BE SETTLED FIRST OF ALL In November 2014 the Ministry of Energy and Coal Industry approved36the Program of Priority measures for preparation of the UESU to operation in 33

Kyiv was forced to turn from temporary import scheme in “emergency regime” to business contract with Russian Iner RAO // Zerkalo Nedeli — 07.08.2015 — http://zn.ua/ECONOMICS/ukraina-snovavynuzhdena-importirovat-elektroenergiyu-iz-rossii-184788_.html

34

Ukraine will help Poland with electricity // Dzerkalo Tyzhnia — 17.08.2015 — http://dt.ua/ECONOMICS/ukrayina-dopomagatimepolschi-z-elektroenergiyeyu-181999_.html

35

The CabMin ordered to ix the three units of Burshtyn TPP for their operation as part of the United Energy System of Ukraine // Interfax — 13.08.2015 — http://ua.interfax.com.ua/news/general/283590. html; this decision is a part of Ordinance of the Cabinet of Ministers of 05.08.2015 No. 809-p “On Approval of the Action Plan for Preparation of Fuel and Energy Complex Facilities to Autumn-Winter Season 2015/16 and Functioning During It” — http://zakon4.rada.gov.ua/ laws/show/809-2015-%D1%80

36

Order of the Ministry of Energy and Coal Industry of 25.11.2014 No. 840 — http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=244972092

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


39

Order of the Ministry of Energy of 30.03.2015 No. 188 “On amendments to Order of the MinEnergy of 11.04.2014 No. 292” — http:// mpe.kmu.gov.ua/minugol/doccatalog/document?id=244999186

40

Ukraine is going to finish the research stage of the ENTSO-E Project by the end of 2015 // RBK — 17.03.2015 — http://www.rbc.ua/ukr/news/ ukraina-planiruet-zavershit-issledovatelskuyu-1426586806.html

41

Deputy Minister Oleksandr Svetlik discussed the issue of synchronization of Ukraine’s energy system with the European one with public experts / ministry of Energy website. — 13.05.2015 — http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245007139&cat_id=35109

42

International training for ENTSO-E system operators took  place in Hungary / “Ukrenergo” website — 11.06.2015 — http://www.ukrenergo.energy.gov.ua/Pages/ua/DetailsNew. aspx?nID=566&urlNews=/pages/ua/ipsoperation.aspx

43

Ordinance of the Cabinet of Ministers of 15.06.2015 No. 671-p “On launching implementation of Ukraine-EU Energy Bridge Pilot Project — http://www.kmu.gov.ua/control/uk/cardnpd?docid=248296186

44

Memorandum for implementation of Ukraine-EU Energy Bridge Pilot Project / the Cabinet of Ministers website — 18.03.2015 — http://www.kmu.gov.ua/control/publish/article?art_id=248019980

45

Order of the MinEnergy of 31.07.2015 No. 490 “On Approval of the Action plan for Implementation of Ukraine-EU Energy Bridge Pilot Project”

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Ministry of Energy and Coal Industry signed documents for granting the World Bank loan amounted to USD 378.4 million for modernization of power transmission system and electricity market reform / Ministry of Energy website — 10.02.2015 — http://mpe.kmu.gov.ua/minugol/ control/uk/publish/article?art_id=244986839&cat_id=35109

Despite the declared plans, “Ukrenergo” PEC and the MinEnergy have made no real step for effective integration of Ukrainian and European electricity systems. Considering that satisfaction of internal consumption electricity needs is an indispensable condition for integration, battles in the ATO zone and presence of temporary occupied territories hamper its implementation. Practicability of partial integration through implementation of Ukraine-EU Energy Bridge Project may be defined only upon completion of the feasibility study. Therewith, the NEURC is very proactive in elaboration of regulation and new rules to apply in cross-border grid, which will promote further development of competition, which, unfortunately, is rather weak at a moment.

Environment

38

CONCLUSION Renewables

On November 14, 2014 delegations of Ukraine and the World Bank concluded negotiations on Second Power Transmission Project (according to Order of the President of Ukraine of 10.11.2014 No. 1233/2014-рп) / Ministry of Energy website – 17.11.2014. http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=244968550&cat_id=35109

Three leaders among the companies competing for export of electricity in 2014-2015 were DTEK (bought out electricity to Poland, Moldavia, Belarus), “Donbasenergo” (Moldavian direction) and “Zakarpattiaoblenergo” (Slovakia). As a rule, distribution of directions among these companies was unchanged. In December 2014 5 companies participated in the auction, in April “Ukrintenergo” SE bought 50 MW to Slovakia and Romania, however soon export again was distributed among the above-mentioned companies.

Security of supply

37

Regulatory authority

At the same time the Government by its Ordinance43 approved the MinEnergy’s proposal to prepare feasibility study of the Ukraine-EU Energy Bridge Project, which provides for expansion of Burshtyn Island by transfer electricity from unit 2

of the Khmelnitsky nuclear power plant (NPP) to the European Union and ensuring long-term power export. Interests in the project are confirmed by Memorandum between “Energoatom” National Nuclear Energy Generating Company and Polenergia International from Poland44. In July 2015 the MinEnergy approved Action plan for implementation of the project, which shall be completed by the end of 2017.45Therewith, fast completion of this project is doubtful, since during heatwaves in summer and preparation to the heating season 2015/16 generation of electricity volumes sufficient to satisfy consumption needs in Ukraine was questioned once again.

Electricity

Already in March 201539 composition of the Working group for synchronization of Ukraine’s energy system with the ENTSO-E was renewed, and completion of the research stage of the project40 was planned by the end of 2015. The issue of synchronization of Ukraine’s energy system with the European one was raised also at a meeting of the Ministry41 with public. In June “Ukrenergo” PEC took part42 in international training for ENTSO-E system operators.

Gas

European energy system by 2016. On November 14 negotiations between the Ministry of Energy and the World Bank, aiming at attracting loan from the Bank and Clean Technology Fund equal to USD 378.425 million37 concluded and resulted in signing relevant documents38 in February 2015. The loans were attracted to allow “Ukrenergo” PEC implementing Second Power Transmission Project. Implementation of the project shall help to create technical conditions to approximate UESU integration to European Network of Transmission System Operators for Electricity (ENTSO-E). Moreover, the framework of the Project included implementation of “Smart Power Networks” component (financed by the loan of Clean Technology Fund equal to USD 48.425 million).

29


REGULATORY AUTHORITY

30

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

The Third Energy Package provides for strengthening of the regulator’s independence, particularly, through granting it separate legal status, functional independence from any state or private enterprise, separate budget funding and autonomy in application thereof for fulfilment of its obligations. Legal regulation of powers of state regulatory body in energy sector is mentioned in EU-Ukraine Memorandum of understanding for granting EUR 1.8 billion of macro-financial assistance. Moreover, this obligation is a part of reform within the World Bank’s Second Development Policy Loan Project.

REGULATOR’S STATUS CONTINUES TO BE SUBJECT TO POLITICAL DECISIONS, THAT AFFECTS SUSTAINABILITY OF ITS OPERATION

Separate draft laws which concerned state regulation in energy and utility sectors (No. 50887) and the NEURC as such (No. 50898) were registered in the 7th Verkhovna Rada, however they were not examined. At the same time, the Regulator itself prepared legal framework of its activity: On November 10, 2014 Draft Law “On State Regulation in Energy Sector”9, developed “to ensure implementation of strategic and institutional reforms” pursuant to the EU Third Energy Package, was published on the NEURC website.

Renewables Environment

In 2015 the NEURC had numerous consultations with representatives of the Secretariat of the Energy Community, the European Commission, international financial institutes and donors, during which the aforesaid document was followed up and refined. According to the action plan for natural gas sector reform, approved by the Ordinance of the Cabinet of Ministers of March 25, 2015 No. 375-p10, the draft law should be submitted in April-May; such scheduling was approved by the NEURC itself11.

1

http://www.president.gov.ua/documents/18031.html

2

http://president.gov.ua/documents/18032.html

7

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=52190

3

http://www.president.gov.ua/documents/18055.html

8

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=52191

4

http://zakon1.rada.gov.ua/laws/show/1038-2014-%D1%80

9

http://www.nerc.gov.ua/index.php?news=4061

5

http://www.nerc.gov.ua/?id=11775

10

http://zakon4.rada.gov.ua/laws/show/375-2015-%D1%80#n9

6

http://w1.c1.rada.gov.ua/pls/radan_gs09/ns_golos?g_id=691

11

http://www.nerc.gov.ua/?id=12780

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

At the same time, on February 10, 2015 the Verkhovna Rada of Ukraine adopted the draft law No. 09196, which provides for agreement of regulated prices, which are lower than economically feasible with the government and “simultaneous definition in the relevant decision of the Cabinet of Ministers of sources to cover the difference between the regulated and economically feasible prices”. In March the President P. Poroshenko put a veto on the document, approving the independence of the regulator and in June appointed D. Vovk, which

THEREWITH, DISCUSSION OF THE DRAFT LAW ON THE NEURC IN THE PARLIAMENT DRAGS ON DUE TO A RANGE OF ISSUES, WHICH MAY BE SETTLED NOT BY THE POLITICAL WILL, BUT BY INDEPENDENT EXPERTISE OF PUBLIC AND FOREIGN SPECIALISTS

Security of supply

On August 27, 2014 according to the Orders of the President No. 692 and No. 693, the National Utilities Regulatory Commission and the NERC were dissolved. Instead, according to the Order No. 694, the National Energy and Utilities Regulatory Commission (NEURC)1 was established. New composition of the regulatory body was defined2, and on September 10, 2014 by Order of the President Regulation on the NEURC was approved3. The main functions of the body include: regulation of activity of undertakings in natural gas and electricity market, as well as in the spheres of heating and water supply; improving competition in the aforesaid markets; ensuring sustainability and transparency of the functioning thereof etc. In October budget allocations for the NEURC were unified and4, while the NEURC approved its own Regulation5.

Regulatory authority

previously was acting Head and substituted two resigned members, to position of the Head of the NEURC.

31


According to the report of the Government Office for European Integration12, on April 7 the Government approved Draft Law “On the National Energy and Public Utilities Regulatory Commission”, however registered it in the Parliament (under the No. 296613) only on May 28. The Draft Law provides for reinforcement of the NEURC’s political, functional and financial independence, prohibiting any form of inferences both for the public bodies/ officials and for business interests. Also, it sets out that the term of office of 7 Commission members shall be 6 years. Their appointment and dismissal shall be within the competence of the President of Ukraine, however the candidates shall be nominated by an independent commission based on the results of open competition. The Competition commission shall be nominated by the President (2 members), the Verkhovna Rada upon nomination of the Head of the VRU (2 persons) and the Government (Minister of Energy acting on the basis of decision of the Cabinet of Ministers). The Draft Law provides for extended possibilities as regards market monitoring and control, since the NEURC receives powers to review complaints and settle disputes and will be empowered to apply penalties in case of infringements. Financing of the Regulator shall be carried out from regulation fees collected on the Special fund of the State Budget and calculated as a rate on license holders’ quarterly income. The budget shall be set considering proposals of the Budget Board — special ad hoc body consisting of 6 persons — 2 representatives from the President, the Verkhovna Rada and the Cabinet of Ministers. An alternative Draft Law No. 2966-114, registered by the the MP A. Martovytskyi (Opposition Bloc faction) has a range of differences. For instance, its author proposes to appoint and to dismiss 7 NEURC members by decision of the Cabinet of Ministers. Candidates shall be nominated by the Competition commission, which shall consist of 13 members nominated by the President (3 persons), the Verkhovna Rada (3 persons), the Cabinet of

32

12

http://supportforukraine.com/mediafiles/files/impl_report_ua.pdf

13

 ttp://w1.c1.rada.gov.ua/pls/zweb2/ h webproc4_1?id=&pf3511=55378

14

 ttp://w1.c1.rada.gov.ua/pls/zweb2/ h webproc4_1?id=&pf3511=55392

Ministers (3 persons), the Secretariat of the Energy Community (2 persons) and the NEURC Public Council (2 persons). The above-mentioned bodies also nominate the Commission’s Budget Council, delegating to it 1 person each; this body shall have the right to not only examine, but also approve the budget of the Regulator. What is more, the Draft Law by Martovytskyi provides for new constitution of the NEURC, provided also that drawing of lots shall be organized among the nominated members to define order of their rotation; here is the difference as compared to the governmental draft, which provides for conservation of posts for acting NEURC members with following rotation through gradual dismissal in 20172020. One more alternative Draft Law No. 2966-215 was registered in the Verkhovna Rada by the MP Yu. Levchenko (not affiliated with any faction, VO “Svoboda” political party). Pursuant to it the NEURC shall consist of 9 members and be constituted on the basis of quota principle: the Verkhovna Rada, the President and the Cabinet of Ministers nominate their own 3 members. Rated candidates to be voted for in the Parliament shall be elected by the Committee on Fuel and Energy Complex from nominees of peoples’ deputies’ factions and/or all-Ukrainian public associations. The President and the Cabinet of Ministers shall appoint the NEURC members on the basis of open competition arranged according to the legislation on state service. Funding shall be made from the State budget without any special condition; at the same time it is offered to grant to the NEURC members the status of public officials of the I category. The Draft Law No. 2966 was recommended by the special committee as a basic to eliminate in the second reading the shortcomings as regards “procedure of appointment and dismissal of the competition commission, the NEURC members, Budget Council functions and the NEURC funding”16. On June 18, 2015 the Draft was examined by the Verkhovna Rada and directed for the follow up17, 15

http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?id=&pf3511=55396

16

http://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3511=55378 &pf35401=345652

17

http://zakon2.rada.gov.ua/laws/show/543-19

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

having obtained the minimum, i.e. 226, necessary “for” votes18.

Regulatory authority Security of supply

At the same time, in September, a Strategic Advisory Group21, which included representatives of interested factions of the Verkhovna Rada, international associations of regulators, Energy Community, the European Commission support groups for Ukraine, embassies as well as the Ukrainian experts in the field of energy and regulation, began its work22. The Group is founded with help of the International Renaissance Foundation aiming at elaborating a list of “bottlenecks” of the draft law and relevant amendments proposals.

Living out the key expectation, i.e. adoption of the Draft Law “On the National Energy and Public Utilities Regulatory Commission”, will depend on settlement of the main risks, including those of political nature. Association of Ukrainian experts and EU representatives shall smooth the path as regards appointment of the NEURC members, its status, funding, sustainability and irreversibility of its decisions, its independence of political forces and regulated markets’ players. Reinforcement of the Regulator’s independence shall be a priority task for the parliament, especially in the light of liberalization of the gas market and start of the similar process in the electricity market.

Electricity

On July 15 an adjusted version of the draft was registered in the Parliament; the same day it was examined at the meeting of the special committee19. Minutes of the meeting states that deputies offered to prepare a request addressed to the Prime Minister for setting up a united working group including international experts aiming at elaborating a new version of the Draft Law to be submitted to the Verkhovna Rada for consideration in September20.

CONCLUSION

Renewables Environment Energy efficiency

18

http://w1.c1.rada.gov.ua/pls/radan_gs09/ns_golos?g_id=2694

19

http://kompek.rada.gov.ua/kompek/control/uk/publish/ article?art_id=50101&cat_id=50100

20

http://kompek.rada.gov.ua/kompek/control/uk/publish/ article?art_id=50185&cat_id=50184

21

http://ua-energy.org/post/55435

22

http://enref.org/obhovorennya-proektu-zakonu-pro-rehulyatorvidhuky-neprybutkovyh-orhanizatsij-hromadskyh-orhanizatsijinitsiatyv-koalitsij/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

33


SECURITY OF SUPPLY

34

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

Directive 2004/67/EC concerning measures to safeguard security of natural gas supply requires to define general, transparent and non-discriminatory security of supply policies compatible with the requirements of a competitive market and clarify the general roles and responsibilities of the different market players in carrying out relevant procedures. The government shall specify minimum security of supply standards that must be complied with by the players on the gas market; prepare and update national emergency measures; define the “vulnerable customers” and ensure that supplies for them are protected to an appropriate extent; establish cooperation with the European Commission and other stakeholders.

According to the new version of Ukraine’s National Security Strategy approved in May, market distortions, low diversification of energy supplies, criminalization and corruption in the sector, ineffective energy efficiency policy are among the main threats to energy security8. To address these chal3

http://ua-energy.org/post/52424

4

http://ua-energy.org/post/52580

5

http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=245002805

6

http://zakon2.rada.gov.ua/laws/show/847-2014-%D1%80

1

 ttp://www.kmu.gov.ua/control/uk/publish/article?art_ h id=247574728

7

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245009048&cat_id=35109

2

http://zakon4.rada.gov.ua/laws/show/213-2015-%25D1%2580#n9

8

http://zakon1.rada.gov.ua/laws/show/287/2015#n14

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

At the NDSC meeting held in May 2015 President P. Poroshenko invited to prevent increase in supplies

Environment

It is also planned to gradually introduce the 30 % threshold for importing gas, oil/oil products and coal from one source, Action Plan for the implementation of the Action Program of the Cabinet of Minister of Ukraine and Strategy for Sustainable Development of Ukraine until 2020 in 20152 ordered to the Ministry of Energy and Coal Industry, the State Statistics Committee and the Ministry of Finance to set up a system of monitoring import of gas, oil/oil products and coal, to draw and submit relevant draft regulations to the Government by the end of this year.

On March 31, 2015, the Ministry of Energy and Coal Industry by its Order No. 192 to appointed MP Minister I. Didenko as coordinator of the process of introduction of the Early Warning Mechanism established between Ukraine and the EU5, and approved the list of the authorized persons. Therewith, pursuant to the Action Plan for Implementation of the EU-Ukraine Association Agreement for 2014-2017, approved by the Ordinance of the Government No. 847-p6, this should be done by November 2014. On May 21, Ukraine represented by Minister of Energy V. Demchyshyn signed the Final Document of the International Conference (Hague II) on the International Energy Charter.7 This document is not binding, however, it highlights mutual aspiration of all the signatories to ensure energy safety.

Renewables

On September 3, 2014, the Cabinet of Ministers presented “Ukraine’s Renewal” Action Plan1. In its energy section the document provides for involvement of the EU and the U.S. to gas GTS operation, reaching market agreement on Russian gas supplies and transit, nuclear fuel supplies diversification, signing agreements on building new and finishing construction of unfinished NPP units, strict energy resources saving with state support of natural gas substitution.

from one source by over 30%3. Later, Prime Minister A.Yatsenyuk announced the country’s decision to procure at least 50% from the EU4, which was reflected in the annual gas balance.

Security of supply

A RANGE OF STRATEGIC DOCUMENTS IS APPROVED, THE GOVERNMENT IS VERY CLOSE TO FULFILMENT OF THE ENERGY COMMUNITY REQUIREMENTS AS REGARDS SECURITY OF NATURAL GAS SUPPLY

Regulatory authority

Pursuant to Energy Community Accession Protocol, the Directive should be implemented by January 1, 2012. According to the Action Plan for Fulfilment of Obligations Under the Energy Community Treaty , the NERC, the Ministry of Energy and Coal Industry and “Naftogaz of Ukraine” NJSC were responsible for development of measures for ensuring security of natural gas supply.

35


lenges, the Strategy sets the following priorities: energy markets reform, ensuring transparency and competition, demonopolization, integration in the EU energy markets and Europe’s energy security system, enhancing energy efficiency, diversification of sources and routes of energy supply, development of renewable and nuclear energy sectors, creating favourable conditions to ensure safe energy transit through Ukraine, protection of energy infrastructure against terrorism, etc. On June 12, Minister of Energy V. Demchyshyn discussed tasks of developing an emergencies plan with representatives of the US Department of Energy, US and Canada’s embassies to Ukraine9. According to the preliminary arrangements, the plan will consist of two documents: The winter action plan to deal with the reserves of gas, coal and other sources of energy necessary to pass through heating season, and the Sustainability Plan to introduce the system of tackling emergencies, which will be developed every 3 to 5 years. On August 28 the MinEnergy published a set of documents aimed at reinforcing security in natural gas market pursuant to requirements of the Law “On Natural Gas Market”. Namely, Draft Orders of the MinEnergy “On Approval of Natural Gas Supply Security Rules”10 and “On Approval of Natural Gas Supply Emergency Action Plan”11, as well as Draft Resolution of the Cabinet of Ministers “On Procedure of Accumulation of Natural Gas Security Reserve”12 are among them. The first document is the main secondary legislation as regards security of natural gas supply, which shall be ensured through forecasting and assessment of potential risks and taking proactive measures to prevent them. The second document is the main secondary legislation, which regulates preparation to and reaction on natural gas supply emergencies. It drives off results of stress testing of the natural gas systems in the EU countries and the Energy Community members, 2009 and 2014 emergency experience, conclusions of the Action Plan for Preparation of Fuel and Energy Complex 9

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245014452&cat_id=35109

10

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245036259&cat_id=244946928

11

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245037557&cat_id=244946928

12

36

 ttp://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ h id=245039644&cat_id=244946928

Facilities to Autumn-Winter Season 2015/16 and passing through it (developed in cooperation with experts from the EU, the USA and Canada), risk assessment results. It should be noted that both the documents are developed to implement the Law “On Natural Gas Market” considering requirements of the Energy Community and Regulation 994/2010. New version of Procedure of Accumulation of Natural Gas Security Reserve, which proposes to accumulate reserve of 100 percent of planned monthly volume of natural gas supply to customers, is less unambiguous. Therewith the relevant Explanatory Note contains references to Directive 2009/73/EC.

WHILE COPING WITH CHALLENGES OF 2014/2015 WINTER SEASON THE GOVERNMENT INTRODUCED RESTRICTIONS THAT WERE NEGATIVELY PERCEIVED BY MARKET PLAYERS On September 29, 2014, by the Resolution No. 488, the CabMin established that from October 1, 2014 until the 2014/2015 autumn-winter season will end or until a special government resolution will be taken, producers of mineral fertilizers are entitled to use only natural gas which they import13. While more than 16 billion cubic metres of natural gas were accumulated in storage facilities, the Head of Naftogaz A. Koboliev stated that private extraction companies refuse to inject half of extracted natural gas into underground storage facilities14. On October 14, 2014, draft governmental law No. 5166 15On emergency powers in natural gas sector was registered in the Verkhovna Rada; it empowers the CabMin to limit or to suspend natural gas supplies, change natural gas price, compulsorily buy natural gas from private companies during the periods of limitation or suspension of natural gas supply to the territory of Ukraine. Actions of GTS operator and other market players during emergency period shall be subordinated to governmental decisions.

13

http://zakon4.rada.gov.ua/laws/show/488-2014-%25D0%25BF

14

http://ua-energy.org/post/47070

15

http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?id=&pf3511=52309

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

Back on February 16, 2015, Prime Minister A.Yatsenyuk announced the Government’s decision to borrow USD 1 billion to create gas and fuel oil24 reserve fund, following which Naftogaz launched negotiations on fund raising with international organizations25 to purchase fuel in Europe in summer.

24

http://ua-energy.org/post/50621

 ttp://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ h id=244966861&cat_id=167475

25

http://ua-energy.org/post/50915

26

http://naftogaz.com/www/3/nakweb.nsf/0/E70360C33A351CA1C22 57E600044AC71?OpenDocument&year=2015&month=06&nt=%D0 %9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

27

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245025230&cat_id=35109

28

http://www.kmu.gov.ua/control/uk/cardnpd?docid=248301637

29

http://zakon2.rada.gov.ua/laws/show/540-2015-%D0%BF

30

http://ua-energy.org/post/55854

http://zakon1.rada.gov.ua/laws/show/647-2014-%D0%BF

21

http://tyzhden.ua/News/123849

22

https://www.energy-community.org/portal/page/portal/ENC_ HOME/NEWS/News_Details?p_new_id=9921

23

 ttps://www.energy-community.org/portal/page/portal/ENC_ h HOME/NEWS/News_Details?p_new_id=10142

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

http://zakon1.rada.gov.ua/laws/show/599-2014-%D0%BF

18

Environment

A month later, on July 24, the Government provided state guarantees for “Naftogaz of Ukraine” NJSC obligations under USD 300 million loan granted by the EBRD and used to create stabilization (reserve) energy fund29. The document specifies that natural gas purchased for loaned funds shall be used exclusively to meet the needs of Ukrainian customers. About the end of September Naftogaz reached agreement on USD 500 million loan from state banks30; the EU, in turn, continued to search funds to finance natural gas filling in underground

http://zakon1.rada.gov.ua/laws/show/596-2014-%D0%BF

20

Renewables

On June 24, the Cabinet of Ministers created an energy stabilization fund in the amount of USD 1 billion to be financed by “Naftogaz of Ukraine” NJSC under agreements with foreign creditors28. Therewith, funds will be raised against the state guarantees given by special decisions of the Government and spent on purchase of imported gas, services for connection and access to the GTS, gas transportation and storage only.

17

http://ua-energy.org/post/48666

Security of supply

According to Naftogaz’s estimations, Ukraine needs USD 1.5–2 billion to finance its working capital (to fill up its underground gas storage facilities)26, that is why negotiations with European suppliers and Ukrainian industrial companies, that were invited to pump gas at their own expense in the summer, are held. According to Minister V. Demchyshyn, progress in natural gas filling is “a little bit slower than expected, but it cannot be speeded up due to lack of funding”27.

16

19

Regulatory authority

Independent natural gas traders and private extraction companies were disappointed with such a discriminatory rules, some of them even filed an action against the Government and Naftogaz21. In the letter addressed to the Prime Minister A. Yatseniuk, the Head of the Secretariat of the Energy Community Ja. Kopac clearly stated that existing situation gave rise to concerns as to the compliance with the Energy Community Treaty22. On December 11 the Secretariat of the Energy Community expressed its concern about “distortion of the legal framework in natural gas market”23 and addressed to the Minister V. Demchyshyn a duplicative letter, requesting to review legislation that restricts rights of the natural gas market players.

MEANWHILE THE KEY ISSUE OF 2015/2016 SEASON WAS ACCUMULATION OF NATURAL GAS RESERVES

Electricity

Resolutions of the Government No. 596 of November 716 and No. 599 of November 1217, which obliged majority of industrial, energy generating and heat generating enterprises to buy natural gas exclusively from “Naftogaz of Ukraine” NJSC as guaranteed supplier, attracted wide attention of stakeholders. In such way natural gas distribution and transportation companies, including GTS operator, were obliged to provided their services only upon condition that their resource is generated by the “Naftogas”. Moreover, on November 6 the MinEnergy published Draft Order, by which it initiated transfer of ad hoc function as regards development of natural gas monthly balances Naftogaz18. Naftogaz itself justified resumption of the monopolist’s status by difficulty of settlements for imported natural gas, which requires “cross-guaranties from internal market customers”19. Already on November 26 the Cabinet of Ministers adopted Resolution No. 647 repealing the previous and extending the list of enterprises to which limitations are applicable from 90 to 19720.

37


storage facilities and promises to allocate USD 500 million up to the end of the current year31.

ion in 2014/15 Autumn and Winter Period” the Cabinet of Ministers adopted the draft Binding Protocol and authorized Naftogaz to use respective funds to repay the indebtedness for imported gas34.

CONTINUOUS COORDINATION AND COOPERATION WITH THE EU ALLOWED TO SIGN “GAS PACKAGES”, I.E. SPECIAL ARRANGEMENTS ON SUPPLY OF RUSSIAN NATURAL GAS ON MORE ADVANTAGEOUS CONDITIONS

In December 2014 Ukraine started to import gas from Russia; therewith Prime Minister A. Yatsenyuk allowed for possibility of signing one more interim agreement with the RF35 before decision in dispute between Naftogaz and Gazprom will be taken Stockholm arbitration. At the same time, terrorists from the so-called “LNR” and “DNR” claimed that Ukraine completely stopped natural gas supply36, meanwhile “Naftogaz of Ukraine” NJSC denied the aforesaid and stated that natural gas supply was temporary suspended due to serious damages of the infrastructure37. According to Naftogaz, transmitting natural gas through GMS Platovo and GMS Prokhorovka without supply authorization, Russia breaches the contract.

As regards negotiations, from the very beginning the government insisted on joint position with the EU and using the EU security mechanisms. As the Prime Minister A.Yatsenyuk stated in September 2014, the joint Ukraine-European Commission position shall be the following: until the Stockholm Arbitration does not pronounce until its final decision, Naftogaz shall sign with Gazprom a provisional agreement on natural gas supply32. October 30, 2014 trilateral negotiations between Ukraine, the EU and the RF, which started back on May 2 and were preceded by intense consultations between European and Ukrainian public officials, were held in Brussels. As a result of the meeting 3 documents were signed33:

•

•

•

B  inding Protocol Regarding Conditions for Natural Gas Delivery from the Russian Federation to Ukraine for the Period from November 2014 till 31 March 2015; A  ttachment No. 33 to Natural Gas Sale-Purchase Contract for 2009-2019 of January 19, 2009 between “Naftogaz of Ukraine” NJSC and Gazprom OJSC. L etter of President of the EC J. M. Barroso to President of Ukraine P. Poroshenko, confirming guarantees regarding financial support, as well as the willingness of the EC to further increase the reverse gas supplies.

On the same day, by Ordinance No. 1045-р “On ensuring Energy Security of Ukraine and European Un31

32

33

38

 ttp://dt.ua/ECONOMICS/yevrokomisiya-nadast-ukrayinih 500-mln-dolariv-na-tranzit-rosiyskogo-gazu-v-yevropu-185906_. html http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247634773  ttp://www.kmu.gov.ua/control/uk/publish/article?art_ h id=247720549&cat_id=244276429

Further escalation was the start of direct natural gas supplies to terrorists by Gazprom38, which included their cost into invoices issued to Naftogaz. In turn, Naftogaz refused to make advance payment39 and immediately sent letters to Gazprom, the Cabinet of Ministers, the Secretariat of the Energy Community, claiming violation of the Brussels Protocol40. Consequently, Ukraine declared that it was not going to supply natural gas on uncontrolled territories during the heating season41, and as regards natural gas supplies to the occupied territories by Russia, it would initiate an investigation on international level42. On March 2, 2015, trilateral gas consultations initiated by the EC took place in Brussels 43, where the parties assessed fulfilment of agreements on natural gas supplies during the winter season, and Naftogaz presented evidence proving breach of the “winter package” by Russian party. Moreover, the parties discussed the issue of gas supplies to the occupied territories in Donetsk and Luhansk 34

http://zakon4.rada.gov.ua/laws/show/1045-2014-%D1%80

35

http://ua-energy.org/post/49356

36

http://ua-energy.org/post/50710

37

http://ua-energy.org/post/50728

38

http://ua-energy.org/post/50860

39

http://ua-energy.org/post/50821

40

http://ua-energy.org/post/50807

41

http://ua-energy.org/post/53711

42

http://www.pravda.com.ua/news/2015/07/3/7073365/

43

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=244992459&cat_id=35109

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

46

Naftogaz suggested to Slovak operator “Eustream” a technical solution60, which provides for possibil257D730030E360?OpenDocument&year=2014&month=10&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

http://dt.ua/ECONOMICS/u-rosiyi-stverdzhuyut-scho-po-gazu-vbryusseli-domovilisya-167502_.html

52

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=244998777&cat_id=35109

http://news.eizvestia.com/news-markets/full/257-gazprom-vystavil-ukraine-shtraf-na-summu-267-mlrd

53

http://ua-energy.org/post/53104

54

http://ua-energy.org/post/51691

55

http://ua-energy.org/post/52168

56

http://ua-energy.org/post/52175

http://naftogaz.com/www/3/nakweb.nsf/0/BCD10F60677F99DFC2 257E740047E8A5?OpenDocument&year=2015&month=06&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

47

http://ua-energy.org/post/53605

57

http://ua-energy.org/post/54495

48

http://ua-energy.org/post/53628

58

49

 ttp://dt.ua/ECONOMICS/rosiya-ukrayina-i-yevrokomisiya-pidpish ali-ugodu-schodo-zimovogo-paketu-gazu-185873_.html

http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247570222

59

http://ua-energy.org/post/47942

50

http://www.pravda.com.ua/news/2015/09/26/7082676/

60

51

http://naftogaz.com/www/3/nakweb.nsf/0/59158A20AC5D207CC2

http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247697879&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

45

On September 2, 2014 the Prime Minister of Ukraine A.Yatsenyuk and the Prime Minister of Slovakia R. Ficoput into industrial operation the Vojany-Uzhgorod pipelinein Veľké Kapušany (Slovakia), therewith starting the reverse gas flow to Ukraine through the above-mentioned route58. On October 16 the EU published results of natural gas systems stress testing. For Ukraine, this study highlights the possibility to cover 70% of gas demand from other sources, with estimated deficit at a level of 5 billion cubic meters59.

Environment

44

PRE-CONDITIONS FOR EXTENSION OF NATURAL GAS SUPPLY FROM THE EU ARE CREATED, HOWEVER THERE IS STILL A LONG WAY TO LAUNCHING OF “THE BIG REVERSE”

Renewables

Therewith, on October 16, 2014 the Naftogaz brought action in the Arbitration Institute of Stockholm Chamber of Commerce regarding amendments to the contract with Gazprom on gas transit. Claims under the action amounted to more than USD 10 billion regard invalidation of a range of provisions, including those on the natural gas transit tariff, as well as compensation for incomplete supplies under the contract (according to Gazprom’s obligations). The Company stated that such an action is related to fulfilment of obligations in the Energy Community by Ukraine51.

Security of supply

Nevertheless, agreement upon the next “winter package” was made only at the end of September: Ukraine, Russia and the EU initialled a trilateral protocol, according to which Ukraine shall buy 2 billion cubic metres of natural gas from Gazprom to be filled into underground storage facilities, while the Russia will provide 2 quarter discount for Ukraine49. According to the mass media, final price of the Russian natural gas will be equal to USD 232 per thousand cubic metres in IV quarter50.

At the same time, Ukrainian Government requested the Antimonopoly Committee of Ukraine to investigate Gazprom’s non-competitive policy which55, according to Naftogaz’s statement, also prevents integration of the Ukrainian and the EU energy systems56. In July 2015 the Head of the AMCU Yu. Terentiev announced that the first hypotesises within investigation of the case against Gazprom as relates violation of Ukrainian legislation on protection of economic competition would be presented within 1.5-2 months57.

Regulatory authority

As to the negotiations held on June 30 in Vienna, Ukraine insisted that the gas issue should be settled by trilateral, binding document to lay down the interim arrangements between the parties to be applicable by the end of Q1 2016 at least46. The Russian party offered the price of USD 247.18 per thousand cubic meters47, however, refused to discuss it during the negotiations and sign the final protocol48.

In turn, Gazprom fined Naftogaz in the amount of USD 26.7 billion for natural gas underdrawal52, and stated that it was not going to prolong the transit contract with Ukraine after 201953. The Arbitration refused to attach the claim to the case Naftogaz vs Gazprom concerning supply contracts54.

Electricity

oblasts. On March 20 another round of consultations took place, where the parties agreed upon the “summer package”44, while the issue of supplies to the occupied territories was excluded from the agenda. Following the consultations, on April 1 Naftogaz and Gazprom signed an additional agreement to the contract on natural gas supply45, according to which term of the key Brussels’s agreements was prolonged till the end of 2015.

39


ity of launching similar virtual reverse natural gas volumes in both the directions (the so-called backhaul) and allows to significantly expand capacity of the above-mentioned gas transportation route. The MinEnergy by its Order No. 746 of October 2461 approved signing the Agreement between Naftogaz and “Eustream” on access to gas transportation system and transportation of natural gas; then the start of the “big reverse” was planned for April 2015. Therewith, according to the Naftogaz, to reach the aforesaid goal, it was necessary to align the Agreement between “Eustream” and “Gazprom Export” with European regulations62. The company also admitted possibility of launching similar virtual reverse from Romania through signing an agreement on direct connection between Ukrainian and Romanian operators. In December 2014 “Ukrtransgaz” completed installation of connecting section between “VoyanyUzhgorod” and “Soyuz”63 gas transmission pipelines, allowing increase of Slovak reverse up to 40 million cubic meters per day. Therefore, negotiations were launched with V4 Visegrad Countries on gas systems integration64 and creation of gas hub on the basis of Western Ukrainian underground gas storage facilities. For instance, Agreement on cooperation was signed between “Ukrtransgaz” and Polish “Gaz-System”65. The agreement concerned construction of a new gas interconnector Drozdovychi-Bilche-Volytsia with capacity of 8 billion cubic metres yearly in direction Poland—Ukraine and 7 billion cubic metres yearly in the reverse direction; cost of construction of the interconnector in the territory of Ukraine is USD 245 million.66The interconnector will allow for access to LNG terminals in Lithuania and Poland, as well as to the German natural gas market67. Potential natural gas supplies from LNG terminals in Lithuania were hampered due to blockage of transmis-

40

61

http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=244965370

62

http://naftogaz.com/www/3/nakweb.nsf/0/7AA90665761277E8C22 57DA8003CD3C2?OpenDocument&year=2014&month=12&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

sion in Belarus68 by “Beltransgaz” operator, which is fully-owned by Gazprom. In April 2015, Naftogaz conducted successful negotiations with Romania as regards joint development of gas transportation networks69. At the same time, at the end of May, Ukrainian “Ukrtransgaz” and Hungarian FGSZ signed an interconnection agreement on the merger of cross-border gas pipelines70, which became unprecedented agreement with the EU operator and provided for backhaul transactions. “Ukrtransgaz” works towards signing of similar agreements with Slovak and Polish operators. In June, Prime Minister A. Yatsenyuk requested to the Presidents of the European Commission, the European Council and the European Parliament71 to check the contract between the Slovak operator Eustream and Gazprom, since it breached the EU legislation and hampered free natural gas supply to Ukraine. The Naftogaz called for Slovak part to recognize that operation of gas connection with Ukraine was not compliant with the EU legislation and insisted72 develop an action plan for implementation of the EU rules. On July 10 Ukraine signed the Memorandum of Understanding on a joint approach to address the natural gas diversification and security of supply security challenges in Central and Southeastern Europe73, and its Action Plan to accelerate the implementation of projects on construction of gas transportation infrastructure. The memorandum allows Ukraine to increase gas transit and pumping gas to underground gas storage facilities, construction of the interconnector with Poland, Hungary and Romania and the ability to run the “big reverse” from Slovakia as well as to diversify routes of supply and increase energy security74. 68

http://www.rbc.ua/rus/news/minenergo-litvy-gazprom-otkazalsya-propustit-1433531366.html

69

http://ua-energy.org/post/51917

70

http://naftogaz.com/www/3/nakweb.nsf/0/54D7514B47992176C22 57E5B00435C22?OpenDocument&year=2015&month=06&nt=%D0 %9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

71

http://naftogaz.com/www/3/nakweb.nsf/0/F59A200563F5CE32C22 57E89003BD801?OpenDocument&year=2015&month=07&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

72

http://naftogaz.com/www/3/nakweb.nsf/0/D99159A32A4F8149C22 57E720026D1D1?OpenDocument&year=2015&month=06&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

63

http://ua-energy.org/post/49188

64

http://ua-energy.org/post/48946

65

http://naftogaz.com/www/3/nakweb.nsf/0/0F179C849C793F77C22 57DB100632C2C?OpenDocument&year=2014&month=12&nt=%D 0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

73

https://ec.europa.eu/energy/sites/ener/files/documents/ CESEC%20MoU_signatured.pdf

66

http://ua-energy.org/post/47877

74

67

http://ua-energy.org/post/50047

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245023342&cat_id=35109

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

CONCLUSION Successful cooperation with the EU partners allowed avoiding complete blockage of natural gas import by Russia and considerably expand reverse supply. In particular, thanks to transfer to European operation principles Ukrainian operator “Ukrtransgaz” managed to achieve substantial progress in integration with natural gas networks of European neighbour countries. However, governmental crisis measures and initiatives for increasing natural gas insurance reserves do not help to build trust in internal market, while the threat of temporary monopolization remains, at least until Natural Gas Supply Emergency Action Plan is approved. The EU shall supervise compliance with its regulations in Ukraine and non-discrimination of market players.

Renewables Environment Energy efficiency

According to the Action plan for implementation of the Action Program of the Cabinet of Minister of Ukraine and Strategy for Sustainable Development of Ukraine until 2020 in 2015 (Ordinance No. 213-

In March 2015 the Ministry of Energy and Coal Industry of Ukraine held joint consultations on energy issues between representatives of Ukraine and Turkey81, which particularly concerned importance of Ukrainian GTS as one of the key factors of energy security in Europe, as well as Ukraine’s chances for participation in international gas transportation projects. Presidents of both countries continue negotiations on the LNG terminal project82.

Security of supply

In order to implement this project in time and effectively, the European Commission and the World Bank within the Trust Fund contract provide technical assistance to Ukrtransgaz through creation of the Project Implementation Unit (PIU) which will ensure implementation including design and all issues related to environment, procurement, financial and accounting management and disbursement according to the applicable EBRD and EIB rules for project implementation.

Regulatory authority

Besides, in autumn “Ukrtransgaz” started to publish day-to-day data on natural gas transportation77, meanwhile Naftogaz launched publication of periodic reports on natural gas consumption by categories of customers and regions of Ukraine. Since February 2015 Ukraine has ensured access to GTS facilities for the EC supervisors and submission of the relevant information on a day-to-day basis78. On July 15 the Verkhovna Rada ratified financial agreement between Ukraine and European Investment Bank on the implementation of the Project for the reconstruction, overhaul and re-equipment of the Urengoi-Pomary-Uzhgorod main gas pipeline79.

p80), the Ministry of Energy and Coal Industry and the Ministry of Foreign Affairs were ordered to develop partnership with Turkey in order to arrange for LNG tankers transit through the Bosphorus, while the MEDT must develop a draft Ordinance of the Cabinet of Ministers of Ukraine to approve the Concept of LNG terminal construction project by December 15. The plan also provides for prolongation of direct gas supply contracts with European companies and increase of gas import from the EU through building capacity of the North-South gas corridor.

Electricity

Meanwhile, Ukrainian and Slovak gas transportation system operators discussed increase of gas supplies: following consultations an engineering solution for gas corridor widening from December 1, 201575 was made. In turn, Naftogaz invited all the companies willing to supply natural gas in Ukraine from Europe to use free transportation capacities on the EU border76. What is more, the Company was ready to discuss conditions for use of book capacities to deliver the EU natural gas to Ukrainian border, stressing, however, that along with granting access to natural gas import for other players it expects traders to join the process of accumulation of adequate reserves in storage facilities to meet the needs of its clients in winter.

75

http://ua-energy.org/post/53833

76

http://naftogaz.com/www/3/nakweb.nsf/0/1A97C916B790EDAAC2 257E7E0024C3E5?OpenDocument&year=2015&month=07&nt=% D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

80

http://zakon4.rada.gov.ua/laws/show/213-2015-%D1%80

77

http://ua-energy.org/post/48905

81

78

http://ua-energy.org/post/50609

http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=244995270&cat_id=35109

79

http://zakon2.rada.gov.ua/laws/show/603-19

82

http://ua-energy.org/post/51462

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

41


Directive 2005/89/ЕС concerning measures to safeguard security of electricity supply and infrastructure investment provides for implementation of common rules for networks’ operation and reporting transparency by the Government.

MOST OF THE TIME DURING 2014-2015 ELECTRICITY MARKET FUNCTIONED IN EMERGENCY SITUATION, THAT SUBSTANTIALLY COMPLICATED REFORMS Ukraine started 2014 heating season with military operations in regions, where coal, which is a resource used during heating season, was traditionally extracted. In addition, terrorists’ fire regularly provoked emergencies at energy facilities both in the occupied territory and in adjacent areas. Such circumstances required quick search of new sources of energy supply and operative reacting on emergencies. On August 13, 2014 the Cabinet of Ministers declared emergency in electricity market83, ordered the NERC to adjust electricity production tariffs and to change electricity wholesale market funds distribution algorithm; defined measures for “Ukrenergo” PEC and “Energorynok” SE, including setting temporary capacity restrictions of Ukrainian cross-border power lines, complying with capacity limits, as well as development of grid load schedules. In turn, the NERC obliged84 Oblenergos to immediately found day-and-night energy crisis centres to ensure operational flexibility in supplying electricity to consumers, “particularly during the 2014-2015 heating season”. What is more, the Government founded85State Energy Supervision Inspectorate, responsible for implementation of state supervisory (control) policy in electricity and heating sectors. 83

84

85

42

Ordinance of the Cabinet of Ministers of 13.08.2014 No. 764-p “On Implementation of Temporary Extraordinary Measures in Electricity Market” — http://zakon4.rada.gov.ua/laws/show/764-2014%D1%80 the NERC obliged heads of Oblenergos and Oblgazes to immediately found and ensure functioning of day-and-night emergency energy crisis centres — 08.08.2014 — http://www3.nerc.gov. ua/?news=3915 Resolution of the Cabinet of Ministers of Ukraine of 10.09.2014 No. 442 “On Central Executive Bodies’ System Optimization”, — http:// zakon4.rada.gov.ua/laws/show/442-2014-%D0%BF

In October, the Government approved86 MinEnergy’s proposals as to temporary emergency measures in electricity market. According to the relevant document, the Regulator was ordered to adjust electricity tariffs, while “Ukrenergo” PEC should define a permitted decrease of electricity generation capacities and “Energorynok” SE must develop Ukrainian grid load schedules. To ensure prompt response and overcome consequences of irregularities in electricity market, the MinEnergy created87 special working group and prepared88 schedules of power cut-offs. Moreover, Ukraine suspended export of electricity to Belarus89 and halved it to Crimea90. However, emergency cutoffs were not avoided, during 2014 misbalance91 between electricity consumption and generation appeared several times, therefore scheduled customer cut-offs were applied. Further, during all the heating season the Government approved decisions on provisory emergency measures in electricity market every month. In light of the critical situation, a decision on temporary import of electricity from the neighbour countries was taken om December 5, 2014. The 86

Ordinance of the Cabinet of Ministers of 01.10.2014 No. 915-p “On Implementation of Temporary Extraordinary Measures in Electricity Market” — http://zakon4.rada.gov.ua/laws/show/915-2014%D1%80

87

Order of the Ministry of Energy of 10.10.2014 No. 712 “On Setting the MinEnergy Working Group For Prompt Response and Overcoming Consequences of Irregularities in Electricity Market” — http:// document.ua/pro-stvorennja-robochoyi-grupi-minenergovugilljaz-operativn-doc208584.html

88

Prodan assured that the MinEnergy developed schedules of emergency power cut-offs // Ukrainska Enerhetyka. — 09.10.2014 — http://ua-energy.org/post/47749

89

Ukraine completely suspended electricity export to Belarus —  Prodan // Ukrainska Enerhetyka. — 10.10.2014 — http://ua-energy. org/post/47768

90

Electricity export to Crimea is halved // Ukrainska Enerhetyka. — 09.10.2014 — http://ua-energy.org/post/47753

91

The Minister Yuriy Prodan informed on electricity supply situation / Ministry of Energy and Coal Industry — 02.12.2014 — http://mpe. kmu.gov.ua/minugol/control/uk/publish/article;jsessionid=ADE6F 995F2D03FB1BBBFEA825D3481D4.app2?art_id=244970488&cat_ id=35109

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity Regulatory authority

93

Ordinance of the Cabinet of Ministers of 05.12.2014 No. 1188-p “On Temporary Measures for Ukrainian Electricity Market Balancing” — http://zakon4.rada.gov.ua/laws/show/1188-2014-%D1%80

94

Ordinance of the Cabinet of Ministers of 19.12.2014 No. 1238-р “On Amendments to Resolutions of the Cabinet of Ministers of Ukraine of December 5, 2014 No. 1188” — http://zakon4.rada.gov.ua/laws/ show/1238-2014-%D1%80 The Head of “Ukrinterenergo” is arrested in the SAR coal case // Forbes. — 05.12.2014 — http://forbes.net.ua/news/1384309-podelu-uglya-iz-yuar-zaderzhan-glava-ukrinterenergo

96

 he MinEnergy appointed acting Head of “Ukrinterenergo” AnT drienko // Ekonomichna Pravda — 29.12.2014 — http://www.epravda.com.ua/news/2014/12/29/519045/

97

98

 inister Volodymyr Demchyshyn, Ukraine is ready to sign agreeM ment on electricity supply from the Russian energy market immediately / Ministry of Energy and Coal Industry — 27.12.2014 — http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=244975605&cat_id=35109 “Ukrinterenergo” announced an auction for supply electric ity to Crimea // UNIAN — 28.12.2014 — http://economics.unian. ua/energetics/1027148-ukrinterenergo-ogolosilo-auktsion-napostavku-elektroenergiji-v-krim.html

Do not make Yatseniuk wait till 12 a.m. January 20, contracts on Crimea (may be) / V. Gatsko blog on “Ukrainska Pravda” website — 20.01.2015 — http://blogs.pravda.com.ua/authors/ gatsko/54bdc57c9934d/

100

“Ukrinterenergo” will make amendments to the contract on electricity supply from Russia // Ekonomichna Pravda — 15.01.2015 — http://www.epravda.com.ua/news/2015/01/15/521692/

101

Ukrenergo accuses a company of Akhmetov of sabotage, mass media // Ukrinform — 04.08.2015 — http://www.ukrinform.ua/ukr/ news/ukrenergo_zvinuvachue__kompaniyu_ahmetova_u_sabotagi___zmi_2081639

102

“Ukrinterenergo” is caught in paying electricity for terrorists // Ukrinform — 27.08.2015 — http://www.ukrinform.ua/ukr/news/ ukrinterenergo_spiymali_na_oplati_elektriki_dlya_teroristiv_2088392

103

Revision of “Ukrinterenergo” financial and economic activity,  prescribed by the Government, is completed / Ministry of Energy

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

95

99

Environment

The Cabinet of Ministers approved the MinEnergy proposal as regards temporary electricity import / Ministry of Energy and Coal Industry — 07.12.2014 — http://mpe.kmu.gov.ua/minugol/control/ uk/publish/article?art_id=244971619&cat_id=35109

Renewables

92

ply electricity to Crimea during 2015. The agreement between “InterRAO” and “Ukrinterenergo” was made, however soon public activists claimed99 provisions of the document unlawful and required to provide official comments. In January 2015 “Ukrinterenergo” announced100 amendments to the contract with Russian company, however there is no information on further negotiations and results thereof. During 2015 Spring-Summer period “Ukrinterenergo” informed on termination of electricity import from Russia, however, according to mass media101 the import was renewing from time to time, including during emergencies at generating companies subordinated to DTEK Company. In August 2015 State Financial Inspection claimed102 violation of Ukrainian legislation by “Ukrinterenergo” by carrying out settlements with Russian “Inter RAO UES” OJSC for electricity supply to occupied territories; at the same time the Ministry informed on its website103 that the SFI completed audit of

Security of supply

Cabinet of Ministers approved the proposal92 of the MinEnergy by special Ordinance93, which was subsequently complemented with provisions94 on direct agreements. Also, in December a scandal emerged in relation to the “Ukrinterenergo”: director of the company was arrested95 on suspicion in corruption when purchasing coal from SAR and December 29, 2014 a new acting director96 V. Andrienko was appointed. At the end of December the MinEnergy stated97 that it was planning to conclude direct agreement between “InterRAO” OJSC and “Ukrinterenergo”, while the Company itself announced an auction98 for the right to sup-

43


“Ukrinterenergo”, which revealed no violation in electricity export and import operations and confirmed lawfulness of the relevant agreements (it is likely that agreements with the Russian parties were meant). In response to difficulties in electricity supply to occupied territories, in January the Parliament adopted the Law104, which puts moratorium on power cut-offs and sets out fines for those ATO zone residents, who fail to pay for housing and utility services in time. It allows the situation, when electricity supplied to the ATO zone was used by terrorists and was not always fully paid. Almost immediately after adoption of the Law the Cabinet of Ministers declared105 emergency in the ATO zone106, and in February the Prime Minister ordered107 to suspend payments for electricity generated in the ATO zone and renew them only when it would be supplied to citizens of Ukraine. The MinEnergy by its Order108 approved the relevant last of electricity producers, which included two TPPs (Starobeshivska and Zuyevska), 13 CHPPs and units and 4 WPPs (Luhutynska, Krasnodonska, Novoazovska, Vitroenergoprom). Already in April the Parliament adopted the law109, which empowered the government to settle issues110, related to activities of power plants in the ATO territory. Also

at the end of April emergency in electricity market together with heating season ended.111 In May the Cabinet of Ministers by its Resolution112 defined that energy companies, situated in occupied territories, would purchase electricity directly from local producers and supply it to customers without “Ehergorynok” participation. Pursuant to the Resolution the Ministry of Energy published the Order113 to define a list of electricity producers with facilities located in the occupied territories, including WPPs, CHPPs and TPPs. According to Minister V. Demchyshyn114 in July 2015 Ukraine managed to cut off 4 power lines towards occupied territories. In April the Ministry of Energy launched meetings and discussions on preparation to the new heating season. The aforesaid activities were carried out against the backdrop of mineworkers’ labour strikes115 and their negotiations with the Ministry of Energy as regards privatization of mines. Miners were engaged116 in development of the Program of Coal Industry Reform, which subsequently, in May, was presented both to public and to trade unions of mineworkers117 and generally approved by them. In July the Cabinet of Ministers took first decisions118 on liquidation of some loss-making mines in Lviv, Volyn and Donetsk oblasts, meanwhile the 111

Ordinance of the Cabinet of Ministers of 31.03.2015 No. 280-p “On Implementation of Temporary Extraordinary Measures in Electricity Market” — http://zakon4.rada.gov.ua/laws/show/280-2015%D1%80

112

Resolution of 07.05.2015 No. 263 “Peculiarities of Regulation of Relations in Electricity Sector in the Territories, Where Public Authorities Temporary Have No Power or Have limited Powers” http://www. kmu.gov.ua/control/uk/cardnpd?docid=248145011

113

Order of the Ministry of Energy and Coal Industry of 18.02.2015 No. 273 “On Approval of List of Electricity Producers” — http://mpe. kmu.gov.ua/minugol/doccatalog/document?id=245008361

114

Ukraine does not pay for electricity for terrorists any more, Demchyshyn // Ukrinform — 07.07.2015 — http://www.ukrinform.ua/ ukr/news/ukraiina_bilshe_ne_platit_za_elektriku_dlya_teroristiv___demchishin_2071976

115

In light of the outburst of mineworkers’ strikes Minister of Energy and Coal Industry Volodymyr Demchyshyn took decision to end his participation in CERAWeek-2015 Energy Conference, held in Houston (Texas, USA) one and half days earlier — 23.05.2015 — http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_ id=245003556&cat_id=35109

116

The MinEnergy involved mineworkers’ trade unions to development of the sector reform //Insider. – 22.04.2015. - http://www. theinsider.ua/business/553796731b24f/

117

Trade unions of mineworkers generally approved general conceptual framework of the State Target Program of Coal Industry Reform for 2015–2020 / Ministry of Energy and Coal Industry — 07.05.2015 — http://mpe.kmu.gov.ua/minugol/control/uk/publish/ article?art_id=245006112&cat_id=35109

118

Ordinance of the Cabinet of Ministers of July 8, 2015 No. 696-p “On Liquidation of Selected Loss-Making Mining Enterprises” http:// zakon2.rada.gov.ua/laws/show/696-2015-%D1%80

and Coal Industry website — 14.08.2015 — http://mpe.kmu.gov. ua/minugol/control/uk/publish/article?art_id=245033831&cat_ id=35109 104

105

Emergency is declared in Donbass // Ukrainska Enerhetyka — 26.01.2015 — http://ua-energy.org/post/50174

106

 rdinance of the Cabinet of Ministers of 26.01.2015 “On IntroducO tion of High Alert and Emergency Situation Regimes” — http:// zakon1.rada.gov.ua/laws/show/47-2015-%D1%80

107

Ukraine will not pay for electricity in the ATO zone, Yatseniuk // Korespondent — 18.02.2015 — http://korrespondent.net/business/ economics/3481003-ukrayna-ne-budet-oplachyvat-elektroenerhyui-v-zone-ato-yatsenuik

108

Order of the Ministry of Energy and Coal Industry of 18.02.2015 No. 100 “On Approval of List of Electricity Producers” — http://mpe. kmu.gov.ua/minugol/doccatalog/document?id=244990571

109

 aw of Ukraine of 07.04.2015 No. 284-VIII “On Amendments to the L Law of Ukraine “On Electric Energy” as Regards Peculiarities of Regulation of Relations in Electricity Sector in the Territory of AntiTerrorist Operation” http://zakon4.rada.gov.ua/laws/show/284-19

110

44

Law of Ukraine of 13.01.2015 No. 85-VIII “On Introduction of Additional Guarantees for Protection of Rights of Individuals Residing within Anti-Terrorist Operation Areas, and Limitation of Liability of Housing and Utility Service Providers and Producers in Case of the Late Payment for the Consumed Energy Resources — http:// zakon1.rada.gov.ua/laws/show/85-19

Draft Law of Ukraine “On Amendments to the Law of Ukraine “On Electric Energy” as Regards Peculiarities of Regulation of Relations in Electricity Sector in the Territory of Anti-Terrorist Operation” was approved at the meeting of the Verkhovna Rada of Ukraine — 07.04.2015 http://mpe.kmu.gov.ua/minugol/control/uk/ publish/article?art_id=244999912&cat_id=35109

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

Discussions for preparation to the heating season concerned coal procurement and sources of supply thereof, repair of equipment at generating enterprises, increasing workload of NPPs and securing settlements for electricity. In August the Cabinet of Ministers approved120 Action Plan for preparation of fuel and energy complex facilities to autumnwinter season, which orders to prepare draft ordinance on checks at fuel and energy complex facilities to be carried out by the State Energy Supervision Inspectorate, to develop schedule of coal and fuel oil accumulation in storage facilities, to take measures for repayment of customers’ debts for electricity. Also, the Government set up an Intergovernmental group121 for preparation to autumnwinter season, and ordered all the oblasts122 to set up committees for preparation to heating season.

Electricity

MinEnergy set up119 the Working group for development of a draft law on operating principles of coal market.

Regulatory authority Security of supply Renewables Environment

Order of the Ministry of Energy and Coal Industry of 16.07.2015 No. 451 “On Setting Up Working Group For Development of a Draft Law On Operating Principles of Coal Market” — http://mpe.kmu. gov.ua/minugol/doccatalog/document?id=245029021

Ordinance of the Cabinet of Ministers of 05.08.2015 No. 809-p “On Approval of the Action Plan for Preparation of Fuel and Energy Complex Facilities to Autumn-Winter Season 2015/16 and Functioning During It” — http://zakon4.rada.gov.ua/laws/show/8092015-%D1%80

121

Resolution of the Cabinet of Ministers of 05.08.2015 No. 549 “On Setting Up Intergovernmental Working Group for Preparation of Fuel and Energy Complex Facilities to Autumn-Winter Season 2015/16 and Functioning During It” — http://zakon4.rada.gov.ua/ laws/show/549-2015-%D0%BF

122

Arseniy Yatseniuk ordered to set up committees for preparation to heating season in every oblast / the Cabinet of Ministers website — 06.08.2015 — http://www.kmu.gov.ua/control/uk/publish/ article?art_id=248389972

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

119

120

45


RENEWABLES

46

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

NATIONAL OBJECTIVES Electricity Regulatory authority

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 provides for establishment of biding national indicative targets for renewable energy, based on adequate assessment of starting potentials and precise statistical data. Such targets shall ensure a 20 % share of energy from renewable sources in overall Community energy consumption by 2020 and a 10 % share in all Member States in transport sector. For the aforesaid purpose every state shall approve a national renewable energy action plan.

Following initiation of the case ECS-07/14 against Ukraine by the Secretariat of the Energy Community for the breach of renewable energy legislation, the Government approved the National Renewable Energy Action Plan until 2020 on October 1, 2014 (Ordinance No. 902), which sets out an indicative gross end consumption target of 11 percent for the country. The Plan provides for increase of capacities of wind power plants by 5.6 times, i.e. from 410 to 2280 MW and of solar power plants by 5.1 times — from 450 to 2300 MW. Smaller increase is provided as regards small hydropower facilities, i.e. by 25%, from 120 to 150 MW. Therewith record high trends among all the renewable energy sources are established for biomass sector: during next 6 years capacities shall rise 40 times, i.e. from 24 MW to 950 MW for biomass power plants, and 2.7 times, i.e. from 1.88 million tons of oil equivalent in 2013 to 5.0 million tons of oil equivalent in 2020 for biomass heat power sector.

Moreover, on September 3, 2014 the Cabinet of Ministers approved Ordinance No. 791 “On Approval of the Action Plan for Implementation of Directive 2009/28/EC of the European Parliament and of the Council”1. The Resolution provides for improvements as regards informing of the Secretariat on possibilities of statistical transfers with other Member States as well as on progress in promotion of RES development. Therewith, reliability of data on RES functioning in Ukraine is low. Official data do not take into account use of solar energy for heat generation by means of solar collectors, of air and ground source energy for heat generation by means of heat pumps, as well as of automotive biofuels etc. In particular, according to experts2, forms of state 1

Ordinance of the Cabinet of Ministers of September 3, 2014 No. 791 “On Approval of the Action Plan for Implementation of Directive 2009/28/EC of the European Parliament and of the Council” // Ukrainian legislation — http://zakon4.rada.gov.ua/laws/show/7912014-%D1%80

2

Letter of the Bioenergy Association of Ukraine of January 14, 2005 addressed to Acting Head of the State Statistics Service and Head of State Agency on Energy Efficiency and Energy Saving, Entry No.

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Therefore, Ukraine managed to avoid responsibility for breaching terms of National Renewable

Environment

Energy Action Plan approval. On November 6 following publication of National Renewable Energy Action Plan until 2020 the Secretariat initiated procedure of dispute settlement.

Renewables

THE GOVERNMENT APPROVED THE NATIONAL RENEWABLE ENERGY ACTION PLAN UNTIL 2020 WITH SIGNIFICANT DELAY

Security of supply

Pursuant to Decision of the Ministerial Council of the Energy Community of October 18, 2012 D/2012/03/ MC-EnC, the deadline for integration of Directive 2009/28/EC to national legislation of Ukraine shall be January 1, 2014. Moreover, Ukraine is obliged to approve National Renewable Energy Action Plan and to submit it to the Secretariat of the Energy Community for consideration by June 30, 2013.

47


statistical monitoring, which are currently used by the State Statistics Service of Ukraine (Derzhstat), do not allow carrying out detailed account of different types of biomass and biofuel in an appropriate manner.

tration shall be no less than 7%. However, in practice, general transfer to biofuel did not happen due to gaps in legislative regulation of manufacturing, storage and sale of alternative fuels.

According to NSDCU’s Order “On Conditions of Ensuring Energy Safety in Relation to Circumstances of Natural Gas Supply to Ukraine”3, by June 20, 2014 the Government should update Energy Strategy until 2030 to ensure fulfilment of international obligations in RSE sector. By the Order of September 23 No. 6594 the MinEnergy set up an intergovernmental working group for Energy Strategy updating, which should develop new draft strategy by November 30. On August 7, 2015 the Ministry of Energy and Coal Industry published draft New Energy Strategy of Ukraine5, which provides for increase of renewable energy share in overall primary energy supply up to 5.2 percent by 2020 (more than 7.5% in the end use of energy) and up to 20 percent by 2035; that is incompatible with indicators set out in the National Plan. The Draft Strategy is still unapproved.

NATIONAL INDICATORS AS REGARDS USE OF BIOFUEL ARE SET OUT BY LAW, HOWEVER IT IS UNENFORCED The Law No. 4970-VI, approved in June 2012, provides for gradual increase of production and use of biofuel and mixed automotive fuel. Pursuant thereto, concentration of bioethanol in automotive petrol, produced and sold in the territory of Ukraine shall be: from January 1, 2013 recommended concentration shall be no less than 5%; from January 1, 2014 obligatory concentration shall be no less than 5%; from January 1, 2016 obligatory concen177 // BAU — http://www.uabio.org/img/files/news/pdf/letter-statestatistics-committee-seea.pdf

48

3

According to NSDCU’s Order of April 28, 2014 “On Conditions of Ensuring Energy Safety in Relation to Circumstances of Natural Gas Supply to Ukraine” // Ukrainian legislation — http://zakon4.rada. gov.ua/laws/show/n0003525-14

4

Order of the Ministry of Energy and Coal Industry of 23 September 2014 No. 659-p // Ukrainian legislation — http://mpe.kmu.gov.ua/ minugol/doccatalog/document?id=244960157

5

Draft New Energy Strategy of Ukraine: safety, energy efficiency, competitiveness // the Cabinet of Ministers — http://mpe.kmu.gov. ua/minugol/doccatalog/document?id=245032412

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

CREATING FAVOURABLE CONDITIONS AND REMOVING BARRIERS

“LOCAL CONTENT” RULE, WHICH IS DEEMED DISCRIMINATORY, WAS ABOLISHED IN UKRAINE

In January 2015 the NEURC reduced green tariffs by 10-20%7 pursuant to Ordinance of the CabMin on emergency measures, in February it limited8 payments to enterprises situated in uncontrolled territories and reduced green tariffs by 50-55%9 within the framework of temporary emergency measures in electricity market. From August 2015 the Regulator ceased to adjust the green tariff based on exchange rate fluctuations. Consequently, the European Wind Energy Association addressed an official letter to Prime Minister A. Yatseniuk10 requesting to discuss necessity to respect legislation as regards RES tariff policy, considering that the Resolution of the NEURC of 31.01.2015 No. 105 “On Setting Out Electricity Green Tariffs” // NEURC — http://www.nerc.gov. ua/?id=13913

8

Resolution of the NEURC of 18.02.2015 No. 203 “On Amendments to the NEURC Resolution of 03.09.2008 No. 1052 and the NERC Resolutions of 21.12.2011 No. 2 and of 26.07.2013 No. 1036” // NEURC — http://www.nerc.gov.ua/index.php?id=14097

9

Resolution of the NEURC of 27.02.2015 No. 492 “On Setting Out Electricity Green Tariffs” // NEURC — http://www.nerc.gov. ua/?id=14326

10

Energy efficiency

7

Environment

Law of 04.06.2015 No. 514-VIII “On Amendments to Certain Laws of Ukraine For Ensuring Competitive Conditions of Electricity Generation From Alternative Energy Sources” // Legislation of Ukraine — http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55219

DURING EMERGENCY IN ENERGY SECTOR THE REGULATOR REDUCED GREEN TARIFFS UPON REQUEST OF THE GOVERNMENT, CAUSING OPPOSITION OF INVESTORS

Renewables

Also, the Draft Law establishes a reduced green tariff rate for large solar power plants, increased rates for small solar power plants and hydro-electric power plants, introduction of the green tariff for power plants using geothermal sources of energy. Private households are authorized to install power plants with capacity of up to 30 kW to generate electricity from not only solar, but also wind energy. Moreover, is was proposed to cancel allowances for those connecting to alternative power networks. The Draft Law also aligned the term “bi-

Security of supply

omass” with Directive 2009/28/EC, therewith removing a huge barrier in bioenergy development.

Following initiation of another case ECS-7/13 against Ukraine by the Secretariat of the Energy Community as regards the so-called “local content”, on June 4, 2015 the Verkhovna Rada generally approved the Draft Law No. 2010-д “On Amendments to Certain Laws of Ukraine For Ensuring Competitive Conditions of Electricity Generation From Alternative Energy Sources”6, developed by a group of peoples’ deputies members of the Committee for Fuel and Energy Sector. The Law cancels the “local content” rule and instead introduces a 5–10% surcharge to the tariff in case 30–50% of the used equipment is of Ukrainian origin.

6

Regulatory authority

Directive 2009/28/EC provides for reduction of administrative and regulatory barriers in renewable energy sector. Governments shall supervise objectivity, transparency, non-discrimination and proportionality of rules and authorization, certification and licensing procedures, applicable to generating undertakings, to facilities for transportation and distribution of electricity, generation of electricity for heating or cooling from renewable sources, as well as for treatment of biomass in biofuel manufacturing or other energy products.

Letter of the European Wind Energy Association addressed to A. Yatseniuk of 29.12.2014 // EWEA — http://www.uwea.com.ua/files/ Letter_to_Ukrainain_Prime_Minister_141218.pdf

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

49


NEURC inaction had already incurred loss of wind energy company amounted to UAH 45 million. Upon the end of emergency in the power sector, owners of wind parks filed three different lawsuits in Kyiv District Administrative Court against the Regulator’s provisional decision. In a joint lawsuit11 brought by six wind energy enterprises against the Regulator, “Energorynok”, the Ministry of Energy and Coal Industry and the Ministry of Justice with the claim of recognizing unlawful the 10–20% reduction of the green tariffs within the framework of the Resolution No. 105, the court obliged the Commission to consider compensation of the difference between the value of the actually sold electricity in February 2015 and the green tariff rate established by law12. In July-August the NEURC approved Resolutions No. 206013, No. 214014 and No. 214415 on compensation of benefits not received by producers, operating under the green tariff as of July-August 2015. Two of six claimants, namely “Wind Park Ochakiv” PrJSC and “WIND POWER” LLC were included to the list of companies entitled to compensation.

CERTAIN STEPS TO PROMOTE ALTERNATIVE HEAT SUPPLY AND BIOENERGY AND REMOVE BARRIERS THEREIN ARE MADE Within the framework of the program for natural gas substitution in heating sector a compensation 11

Notice of opening procedure in administrative case to challenge the NEURC Resolution of 17.04.2015 No. 157 // NEURC — http://www. nerc.gov.ua/index.php?news=4372

12

The court obliged the NEURC to adjust cost of “green” energy generated in February for 6 companies // BIN.ua - http://bin.ua/news/ economics/faec/173790-sud-obyazal-nkryeku-provesti-pereraschet-oplaty.html

13

Resolution of the NEURC No. 2060, “On Approval of Additional Payments for Compensation of Benefits Not Received by Producers, Operating Under the Green Tariff as of July 2015” // NEURC — http://www.nerc.gov.ua/index.php?id=16794&find=

14

 esolution of the NEURC of 06.08.2014 No. 2140, “On EstablishR ing in July 2015 Tariffs For Electricity Sold in Ukrainian Wholesale Electricity Market For Producers to Which the Green Tariff and Additional Payment For Compensation of Benefits Not Received Are Set Out by the NEURC” // NEURC — http://www.nerc.gov.ua/index. php?id=16938&find=

15

50

Resolution of the NEURC of 10.08.2015 No. 2144, “On Approval of Additional Payments for Compensation of Benefits Not Received by Producers, Operating Under the Green Tariff as of August 2015” // NEURC — http://www.nerc.gov.ua/index.php?id=16947&find=

payable to heat producers from alternative sources was approved. According to Resolution of the Cabinet of Ministers of July 9, 2014 No. 29316, the difference between established tariff for heat energy generated from alternative sources and supplied to household customers and a tariff actually paid by household customers shall be compensated from the State budget. Therewith, such compensation may not exceed the difference between the actual heat energy tariff for household customers and cost of its production, provided that marginal breakeven is 21%. On September 10, 2014 the Cabinet of Ministers approved Resolution No. 453 “On Promotion of Natural Gas Substitution in Generation of Heat Power for Institutions and organizations funded From the State and Local Budgets”17, which sets out tariff for heat energy generated from alternative sources for public sector equal to “average weighted” tariff for heating energy generated from “commercial” natural gas. The Resolution No. 453 is implemented in practice; it promotes active natural gas substitution by biomass and biofuels in the public sector. However, the Resolution No. 293 was not implemented and no company in Ukraine received the relevant compensation of tariffs until now. Therefore, the process of natural gas substitution by biomass and biofuel is actually blocked in the sector of heat energy production for household customers in housing and utilities companies. According to experts, these mechanisms shall be followed up. In particular, the Resolutions shall be applied alternative fuel TPPs, which will carry out additional natural gas substitution in case the Resolutions will be implemented. Two new versions of the CoM Resolutions No. 293 and No. 453 were developed to close the gaps, however the Government rejected them. The Bioenergy Association of Ukraine requested Prime Minister A. Yatseniuk18 to re-examine at the 16

Resolution of the CoM of July 9, 2014 No. 293 “On Promotion of Natural Gas Substitution in Heat Supply Sector” // Ukrainian legislation — http://zakon2.rada.gov.ua/laws/show/293-2014-%D0%BF

17

Resolution of the CoM of September 10, 2014 No. 453 “On Promotion of Natural Gas Substitution in Generation of Heat Power for Institutions and organizations funded From the State and Local Budgets” // Ukrainian legislation — http://zakon2.rada.gov.ua/ laws/show/453-2014-%D0%BF

18

BAU’s Letter of 27.07.2015 No. 196 “On relevancy of approval of new versions of Resolutions No. 293 and No. 453” // BAU — http://www.

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

20

Explanatory note to the Draft Law of Ukraine “On Amendments to the Law of Ukraine “On Heat Supply” on Delegation of Tariff Setting and Licensing Powers as Regards Generation of Heat Energy From Alternative Energy Sources” // — http://www.minregion.gov.ua/attachments/content-attachments/4407/%D0%9F%D0%BE%D1%8 F%D1%81%D0%BD%D1%8E%D0%B2%D0%B0%D0%BB%D1%8 C%D0%BD%D0%B0%20%D0%B7%D0%B0%D0%BF%D0%B8%D 1%81%D0%BA%D0%B0.pdf

Letter of Bioenergy Association of Ukraine addressed to Deputy Minister of Regional Development, Construction and Housing and Utility Services of Ukraine H. Zubko // http://www.uabio.org/news/ uabio-news/2626-uabio-letter-190

Despite requests of sector associations24, namely Association of Alternative Fuel and Energy Market Participants of Ukraine (APEU), Ukrainian Wind Energy Association (UWEA) and Bioenergy Association of Ukraine (BAU), to put veto on the Draft 21

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56300

22

Detailed information on demand trends:https://www.facebook.  com/daeeUA/photos/a.413454171999958.102624.39966243004579 9/1141222205889814/?type=3&theater

23

Law of Ukraine No. 1621-VII “On Introduction of Amendments to the Tax Code of Ukraine and Other Selected Laws and Regulations (on Improvement of Selected Provisions)” // Ukrainian legislation — http://zakon.rada.gov.ua/go/1617-VII

24

“Sector associations addressed a letter to the President requesting to put veto on cancellation of benefits for green energy” // Ukrainska Enerhetyka — http://ua-energy.org/post/46088

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

19

At a closed meeting of July 31, 2014 deputies approved the Draft Law “On Introduction of Amendments to the Tax Code of Ukraine and Other Selected Laws and Regulations (on Improvement of Selected Provisions)”23. The Draft Law abolishes corporate profit tax exemption for companies generating electricity from RES. Additionally, it provides for setting temporary – by January 1, 2015, 99 – EUR/t excise tax on alternative fuels.

Environment

uabio.org/img/files/news/pdf/letter-prime-minister-decrees293-453-july-2015%20.pdf

AT THE SAME TIME, A RANGE OF BENEFITS FOR ALTERNATIVE SOURCES ELECTRICITY PRODUCERS IS ABOLISHED AND NEW BARRIERS FOR INTRODUCTION OF TECHNOLOGIES ARE CREATED

Renewables

On August 2015 Draft Law No. 2529a “On Introduction of Amendments to Certain Laws and Regula-

Security of supply

What is more, an administrative barrier related to classification of bioenergy facilities to the V category of complexity, i.e. facilities of higher environmental risks, is removed in Ukraine. On July 1, 2014 amendments to DSTU (State Construction Standards) Б В.1.2-16:2013 “Definition of class of consequences (responsibility) and category of complexity of construction object”, which cancel requirement of classification to the V category of complexity, i.e. facilities of higher environmental risk, by default, entered into force. For boilers and CHPPs working on biomass and biogas units this means removal of additional requirements to location, design and construction works.

Among successfully functioning programs in RES sector, the governmental program for 20% compensation of the main loans for non-gas boilers installed in individual houses, which is mainly used in installation of biomass and biofuels boilers. Moreover, in a range of regions local government bodies additionally compensate a substantial part of bank interest rates for such loans22. The state reimburses 70% of the main credit for customers, which got the relevant subsidies for housing and utility services.

Regulatory authority

The Ministry of Regional Development, in turn, actively prepares a draft law19, to introduce amendments to the Law of Ukraine “On Heat Supply” and extend powers of local government bodies as regards setting out tariffs for heat power generated from alternative energy sources. Adoption of the Law will promote decentralization of power supply systems through use of local fuel products, development of local alternative energy in housing and utility sector. Lots of experts regards the draft law as substantially risky and untimely adopted 20.

tions of Ukraine on Simplification of Land Acquisition Procedures for Construction of Heat and/or Power Energy Production Facilities Using Renewable Energy and/or Biofuels”21. The Draft Law notably facilitates allocation of land for RES facilities.

Electricity

Government’s meeting and approve new versions of the CoM Resolutions No. 293 and No. 453, since non approval thereof “holds current situation, when Ukraine to a large extent (2-3 times) subsidizes imported products (natural gas) and therefore deliberately decrease competitiveness of local alternative fuels”.

51


Law addressed to P. Poroshenko, on August 2 the President signed the Law. What is more, the Cabinet of Ministers on December 29 decided to abolish exemptions25 on import of energy-saving materials, equipment and their components to the customs territory of Ukraine, justifying it by the need to create equal conditions for business operators.

25

52

Resolution of the CoM of December 29, 2014 No. 719 “On Invalidation of Certain Resolutions of the Cabinet of Ministers of Ukraine On Import of Energy-Saving Materials, Equipment and Their Components to the Customs Territory of Ukraine” // Ukrainian legislation — http://zakon4.rada.gov.ua/laws/show/719-2014-%D0%BF

Also, according to experts26, the Law “On Secondary Products of Animal Origin Not Intended for Human Consumption” approved on April 427 may create an additional barrier for introduction of biogas technologies in Ukraine. In particular, it concerns requirement to sterilize pus before processing into biogas, which creates an additional serious barrier for expansion of biogas technologies and consequently, for development of biogas industry in Ukraine, since it nullify all the energetic and economic advantages of traditional biogas production.

26

BAU’s Advisory note No. 12 “Prospects for the development of bioenergy as an instrument for natural gas replacement in Ukraine” // Energy Reforms — http://enref.org/wp-content/uploads/2015/07/ Position-paper-UABIO-12-UA.pdf

27

Law of Ukraine of April 4, 2015 “On Secondary Products of Animal Origin Not Intended for Human Consumption” // Ukrainian legislation — http://zakon2.rada.gov.ua/laws/show/287-19

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

RENEWABLE FUELS FOR TRANSPORT Directive 2009/28/EC stipulates that the objectives should include a 10-percent target for energy from renewable sources in transport by 2020 for each Member State.

29

Law of Ukraine No. 1638-VII of 12 August 2014 “On Introduc ing Amendments to the Tax Code of Ukraine and Certain Laws of Ukraine to Strengthen the Control Over Circulation of Excisable Goods and Clarification of Certain Tax Provisions” // Legislation of Ukraine - http://zakon2.rada.gov.ua/laws/show/1638-18

30

Draft Law No. 2044а of 08 June 2015 “On Introducing Amendments to the Tax Code of Ukraine with Regard to Development of Alternative Fuel Production and Market, Deregulation of Bioethanol Production and Harmonization of Legislation with the European Union and Energy Community Regulations” // Verkhovna Rada of Ukraine - http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55529

31

Draft Law No. 2114а of 18 June 2015 “On Amending Article 215 of the Tax Code of Ukraine (as Regards Fuel Value Reduction)” // Verkhovna Rada of Ukraine - http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=55639

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Resolution of the Cabinet of Ministers of Ukraine No. 319 of 20 May 2015 “On introducing amendments to the Resolution of the Cabinet of Ministers of Ukraine of 5 December 2007 No. 1375” // Cabinet of Ministers of Ukraine - http://www.kmu.gov.ua/control/uk/ cardnpd?docid=248187141

Environment

28

The Verkhovna Rada registered a number of initiatives with regard to the preferential tax regime for fuels with biocomponents. On the 8th of June, a group of MPs registered the Draft Law No. 2044а30 concerning the development of alternative fuel market, deregulation of bioethanol production and harmonization of legislation with the Energy Community regulations. In order to meet the requirements of Directive 2003/30/EC, MPs propose reviewing the definition of bioethanol as “a mixture of denaturated spirits which contain not less than 92.1 per cent of ethanol produced from biomass”; abolishing bioethanol production licensing; and establishing a zero duty rate on ethanol produced from agricultural products, and its gasoline blends. On the 18th of June, MP T. Kozak (Opposition Block faction) registered the Draft Law No.  2114а31, proposing introduction of amendments to the Tax Code, including new excise duty rates on petrol products. The amendments provide for the reduction in the excise duty rate by 25 per cent, in particular, on biodiesel and its blends as well as on alternative motor fuel. On the 30th of June, non-affiliated MP Mykhaylo Holovko reg-

Renewables

On the 20th of May, the Government issued the Resolution No. 31928 which removed the list of ethanol plants having the right to produce ethanol. Therefore, in accordance with this Resolution and the Law No. 1638-VII29, bioethanol may be produced not only by state-owned ethanol plants, but also by any enterprises which have obtained the license for bioethanol production. It greatly simplifies the system of granting permits for carrying out economic activities in the area of bioethanol production.

A NUMBER OF PROPOSALS FOR REDUCING TAX BURDEN ON ALTERNATIVE FUEL IMPORTS HAVE BEEN INTRODUCED IN THE PARLIAMENT

Security of supply

As it was mentioned, the Law No. 4970-VI providing for the increase in the rate of production and use of biofuel and composite motor fuel has not been implemented in Ukraine. The Parliament does not tend to pass any draft laws concerning abolition or change of current rates.

Regulatory authority

THE REGULATORY RATE OF BIOFUEL PRODUCTION AND USE HAS NOT BEEN ADJUSTED, WHILE THE STATE MONOPOLY FOR PRODUCTION OF BIOETHANOL HAS BEEN ABOLISHED

53


istered an alternative Draft Law No. 2114a-132, providing for the exemption of alternative motor fuel from the excise duty. In accordance with the explanatory note, the document aims at helping ethanol plants and domestic producers of organic fuel components compete with oil which is losing value. At the same time, MP A. Lopushanskyi (Petro Poroshenko’s Block faction) introduced one more Draft Law (Registration No. 2114а-233), providing for the removal of biodiesel and its blends from the list of excisable goods. The author believes that it will help resume operation of 14 large and about 50 small biodiesel plants in Ukraine with a capacity of 325 thousand tons per year. Some legislative amendments are also developed by34 the Working Group jointly established by Ukrspyrt and experts and representatives of the specialized Ukrbiopalyvo Association. In particular, it recommends withdrawing from the system of avalized bills used by enterprises buying ethanol to guarantee the payment of taxes. It is also proposed to abolish bioethanol licensing, exempt producers of fuel with biocomponents from the excise duty and introduce a zero excise duty rate on alternative motor fuel (AMF). Fuel producers believe that such

54

32

Draft Law No. 2114а-1 of 30 June 2015 “On Introducing Amendments to the Tax Code of Ukraine (as Regards Alternative Motor Fuel Taxation and Fuel Value Reduction)” // Verkhovna Rada of Ukraine http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55766

33

 raft Law No. 2114а-1 of 01 July 2015 “On Introducing AmendD ments to the Tax Code of Ukraine to Support Biodiesel Production” // Verkhovna Rada of Ukraine - http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=55799

34

Ukrspyrt to Exempt Industrial Alcohol Products from Excise Duty // RBC-Ukraine - http://www.rbc.ua/ukr/analytics/ukrspirt-vyvoditbioetanol-iz-pod-aktsiza-1438600451.html

liberalization will allow Ukraine to meet the European standards related to a 10-percent content of biocomponents in gasolines in a few years and will promote the development of Ukrainian market of petrol products. According to Oleksandr Sirenko, UPECO analyst, producers of petrol products are interested in biofuel production. “However, the problem with gasoline blends is that in the market there is no uniform formula for their production. In addition, there are no technical specifications and general rules for biogasoline production. First of all, it is necessary to resolve these issues, and the automobile industry will adjust to operation pursuant to new rules”, the expert believes.

FIRST STEPS WERE MADE TO PROMOTE DEVELOPMENT OF THE ELECTRIC VEHICLE MARKET IN UKRAINE On the 21st of May, the Rada approved in the first reading the amendments to the Law of Ukraine “On Customs Tariff of Ukraine” with regard to abolition of the import duty on electric vehicles. The Draft Law No. 167435 provides for setting zero import duty rates on vehicles equipped with electric motors. In addition, the Rada adopted in the first reading the Draft Law No. 191236 which exempts 35

Draft Law No. 1674 of 28 December 2014 “On Introducing Amendments to the Law of Ukraine “On Customs Tariff of Ukraine” as Regards Abolition of the Import Duty on Electric Vehicles” // Verkhovna Rada of Ukraine - http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=53254

36

Draft Law No. 1912 of 02 February 2015 “On Introducing Amendments to Section ХХ “Transitional Provisions” of the Tax Code of Ukraine as Regards Peculiarities of Taxation of Imports

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

CONCLUSION The Government approved the National Renewable Energy Action Plan for the period till 2020 which is still not aligned with the current Energy Strategy for the period till 2030 in terms of development of renewable energy sources (RES). The “local content” discrimination barrier has been eliminated, the legal definition of the term “biomass” has been corrected and a number of incentives have been introduced to develop alternative heat supply and bioenergy in the country. At the same time, during the extraordinary period in the energy sector, the Regulator unlawfully reduced “green” tariffs which resulted in a number of lawsuits from investors. In addition, producers of energy from renewable energy sources have been deprived of some benefits, including exemption from the income tax and benefits related to imports of equipment and accessories. The commitment to increase a share of biofuel in transport remains unfulfilled.

Electricity

imports of electric vehicles in Ukraine from VAT till 1 January 2020. Kyiv City Council, in its turn, declared its intent to replace the car fleet of Kyiv Council Secretariat with electric vehicles37 by the end of 2016. In accordance with the Memorandum with Shooter.ua, Kyiv Council will have leased 2 Renault Fluence electric vehicles by the end of 2015, 3 more vehicles will be leased in 2016.

Regulatory authority Security of supply Renewables Environment Energy efficiency

and Supply of Vehicles Equipped with Electric Motors” // Verkhovna Rada of Ukraine - http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=53785 37

Kyiv Council Secretariat to Switch to Electric Vehicles by the End of 2016 // Ukrainian News - http://ukranews.com/news/169277.Sekretariat-Kievosveta-peresyadet-na-elektromobili-do-kontsa-2016.uk

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

55


ENVIRONMENT

56

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

Directive 85/337/ЕЕС on the assessment of the effects of certain public and private projects on the environment as amended by Directives 97/11/ЕC, 2003/35/ЕC and 2009/31/ЕC

• •

It requires that projects which are likely to have significant effects on the environment obtain the development consent and be subject to the environmental impact assessment. T he environmental impact assessment shall identify, describe and assess the direct and indirect effects of such projects on human beings, fauna and flora, soil, water, air, climate and the landscape, material assets and the cultural heritage as well as take into account interaction of this factors. It requires that the developer of a project subject to the environmental impact assessment provide a description of the project, a description of the measures envisaged in order to avoid, reduce and remedy significant adverse effects, a summary of main alternatives, taking into account the environmental effects, and a non-technical summary of information.

Regulatory authority

Electricity

It requires taking into account the opinion of the authorities likely to be concerned by the project by reason of their specific environmental responsibilities. It requires ensuring public access to relevant information and determining the manner in which the public is to be informed and consulted.

Security of supply

1

Ordinance of the Cabinet of Ministers of Ukraine No. 864-р of 17 September 2014 “On introducing amendments to the Action Plan for Fulfilment of Commitments under the Treaty establishing the Energy Community”. http://zakon4.rada.gov.ua/laws/show/864-2014%D1%80

tive authorities, of civil society organizations, of economic operators, and the representatives of the Energy Community Secretariat for efficient development, implementation and monitoring of efficiency of reforms implemented under the commitments within the framework of the Energy Community. However, this group has not started its work during the year.

Energy efficiency

The Cabinet of Ministers of Ukraine introduced amendments to the Action Plan for Fulfilment of Commitments under the Treaty establishing the Energy Community.1 The Action Plan was supplemented by a number of organizational and legal activities. Among other things, it provided for the establishment of a multilateral working group comprising the representatives of central execu-

Environment

PROGRAMMING DOCUMENTS STATE THE NEED AND THE GOVERNMENT’S INTENT TO IMPLEMENT THE DIRECTIVE

Renewables

In accordance with the Protocol on the Accession of Ukraine to the Energy Community Treaty , the Directive was to be implemented before 1 January 2013. However, notwithstanding a number of commitments, enshrined in national legislation, and international commitments, in Ukraine there is neither efficient environmental impact assessment mechanism nor adequate public access to the information about such assessment nor efficient procedures for public consultation which would provide for taking account of proposals and lawful requirements of the public or justified rejection of unlawful proposals.

Among other measures in the field of environmental protection, the Action Plan for Implementation of the Programme of Activity of the Cabinet of Ministers of Ukraine and the Sustainable Development Strategy “Ukraine-2020”2 for 2015, provides 2

Ordinance of the Cabinet of Ministers of Ukraine No. 213-р of 04 March 2015 “On approval of the Action Plan for implementation of the Programme of Activity of the Cabinet of Ministers of Ukraine and the

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

57


for alignment of national legislation with the EU Directives listed in Annex ХХХ to the EU-Ukraine Association Agreement, including the development of the Draft Law on environmental impact assessment. A consistent work towards adaptation of the Ukrainian legislation on environmental impact assessment started from the approval of the Action Plan3 for Implementation of the Association Agreement for 2014–2017. The Action Plan, inter alia, contains measures for implementation of the environmental component, including the development and introduction pursuant to the established procedure of draft regulations aimed at implementation of Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment4 (by August 2016). A detailed plan for alignment of Ukrainian legislation with the EU aquis in the field of environmental protection was developed and approved by the Cabinet of Ministers of Ukraine on 15 April 20155. The Action Plan defines, inter alia, measures aimed at the implementation of Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment, including rule-making, institutional, organizational and coordination measures.

As for the institutional component of the Action Plan for Implementation of the Directive, the main drawback is that parties responsible for fulfilment of the Plan do not include such interested central executive authorities as the Ministry of Regional Development, Construction and Housing and Utility Services and the State Architectural and Construction Inspection of Ukraine related to implementation of permit granting procedures in the field of construction, review of project documents as regards planned activities etc. Therefore, the Ministry of Environment and Natural Resources is not a single competent authority and it has no sufficient powers in this area. Due to its institutional weakness, it cannot independently lobby a necessary law. However, some public authorities, directly related to the implementation of the aforementioned reforms, are not interested in their implementation, do not realize the importance of the reforms and hinder them, including through non-participation in relevant processes.

In accordance with the Action Plan for implementation of the aforementioned Directive, Ukraine was to pass the law establishing clear requirements to the EIA procedure, including in case of the transboundary impact, as well as to introduce amendments to the current legislation due to enactment of the law by June 2015.

The proposed and published amendments to the Strategy of the State Environmental Policy of Ukraine6 and to the National Environmental Action Plan7 take account of the need of implementation of Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment, including rule-making, institutional, organizational and coordination measures.

Sustainable Development Strategy “Ukraine-2020” for 2015”. http:// zakon2.rada.gov.ua/laws/show/213-2015-%D1%80

The need to implement the environmental impact assessment, including through enactment of necessary laws, has been repeatedly emphasized by various international institutions. In its annual assessment of implementation of the European Neighbourhood Policy in Ukraine in 2014, published in May 2015, the European Commission

3

Ordinance of the Cabinet of Ministers of Ukraine No. 847-р of 17 September 2014 “On approval of the Action Plan for Implementation of Association Agreement Between the European Union and the European Atomic Energy Community and Their Member States, of the One Part, and Ukraine, of the Other Part, for 2014–2017”. http:// zakon2.rada.gov.ua/laws/show/847-2014-%D1%80

4

The Association Agreement and relevant national documents refer to the updated version of Directive 2011/92/EU replacing the one that is to be implemented under the commitments to the Energy Community.

5

58

The Action Plan also provides for the development and approval of other regulations to ensure operation of the environmental impact assessment system in Ukraine. In particular, a regulation defining projects and types of activity to be subject to the EIA pursuant to Annexes I to III to the Directive shall be approved by October 2015.

Ordinance of the Cabinet of Ministers of Ukraine No. 371-р of 15 April 2015 “On approval of action plans for implementation of certain EU regulations, as developed by the Ministry of Environment and Natural Resources”. http://zakon4.rada.gov.ua/laws/show/371-2015%D1%80

6

Law of Ukraine “On the Fundamental Principles (Strategy) of the State Environmental Policy of Ukraine for the Period till 2020”. http:// zakon2.rada.gov.ua/laws/show/2818-17

7

Ordinance of the Cabinet of Ministers of Ukraine No. 577-р of 25 May 2011 “On approval of the National Environmental Action Plan for 2011–2015”. http://zakon2.rada.gov.ua/laws/show/577-2011%D1%80

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

9

Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Implementation of Certain EU Directives in the Field of Environmental Impact Assessment)”. http://w1.c1.rada.gov.ua/pls/ zweb2/webproc4_1?pf3511=55233

10

11

Opinion on the Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Implementation of Certain EU Directives in the Field of Environmental Impact Assessment)” (Registration No. 2910 of 20 May 2015). http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=55233 Draft Law of Ukraine “On Environmental Impact Assessment”. Registration No. 2009а of 03 June 2015 http://w1.c1.rada.gov.ua/pls/ zweb2/webproc4_1?pf3511=55233

12

http://komekolog.rada.gov.ua/komekolog/control/uk/publish/ar ticle;jsessionid=673EF62DA435FB73FE2978DC5D59329E?art_ id=56827&cat_id=48830

13

Opinion on the Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Implementation of Certain EU Directives in the Field of Environmental Impact Assessment)” (Registration No. 2910 of 20 May 2015). http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=55438

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Implementation of the European Neighbourhood Policy in Ukraine. Progress in 2014 and recommendations for actions. http://eeas.europa.eu/enp/pdf/2015/ukraine-enp-report-2015_en.pdf

On 10 July 2015, the Central Scientific Experts Office of the Verkhovna Rada provided a number of comments on this Draft Law13 and recommended introducing necessary amendments after its approval in the first reading. In particular, the recommendations of the Central Scientific Experts Office concern the regulation of the environmental impact assessment procedure, absence of the definition of “environmental impact assessment” etc. The Central Scientific Experts Office expressed the greatest concern about abolition of the environmental expertise in Ukraine. The opinion, inter alia, states the following: “We believe that, in order to ensure protection of public interests, it is necessary to retain the environmental expertise in Ukraine and refuse from its replacement with other types of expertise as governed by the regulations (including the Law of Ukraine “On Regulation

Environment

8

Renewables

On 3 June 2015, a number of MPs registered in the Verkhovna Rada an alternative Draft Law on Environmental Impact Assessment (Registration No. 2009а of 03 June 2015)11, defining the fundamental principles and the environmental impact

Security of supply

On 20 May 2015, a group of MPs registered with the Verkhovna Rada the Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Implementation of Certain EU Directives in the Field of Environmental Impact Assessment)” (Registration No. 2910 of 20 May 2015).9 This Draft Law is a replication of the Draft Law No. 2109а as rejected by the Verkhovna Rada of the 7th convocation. The Draft Law provided for the re-introduction of the state environmental expertise of construction facilities, but it didn’t ensure the implementation of the EU directives, though, judging from its title, it should have been dedicated to this issue. On 10 July 2015, the Central Scientific Experts Office of the Verkhovna Rada provided a number of comments on this Draft Law10 and recommended returning this Draft Law for finalization. On the 14th of July, the people’s deputies withdrew this Draft Law without public explanation of the reasons.

This Draft Law was approved by the Verkhovna Rada Committee on Environmental Policy, Nature Resources Utilization and Elimination of the Consequences of Chornobyl Catastrophe which proposed its taking as a basis and finalizing in the course of preparation to the second reading.12 Main comments on the Draft Law: absence of the definition of “environmental impact assessment”, which would downplay its importance as it did not set any parameters, criteria and characteristics providing the basis for establishing compliance (acceptability) of environmental effects of certain economic activities; absence of a clear description of the environmental impact assessment procedure as well as of the role and status of the Unified Register of Environmental Impact Assessment etc.

Regulatory authority

AT PRESENT, THE ALIGNMENT OF LEGISLATION WITH THE EU AQUIS FOCUSES ON RULE-MAKING ACTIVITIES

assessment procedure, including in a transboundary context, and the mechanism for public involvement in its implementation. The Draft Law was developed by the interdepartmental group, established by the Ministry of Environment and Natural Resources, and was subjected to the public consultation, but the public consultation results had not been taken into account before the Draft law was registered in the Verkhovna Rada.

Electricity

expressed its concern over the lack of legislation on environmental impact assessments in Ukraine, which violates the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention) and the Convention on Environmental Impact Assessment in a Transboundary Context (Espoo Convention).8

59


of Urban Construction Activity”) which do not constitute a part of the environmental law. The Draft Law “On Environmental Impact assessment” (Registration No. 2009а) is highly important and relevant as regards fulfilment of Ukraine’s commitments under the Association Agreement and commitments to the Energy Community as well as other international commitments of Ukraine: under the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters and under the Convention on Environmental Impact Assessment in a Transboundary Context.14 In general, the Draft Law replicates the environmental impact assessment model as set in the Directive as well as sufficient and detailed requirements with regard to its main stages; however, copying a significant part of the Directive is the main drawback of the Draft Law as its wording in many parts differs from that accepted in the current legislation of Ukraine in the areas of environmental protection, construction and energy, creating conflicts and making its application more complicated. The Draft Law defines “environmental impact assessment” as a permit granting procedure. Such definition may be adequate provided that a clear regulation of the time limits and the procedure for its implementation is ensured, and imposition of excessive administrative and financial pressure on investors is avoided. The Draft Law does not provide for a clear connection (compliance) of the environmental impact assessment with the existing practice and current legislation on design and construction of industrial and infrastructural facilities. Therefore, after the aforementioned Law is passed, other regulations will need alignment therewith in order to eliminate arising conflicts and gaps. At the present stage, in the course of implementation of anti-corruption reforms, it is important for Ukraine to avoid risks of corruption. However, given the introduction of a new permit granting procedure, according to the opinion of the public anti-corruption expertise15, this Draft Law “On En-

60

14

Analytical Note “Analysis of the Draft Law of Ukraine “On Environmental Impact Assessment” No. 2009а”. July 2015. www.rac. org.ua/prioritety/instrumenty-ekologichnoyi-polityky/eia/draft_ law_2015_2009a

15

Centre for Political and Legal Reforms. Public anti-corruption ex-

vironmental Impact Assessment” contains some corruptogenic factors. The opinion of this expertise states that the Draft Law “in general, complies with the anti-corruption law requirements, but it needs finalization in order to eliminate some corruptogenic factors. In general, the Draft Law sets sufficient and detailed requirements as regards providing information to the public and carrying out public consultations, though it will require approval of additional secondary legislation acts in this area. Imposing the obligation to carry out public consultations on public authorities is a positive moment.

CONCLUSION At present, in Ukraine there is no efficient mechanism for environmental impact assessment. The main prerequisite for implementation of Directive 85/337/EEC is the development and approval of relevant regulations. The Action Plan for Implementation of Directive 2011/92/EU of the European Parliament and of the Council on the assessment of the effects of certain public and private projects on the environment (codification) contains detailed requirements to and time limits of necessary rule-making, institutional, organizational and coordination activities which need to be carried out in order to ensure efficient implementation. Without relevant finalization, the Draft Law “On Environmental Impact Assessment” (Registration No. 2009а) as registered in the Verkhovna Rada will not ensure efficient implementation of the Directive. In particular, it will not facilitate full achievement of the objectives set in the Directive as it contains corruptogenic factors; it may impose an unjustified pressure on the business and it is not integrated in the current urban development and nuclear legislation.

pertise of draft laws. http://pravo.org.ua/protydiia-koruptsii/ekspertyza-zakonoproektiv-viii-sklykannia.html

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

In Directive 79/409/EEC on the conservation of wild birds, only Article 4(2) is to be applied. It requires taking measures for conservation of regularly occurring migratory species, paying particular attention to the protection of wetlands and particularly to wetlands of international importance.

A detailed plan for alignment of Ukrainian legislation with the EU aquis in the field of environmental protection was developed and approved by the Cabinet of Ministers of Ukraine on 15 April 201519. 17

Ordinance of the Cabinet of Ministers of Ukraine No. 847-р of 17 September 2014 “On approval of the Action Plan for Implementation of the Association Agreement Between the European Union and the European Atomic Energy Community and Their Member States, of the One Part, and Ukraine, of the Other Part, for 2014–2017”. http:// zakon2.rada.gov.ua/laws/show/847-2014-%D1%80

18

The Association Agreement and relevant national documents refer to the updated version of Directive 2009/147/EC replacing the one that is to be implemented under the commitments to the Energy Community.

19

Ordinance of the Cabinet of Ministers of Ukraine No. 371-р of 15 April 2015 “On approval of action plans for implementation of certain EU regulations, as developed by the Ministry of Environment and Natural Resources”. http://zakon4.rada.gov.ua/laws/show/3712015-%D1%80

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Ordinance of the Cabinet of Ministers of Ukraine No. 213-р of 04 March 2015 “On approval of the Action Plan for implementation of the Programme of Activity of the Cabinet of Ministers of Ukraine and the Sustainable Development Strategy “Ukraine-2020” for 2015”. http://zakon2.rada.gov.ua/laws/show/213-2015-%D1%80

A consistent work towards adaptation of the Ukrainian legislation on environmental protection started from the approval of the Action Plan17 for Implementation of the Association Agreement for 2014-2017. The Action Plan, inter alia, contains measures for implementation of the environmental component, including the development and introduction pursuant to the established procedure of draft regulations aimed at implementation of Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (as regards activities to be implemented by the end of 2017).18

Environment

16

tives 97/62/EC, 2006/105/EC and Regulation (EC) No. 1882/2003”.

Renewables

Among other measures in the field of environmental protection, the Action Plan for Implementation of the Programme of Activity of the Cabinet of Ministers of Ukraine and the Sustainable Development Strategy “Ukraine-2020”16 for 2015, provides for alignment of national legislation with the EU Directives listed in Annex ХХХ to the EUUkraine Association Agreement. In particular, the Ministry of Environment and Natural Resources was entrusted with the obligation, during 2015, to coordinate “activities of central and local executive authorities, scientific institutions and organizations, users and owners of land plots included in the Emerald Network and define their obligations concerning the fulfilment of tasks related to the establishment of the Emerald Network and implementation of Directive 2009/147/EC on the conservation of wild birds, Directive  92/43/ EEC on the conservation of natural habitats and of wild fauna and flora as amended by Direc-

Security of supply

RELEVANT PROGRAMMING DOCUMENTS WITH REGARD TO FULFILMENT OF THE EUROPEAN INTEGRATION COMMITMENTS AND APPROXIMATION OF LEGISLATION ENSHRINE THE INTENT TO IMPLEMENT THE DIRECTIVE

Regulatory authority

In accordance with the Protocol on the Accession of Ukraine to the Energy Community Treaty , the Directive was to be implemented before 1 January 2015. In accordance with the Action Plan for Fulfilment of Commitments under the Treaty establishing the Energy Community, it is necessary to align regulations on the conservation of wild birds pursuant to the requirements of Article 4(2) of the Directive before 1 January 2015. Having been amended in September 2014, the updated Action Plan did not provide for any new measures aimed at the implementation of the Directive on the conservation of wild birds.

61


The Plan, inter alia, defines rule-making, institutional, organizational and coordination measures to ensure efficient implementation of Directive 2009/147/EC of the European Parliament and of the Council on the conservation of wild birds. Rule-making measures include the introduction of amendments to the Laws of Ukraine “On Wildlife”, “On Protection of Animals Against Cruel Treatment” and other regulations, establishing the principle of conservation of wild bird populations “at the level corresponding, in particular, to environmental, scientific and cultural needs”, as well as analysis and comparison of lists of bird species and their conservation status in order to align Ukrainian legislation with the requirements of the Directive and to define the need to amend the law on the Red Data Book. All rule-making measures shall be implemented by December 2017. However, the Action Plan for Implementation of Directive 2009/147/EC on the conservation of wild birds does not contain separate provisions on and time limits of implementation of Article 4(2) of the Directive which is included in the scope of commitments under the Protocol on the Accession of Ukraine to the Energy Community Treaty. The deadline for implementation of the rule-making measures (December 2017) does not comply with the time limits for implementation of Article 4(2) of the Directive as established by the Energy Community. In accordance with the Directive, in order to implement Article 4(2), it is necessary to develop the legal framework for establishment of special protection areas for the conservation of birds, defining the legal status of such territories and the procedure for granting this status as well as the peculiarities of the legal regime. The proposed and published amendments to the Strategy of the State Environmental Policy of Ukraine20 and to the National Environmental Action Plan21 take account of the need of implementation of Directive 2009/147/EC of the European Parliament and of the Council on the conservation of wild birds.

62

20

Law of Ukraine “On the Fundamental Principles (Strategy) of the State Environmental Policy of Ukraine for the Period till 2020”. http:// zakon2.rada.gov.ua/laws/show/2818-17

21

Ordinance of the Cabinet of Ministers of Ukraine No. 577-р of 25 May 2011 “On approval of the National Environmental Action Plan for 2011–2015”. http://zakon2.rada.gov.ua/laws/show/577-2011%D1%80

DURING THE LAST YEAR, THERE APPEARED A LOT OF INITIATIVES WHICH, ALTHOUGH THEY DO NOT DIRECTLY RELATE TO THE PROTECTION OF MIGRATORY BIRDS, MAY INFLUENCE THEIR CONSERVATION On 10 September 2014, the Verkhovna Rada registered the Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Strengthening the Environmental Network Protection)” (Registration No. 5051)22. The Draft Law expands the environmental network to wildlife territories (as a part of natural ecosystems subject to no or a negligible influence of modern technologies), defines the powers of state administrations to establish new nature reserve fund territories, imposes bans on some types of activity within such territories. One more Draft Law under the same title was registered under No. 176923 on 15 January 2015 (as recast on 21 April 2015). On 22 October 2014, the Government approved the Framework for Combatting Land Degradation and Desertification24, aimed at efficiency improvement of implementation of the state policy relating to combatting land degradation and desertification; determination of priority tasks; strengthening institutional capacity and improvement of coordination of the competent authorities’ activities in the relevant area as well as ensuring fulfilment by Ukraine of its international commitments under the UN Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or Desertification, Particularly in Africa. On 28 December 2014 (as recast on 20 May 2015), the Verkhovna Rada registered the Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Fauna and Flora Protection and Strengthening Anti-Poaching Activities)”25 22

Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Strengthening the Environmental Network Protection)”. http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=52145

23

Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Strengthening the Environmental Network Protection)”. http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=53595

24

Ordinance of the Cabinet of Ministers of Ukraine of 22 October 2014 No. 1024-р “On approval of the Framework for Combatting Land Degradation and Desertification”. http://zakon2.rada.gov.ua/laws/ show/1024-2014-%D1%80

25

Draft Law of Ukraine “On Introducing Amendments to Certain Laws of Ukraine (as Regards Fauna and Flora Protection and Strengthening Anti-Poaching Activities)”. http://w1.c1.rada.gov.ua/pls/zweb2/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

Some developed regulations on protection of biodiversity, the nature reserve fund, the environmental network, if approved, may have a positive effect on the conservation of birds pursuant to the requirements of the Directive on the conservation of wild birds. However, it will not ensure the implementation of Article 4(2) of the Directive as required under the commitments to the Energy Community. Issues related to the implementation of the Directive on the conservation of wild birds are currently considered in the context of adaptation of Ukrainian legislation to the EU aquis and are regulated by relevant state programming documents. Due to expiration of the period established for implementation of the Directive on the conservation of wild birds, it is necessary to pay a special attention to the need for development and approval of regulations to establish special protection areas as referred to in Article 4 of the Directive.

Renewables Environment Energy efficiency

On the 9th of April, the Verkhovna Rada of Ukraine passed the Law “On Introducing Amendments to the Law of Ukraine “On Peculiarities of State Regulation of Activity of Entrepreneurs Related to Timber Sale and Exports” (as Regards the Moratorium on Exports of Rough Timber and Lumber) (No. 1362)28.

CONCLUSION

Security of supply

On 6 April 2015, the Minister of Ecology and Natural Resources signed the Order27 “On measures aimed at conservation of biodiversity and the nature reserve fund areas”. The document prohibits carrying out sanitation measures, such as sanitation cuttings and clearances, within nature reserves, conservation areas of biosphere reserves and national nature parks under the management of the Ministry of Environment and Natural Resources, except for cases provided in paragraphs three, five and six, Article 16 of the Law of Ukraine “On Nature Reserve Fund of Ukraine”.

Regulatory authority

The Verkhovna Rada registered the Draft Law “On Introducing Amendments to Certain Laws of Ukraine as Regards Improvement of the Legislation in the Field of Conservation of the Nature Reserve Fund of Ukraine”26 (Registration No. 2311 of 04 March 2015) which prohibits changing the assigned purpose of the land plots subject to the decision on establishment or declaration of the nature reserve fund territories and areas as well as their expropriation, transfer of ownership or lease or providing for use.

On 18 May 2015, the Verkhovna Rada registered the Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Strengthening the Protection of Natural Areas)” (as replaced on 1 July 2015) (Registration No. 2889 of 18 May 2015)29, imposing additional restrictions on certain types of cuttings, sand, gravel and pebble extraction in water bodies as well as other destruction of habitats for endangered species within the nature reserve fund areas, and increasing fines for violation of the legislation on protection of fauna and flora habitats in forests.

Electricity

(Registration No. 1665). The Draft Law is, inter alia, aimed at the implementation of the Agreement on the Conservation of African-Eurasian Migratory Waterbirds, proposes amending Article 20 of the Law of Ukraine “On Game Husbandry and Hunting” to prohibit hunting with the use of lead shot in the wetlands of international importance which have a particular significance for the conservation of migratory birds (hunting with the use of metal shot is allowed).

webproc4_1?pf3511=53237 26

27

28

Draft Law “On Introducing Amendments to Certain Laws of Ukraine as Regards Improvement of the Legislation in the Field of Conservation of the Nature Reserve Fund of Ukraine”. http://w1.c1.rada.gov. ua/pls/zweb2/webproc4_1?pf3511=54292 Order No. 114 “On measures aimed at conservation of biodiversity and the nature reserve fund areas”. http://www.menr.gov.ua/presscenter/news/123-news1/3725-minpryrody-zaboronylo-sanitarnirubky-v-pryrodnykh-zapovidnykakh-ta-zapovidnykh-zonakh Law of Ukraine “On Introducing Amendments to the Law of Ukraine

“On Peculiarities of State Regulation of Activity of Entrepreneurs Related to Timber Sale and Exports” (as Regards the Moratorium on Exports of Rough Timber and Lumber)”. http://zakon2.rada. gov.ua/laws/show/2860-15?test=XNLMf5x.qwJgsGXwZib63mqhHI4wQs80msh8Ie6 29

Draft Law “On Introducing Amendments to Certain Laws of Ukraine (as Regards Strengthening the Protection of Natural Areas)”. http:// w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55193

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

63


Directive 2001/80/ЕC on the limitation of emissions of certain pollutants into the air from large combustion plants stipulates that the Government shall develop programmes for the progressive reduction of total annual emissions from combustion plants, the rated thermal input of which is equal to or greater than 50 MW, and shall comply with the emission limit values (through licensing, sanctions). There shall be drawn up a national emission reduction plan, providing for the reduction of the total annual emissions of nitrogen oxides, sulphur dioxide and dust from existing plants. The monitoring of emissions and their reduction shall be carried out at the operator’s expense. The operator shall provide the information on compliance with the requirements to relevant authorities.

In accordance with the Protocol on the Accession of Ukraine to the Energy Community Treaty , the Directive was to be implemented before 1 January 2018. In accordance with the Action Plan for Fulfilment of Commitments under the Treaty establishing the Energy Community , it is necessary to develop measures and methods for setting emission limit values for certain pollutants into the air from large combustion plants before 1 January 2018. Pursuant to Decision of the Ministerial Council of the Energy Community D/2013/06/MC-EnC, Ukraine shall also implement certain provisions of the Directive 2010/75/EU on industrial emissions by January 1, 2018 (for new plants). Having been amended in September 2014, the updated Action Plan for Fulfilment of Commitments under the Treaty establishing the Energy Community provides for the development of the National Action Plan for Reduction of Emissions of Certain Pollutants into the Air from Large Combustion Plants pursuant to the requirement of Directive 2001/80/EEC before 3 October 2014. The Ministry of Energy and Coal Industry and the Ministry of Environment and Natural Resources shall be responsible for implementation of this measure. In accordance with the Order of the Ministry of Environment and Natural Resources “On approval of technological norms of allowable emissions of pollutants from thermal power plants, the rated thermal input of which is greater than 50 MW” No. 541 of 22 October 2008, enterprises shall, before 1 January 2018, carry out a modernization or an overhaul within the time limits as established by the Order and shall comply with current and future technological norms. All plants shall comply with the European requirements.

FULFILMENT OF COMMITMENTS IS CONSIDERED AS CLOSELY LINKED TO ADAPTATION OF UKRAINIAN LEGISLATION TO THE EU AQUIS IN THE FIELD OF INDUSTRIAL EMISSIONS A consistent work towards adaptation of Ukrainian legislation on environmental protection started from the approval of the Action Plan30 for Implementation of the Association Agreement for 20142017. The Action Plan, inter alia, contains measures for implementation of the environmental component, including the development and introduction for consideration by the Cabinet of Ministers of 30

64

 rdinance of the Cabinet of Ministers of Ukraine No. 847-р of 17 O September 2014 “On approval of the Action Plan for Implementation of the Association Agreement Between the European Union and the European Atomic Energy Community and Their Member States, of the One Part, and Ukraine, of the Other Part, for 2014–2017”. http:// zakon2.rada.gov.ua/laws/show/847-2014-%D1%80

Ukraine of draft regulations aimed at implementation of Directive 2010/75/EC of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (recast) (as regards activities to be implemented by the end of 2017).31 A detailed plan for alignment of Ukrainian legislation with the EU aquis in the field of environmental protection was developed and approved by the Cabinet of Ministers of Ukraine on 15 April 201532. The Action Plan for Implementation of Directive 2010/75/EC on industrial emissions (integrated 31

The Association Agreement and relevant national documents refer to Directive 2010/75/EC on industrial emissions.

32

Ordinance of the Cabinet of Ministers of Ukraine No. 371-р of 15 April 2015 “On approval of action plans for implementation of certain EU regulations, as developed by the Ministry of Environment and Natural Resources”. http://zakon4.rada.gov.ua/laws/show/371-2015%D1%80

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


CONCLUSION Timely fulfilment of the Action Plan for Implementation of Directive 2010/75/EC will guarantee the fulfilment of Ukraine’s commitments to the Energy Community as regards the limitation of emissions of certain pollutants in the air by large combustion plants. First of all, it refers to the modification of technological norms of allowable emissions from large combustion plants in order to align them with the requirements of the Directive. An important step towards achievement of the objectives of the Directive is the development of the National Emission Reduction Plan to be approved by the end of 2015. The NERP implementation shall be considered as closely linked to other issues, including establishment of the Registry (Inventory) of Emissions from Large Combustion Plants, development of the procedure for data collection and verification etc.

Renewables Environment Energy efficiency

THE DRAFT NATIONAL EMISSION REDUCTION PLAN (NERP) IS CURRENTLY UNDER DEVELOPMENT

Security of supply

The Ministry of Energy and Coal Industry and the Ministry of Environment and Natural Resources were entrusted with the obligation to develop the National Action Plan for Reduction of Emissions of Pollutants into the Air from Large Combustion Plants by January 2016.

Regulatory authority

In August 2015, the Ministry of Environment and Natural Resources made public two draft regulations33: (1) Draft Order of the Ministry of Environment and Natural Resources of Ukraine “On approval of the form of the permit for emissions of pollutants in the air from stationary sources”; (2) Draft Order of the Ministry of Environment and Natural Resources of Ukraine «On modification of the Technological norms of allowable emissions of pollutants from thermal power plants, the rated thermal input of which is greater than 50 MW”. The latter, inter alia, provides for partial amendment of indent 3.1.3, Section ІІІ of the Annex in the part of prolongation of the current technological norms of allowable emissions of substances in the form of suspended particulate matter, non-differentiated on the basis of elemental composition, till 31 December 2017.

the European Union. NERP is aimed at gradual and steady reduction of emissions of sulphur dioxide (SO2), nitrogen oxides (NOx) and dust from large combustion plants. The Draft NERP stipulates that it shall come into effect on 1 January 2018 and shall remain valid till 31 December 2033 as regards emissions of nitrogen oxides and till 31 December 2028 as regards emissions of SO2 and dust. At the end of NERP validity period, any and all plants shall be compliant with the requirements of Directive 2010/75/EC relating to emissions of the aforementioned pollutants. NERP was developed based on the principles set in Article 4 of Directive 2001/80/ EC. However, during the whole validity period of NERP — 16 years starting from 1 January 2018, Ukraine plans to comply with the requirements of Directive 2010/75/EC without interim implementation of Directive 2001/80/EC. The Action Plan, inter alia, defines the plants it shall apply to, the rules for calculation of maximum allowable gross emissions, the operation of plants at the stage of NERP implementation, evaluation and monitoring of emissions, reporting to the Energy Community.

Electricity

Rule-making measures, inter alia, provide for the development of the Draft Order of the Ministry of Environment and Natural Resources on introducing amendments to the technological norms of allowable emissions of pollutants from thermal power plants, the rated thermal input of which is greater than 50 MW (for the purpose of aligning the norms with the requirements of Articles 28–31, 33–35, 38–40 and Annex V to the Directive).

Gas

pollution prevention and control) (recast), inter alia, defines rule-making, institutional, organizational and coordination measures to ensure efficient implementation of the Directive. The measures relating to the limitation of emissions of pollutants into the air from large combustion plants are closely related to the measures concerning granting an integrated permit.

The Draft NERP34 was developed by Ukrainian and international experts on request of the Ministry of Energy and Coal Industry, with the support of 33

http://www.menr.gov.ua/normbaza/regulatory/554-proekty-rehuliatornykh-aktiv

34

National Action Plan for Reduction of Emissions from Large  Combustion Plants http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=244996332

PROGRAMMING DOCUMENTS CONTAIN

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

65


Directive 1999/32/ЕC relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC as amended by Regulation (EC) No. 1882/2003 and Directive 2005/33/ЕС prohibits using heavy fuel oils if their sulphur content exceeds 1 per cent by mass. Gas oils shall not be used if their sulphur content exceeds 0.1 per cent by mass. Sampling and analysis to check the compliance with the aforementioned limits shall be carried out with the use of the established methods. The Directive shall not apply to gasolines, diesel fuels, and fuels used for off-road vehicles and farm tractors.

In accordance with the Protocol on the Accession of Ukraine to the Energy Community Treaty , the Directive was to be implemented before 1 January 2012. In accordance with the Action Plan for Fulfilment of Commitments under the Treaty establishing the Energy Community, it was necessary to develop measures and methods for reduction in the sulphur content of certain liquid fuels before 1 January 2012. The updated Action Plan did not provide for any new measures aimed at reduction in the sulphur content of liquid fuels.

REQUIREMENTS RELATED TO THE IMPLEMENTATION OF THE DIRECTIVE; HOWEVER, THE ESTABLISHED DEADLINES DO NOT COMPLY WITH THE THOSE SET PURSUANT TO THE COMMITMENTS WITHIN THE FRAMEWORK OF THE ENERGY COMMUNITY The sulphur content of fuels is currently regulated by the Technical regulation on the requirements to motor gasolines, diesel fuels, marine fuels and fuel oils35 which establishes maximum allowable norms of the sulphur content of motor gasolines, diesel fuels, marine fuels and fuel oils. However, deadlines for introduction of diesel fuels with the sulphur content exceeding 0.1 per cent (31 December 2017), and for production and introduction of fuel oils (black oils) with the sulphur content exceeding 1 per cent (1 January 2017) do not comply with those established pursuant to the commitments in the framework of the Energy Community. As a result of the failure to comply with the time limits for implementation of the Directive and 35

66

 esolution of the Cabinet of Ministers of Ukraine of 1 August 2013 R No. 927 “On approval of the Technical regulation on the requirements to motor gasolines, diesel fuels, marine fuels and fuel oils”. http://zakon2.rada.gov.ua/laws/show/927-2013-%D0%BF

non-compliance of Ukrainian legislation with the requirements of the Directive under the commitments to the Energy Community, the Energy Community Secretariat initiated a case involving violation of commitments (No. ECS-5/13) as early as 2013.36 In this regard, in March 2015, the Cabinet of Ministers of Ukraine approved the Action Plan for Implementation of the Directive37, providing for: 1) alignment of the current legislation of Ukraine with the provisions of Directive as regards the time limits; 2) implementation of relevant measures ensuring non-use of heavy fuel oils within the territory, gas oils, including marine gas oils, within the territory, and marine fuels in the territorial sea, exclusive economic zones and contamination control areas if their sulphur content exceeds the established maximum limit; 36

https://www.energy-community.org/portal/page/portal/ENC_ HOME/AREAS_OF_WORK/Dispute_Settlement/2013/01_05_13

37

Ordinance of the Cabinet of Ministers No. 167-р of 4 March 2015 “On approval of action plans for implementation of certain EU regulations, as developed by the Ministry of Economic Development and Trade”. http://www.kmu.gov.ua/kmu/control/uk/publish/article?art_ id=247981868&cat_id=247984327

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

4) ensuring imposition of sanctions for violation of national regulations as approved pursuant to the Directive.

Despite the failure to comply with the time limits for fulfilment of the commitments within the framework of the Energy Community relating to the reduction in the sulphur content of certain liquid fuels, Ukraine does not comply with the provisions of the Directive in terms of both rule-making activity and implementation of existing legislative provisions. An important step towards the implementation of the Directive is the development of the detailed Action Plan for Implementation of the Council Directive 1999/32/EC relating to a reduction in the sulphur content of certain liquid fuels. The Action Plan contains rule-making and organizational activities to be implemented by October 2015.

Regulatory authority

As of 1 October 2015, there were introduced no amendments to the regulations relating to the implementation of the Directive, though the deadlines for implementation of 7 out of 8 activities envisaged by the Action Plan have already expired.

CONCLUSION Electricity

3) ensuring necessary measures to check the quality of fuel through sampling and preparation of an annual report on checks performed;

Security of supply Renewables Environment Energy efficiency

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

67


ENERGY EFFICIENCY

68

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

2

 aw No.538-VIII of 18 June 2015”On Ratification of the Memorandum L of Understanding between Ukraine as the Borrower and European Union as the Lender, and Loan Agreement between Ukraine as the Borrower with the National Bank of Ukraine as the Borrower’s Financial Agent and European Union as the Lender (for the Third EU Macro-Financial Assistance programme to Ukraine in the amount of €1.8 billion)”. // http://zakon4.rada.gov.ua/laws/show/538-19

3

Ordinance of the Cabinet of Ministers of Ukraine No. 847-p. “On Implementation of the Association Agreement between Ukraine, of the one part, and the European Union, the European Atomic Energy Community and their Member States, of the other part” 17.09.2014: http://zakon2.rada.gov.ua/laws/show/847-2014-%D1%80

4

Government approves the road map for compliance with the EU energy efficiency legislation//Government Portal, 26.11.2014: http:// www.kmu.gov.ua/control/uk/publish/article?art_id=247777914&cat_ id=244276429

5

Order No. 349 of the Ministry of Regional Development, Construction and Housing and Utility Services of 15 December 2014 “On Approval of the Ministry’s Action Plan for Regulatory Acts Preparation for 2015”: http://www.minregion.gov.ua/regulatory/plan-dijalnosti-minregionuz-pidgotovky-proektiv-reguljatornyh-aktiv/nakaz-minregionu-vid15-grudnya-2014-roku-pro-zatverdzhennya-planu-diyalnosti-minregionu-z-pidgotovki-proektiv-regulyatornih-akt-656145/

6

SAEE Statutory Activity Plan for 2015: http://www.saee.gov.ua/sites/ default/files/documents/plan-normotvorchoi-roboty-2015.doc

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

On Plan B and EU Energy Packages Implementation by Ukraine. А.Yeriomenko, S.Mizina // Dzerkalo Tyzhnya (Mirror Weekly). – 26.09.2014: http://gazeta.dt.ua/energy_market/pro-plan-b-i-implementaciyu-ukrayinoyu-yevropeyskih-energopaketiv-_.html

Rolling blackouts, practiced throughout a year, though most actively in December 2014, had a significant impact on energy efficiency: while they failed to stimulate gas substitution / electricity conversion initiatives, they did demonstrate the importance of energy saving by itself. Notwithstanding multiple calls on domestic enterprises to reduce energy consumption by switching to night-

Environment

1

2015 Action Plan for Regulatory Acts Preparation by the Ministry of Regional Development5 and 2015 Statutory Activity Plan by SAEE6 specify procedures for development, submission for consideration of the Cabinet of Ministers and follow-up of energy efficiency laws and regulations to be adopted in accordance with Ukraine’s obligations to the Energy Community.

Renewables

According to the Action Plan for Implementation of Ukraine-EU Association Agreement, approved by the Government Ordinance No. 847-p3, the scope of Ukraine’s obligations relating to energy

efficiency has been expanded to include appliance eco-design, energy marking, promotion of energy saving by means of energy-efficient transport policy inter alia. The Government has also developed and approved action plans for implementation of EU Directives in the field of energy efficiency4.

Security of supply

Current implementation status of the Directive may be described using the words said by Energy Community Director Janez Kopač at the last Ministerial Council in Kyiv: “All actions are on their way.”1 For instance, National Energy Efficiency Action Plan for 2020, which is to be the basic strategic document setting national policy aimed at energy consumption reduction and introduction of energy efficient measures, remains at the same level of implementation for several years already. According to Memorandum of Understanding between the EU and Ukraine for macro-financial assistance2, adoption of National EEAP 2020 along with the Law of Ukraine “On Energy Efficiency of Buildings” is an essential requirement for Ukraine to receive the third tranche of the program (€600M). However, there is a certain progress in performing some other obligations under the Directive.

Regulatory authority

“ALL ACTIONS ARE ON THEIR WAY”

Electricity

Directive 2006/32/EC on energy end-use efficiency and energy services requires setting a national indicative energy savings target of 9 per cent as well as intermediate energy efficiency indicators to be targeted in energy efficiency improvement programmes and measures, which shall be drawn up (qualification, accreditation and/or certification schemes for providers of energy services, energy audits, metering of energy consumption, financial instruments such as benefits, loans, and subsidies, legal schemes and guarantees, tariff incentives etc.) Moreover, the Government shall assign to one or more authorities or agencies the overall control and administrative, managerial and executive responsibility for overseeing the implementation of these energy efficiency improvement measures.

69


shifts7, similar social initiatives of NERC8, and even statements concerning indicative rate of energy savings during peak hours at 15%, made by the Ministry of Energy and Coal Industry9, the situation was resolved mainly due to increased procurement of coal and electricity. The Ministry of Economic Development and Trade approved the National Standard DSTU ISO 50001:2014 “Energy Saving. Energy Management Systems: Requirements and Application Guidelines”10 in order to enable institutions to develop necessary systems and processes for more efficient use and consumption of energy, as mentioned in SAEE’s response to the RFI.

NEW DIRECTIVE ON ENERGY EFFICIENCY SETS A NEW LEVEL OF RESPONSIBILITY Ukraine and the Energy Community Secretariat have initiated development of the model Draft Law “On Efficient Use of Fuel and Energy Resources”. As explained by SAEE in response to DiXi Group’s RFI, the UNIDO/GEF International Technical Assistance Project is also involved in this activity. This activity takes place against the background of Energy Community’s preparations to enacting a new Directive 2012/27/EU: it is to be integrated into the legal framework of the Energy Community in October 2015 at the Ministerial Council in Tirana. Together with other Member States, Ukraine takes an active part in discussion of the Directive, especially in articulating its concerns about setting compulsory targets without a proper financial support11. In July, 7

8

9

70

Emergency measures on energy market shall be prolonged - Volodymyr Demchyshyn // Government Portal, 05.12.2014: http://www. kmu.gov.ua/control/uk/publish/article?art_id=247800157&cat_ id=244276429

2015 the Draft Law was finalized by the parties at the Vienna meeting12 and discussed by members of both the European Commission Support Group for Ukraine and Ukrainian MPs13. This Draft Law sets the basis for national policy toward buildings’ energy efficiency by specifying public agencies, authorized to administer this direction, and the scope of their powers; institutional and legal principles of record and certification of energy-efficient buildings; basic energy efficiency measures in buildings; general grounds for professional activity and information support in the field of energy efficiency of buildings etc. SAEE specialists consider this Draft Law very complicated as it covers a wide range of issues. Therefore, its agreement and approval are expected no sooner than in a year’s time.

NATIONAL ENERGY EFFICIENCY ACTION PLAN The new Directive introduces drawing of a more expanded Energy Efficiency Action Plan (EEAP), which shall become the 3rd EEAP for all Energy Community Contracting Parties (except Ukraine and Moldova, acceded later), while Ukraine has not yet officially adopted even the first one. At the same time, the Energy Community focuses upon reporting execution of these plans, for the purpose of which Ukraine requires adequate methodology, training and instruction to reach data collecting and reporting phases. As for implementation of Directive 2006/32/ЕС, the national EEAP has to be prepared and submitted to the Cabinet of Ministers for consideration by 31 March 2015. In February, SAEE has published an updated Draft Decree “On Approval of the Na-

NEURC suggests to decrease night-time coefficient to encourage household energy consumption at night // Government Portal, 12.12.2014: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247813193&cat_id=244277212

Volodymyr Demchyshyn: Voluntary reduction in energy consumption by 15% would allow to abandon any rolling blackouts // Government Portal, 04.12.2014: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=247795985&cat_id=244276429

10

 EDT Order No. 1111 of 16 September 2014: http://www.leonorm. M com/p/NL_DOC/UA/201401/Nak1111.htm

11

Conclusions of the 36th Permanent High Level Group. 26.03.2015:

https://www.energy-community.org/portal/page/portal/ENC_ HOME/DOCS/3660166/36th_PHLG_26-03-2015_draft_conclusionscommented_by_Serbia.pdf 12

EU is willing to cooperate with Ukraine in the matter of energy efficiency // Government Portal.

13

SAEE and European Commission Support Group for Ukraine intensify cooperation to approximate national legislation to European standards of energy efficiency. Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 10.07.2015: http://www.minregion.gov.ua/news/te-8263/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

16

National EEAP Template (2009): http://saee.gov.ua/sites/default/  files/Template%202009.doc

17

http://saee.gov.ua/sites/default/files/Scan_20150320_193031.pdf

18

Energy Community supports Ukraine’s EEAP 2020 // Government Portal. 19.05.2015: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=248169390&cat_id=244276429

The National EEAP was approved by the Energy Community Secretariat and unconditionally agreed upon by interested central government bodies and public agencies. On September, 28 Governmental Committee on Economic Development and European Integration approved the Draft Ordinance of the cabinet of Ministers “On Approval of the National Energy Efficiency Action Plan until 2020”21, 19

Adoption and implementation of National EEAP 2020 is a high priority issue for power economy // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 31.07.2015: http://www.minregion.gov.ua/news/marevich-930176/

20

Arseniy Yatsenyuk tasks the ministries to facilitate energy efficiency projects // Government Portal. 23.07.2015: http://www.kmu.gov.ua/ control/uk/publish/article?art_id=248357178&cat_id=244276429

21

Governmental Committee has approved the Draft Ordinance “On Approval of the National Energy Efficiency Action Plan until 2020” //

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Implementation Schedule of National Energy Efficiency Action Plan until 2020: http://saee.gov.ua/sites/default/files/Action%20plan%20 on%20implementation%20of%20NEEAP%2027.02.doc

Environment

15

Renewables

Legislative Activity // SAEE of Ukraine: http://saee.gov.ua/uk/activity/ zakonoproektna-diyalnist

Security of supply

14

Regulatory authority

In June, SAEE informed that the document was submitted to the Ministry of Justice for reconciliation. According to the Agency’s assessment, it was expected to be approved at the end of summer. Meanwhile, SAEE representatives have acknowledged a 3-month delay and informed about exclusion of any funding of the EEAP form the state

budget, requested by the Ministry of Justice. As they explain, the National EEAP is a political and indicative document. The Draft Ordinance of the Government was approved unconditionally by the Ministry of Regional Development, the Ministry of Youth and Sport, the Ministry of Energy, the Ministry of Finance and the State Agency for EGovernance of Ukraine. However, the Ministry of Economy, NEURC, and the Ministry of Infrastructure have provided their comments to the Draft. Besides, at the beginning of July, the Agency received a legal due diligence report with more comments on the Draft from the Ministry of Justice. In July, the National EEAP was discussed with expert community, and it was informed that the document is still “under preparation for submission to the Cabinet of Ministers of Ukraine”19. On July, 21 SAEE informed that it delivered the draft EEAP up to the Ministry of Regional Development for submission to the Cabinet. The Ministry of Regional Development has informed, in its turn, that the Draft Ordinance on the National EEAP is ready for submission for consideration of the Government. However, in September the Draft Ordinance was sent to the Ministry of Environment and Natural Resources for reconciliation regarding expected reduction in greenhouse gas emissions. At that, Prime Minister of Ukraine A. Yatsenyuk urges the ministries to facilitate implementation of energy efficiency projects and develop a tactical and strategic action plan 20.

Electricity

tional Energy Efficiency Action Plan until 2020”14 along with supporting documents, i.e. Explanatory Note and Implementation Schedule15. National EEAP describes the end-use energy market, specifies general and interim end-use energy efficiency targets, lists and explains horizontal and crosssector measures for their achievement as well as establishing a proper legal framework for energy efficiency enhancement. According to this Plan, by 2020 total energy savings are expected at 6 501 thousand tons of oil equivalent, while the total financing is €35,070M. The indicative savings target of 9 per cent of the average domestic end-use energy consumption for the period 2005-2009 is expected to be achieved in 2020, and the intermediate objective of 5 per cent – in 2017. The Explanatory Note stresses that Ukraine is now the only EC country, which has not yet adopted its National EEAP. During March, the Agency was working on this document in cooperation with the Institute for Economics and Forecasting, NAS of Ukraine. A template16, common for all EC countries, was published in the Ukrainian language. The Director of the Energy Community Secretariat has confirmed that National EEAP is to be made using the common template and needs to comply with the Directive 2006/32/EC17. Moreover, in May he declared resounding support to 2020 National EEAP Project and urged the Ukrainian Government to facilitate its approval18.

71


but sent it to the Ministry of Infrastructure for finalization of some technical issues. It is expected to be presented before the Cabinet Meeting by October, 20.

ENERGY SERVICE Although an array of Draft Laws, related to EPC mechanisms, was submitted to the governmental committee in October 2014, according to the corresponding statement of the Secretariat of the Cabinet of Ministers, they were reported out for refinement22. Civil society experts communicate that due to such refinement several essential provisions regarding ESCOs were withdrawn from the Draft23, and the Government failed to scrutinize them properly; they blame the Ministry of Finance for sabotaging integration of energy service companies (ESCOs). On December, 9 Ukrainian Parliament registered the Draft Law “On Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization”24 (Reg. No. 1313), submitted by the Coalition members. This Draft Law regulates public procurements of energy services net cost (excl. VAT) of which equals or exceeds UAH 100,000. The explanatory note thereto indicates that the Draft Law is submitted in pursuance of the Coalition Treaty. According to the authors of the document, there are over 98,000 budgetary institutions in Ukraine, and their heating expenses by 2-3 times exceed respective expenses in the EU countries. Thus, the Draft Law permits ESCOs to implement energy efficient projects at their own

expense, which returns from resulting cost saving within the duration of the corresponding EPC. According to the authors of the document, this will help attract private investments to energy-efficient renovation projects in budgetary institutions and save up to 1 billion m3 of gas per year. Yet, since the Central Scientific Experts Office expressed some reservations, especially concerning “(total or partial) failure to fulfil their liabilities by energy service clients”, it was recommended to test the mechanism on pilot projects prior to full-scale implementation. On December, 11 a group of deputies from the Coalition factions in the Parliament raised amendments to the Budget Code of Ukraine regarding introduction of new investment opportunities as well as guarantying rights and legitimate interests of entrepreneurs for large-scale energy modernization25 (Reg. No. 1409), aimed at “establishing legal basis for energy service procurements”. Furthermore, MP Oleksandr Dombrovsky (Petro Poroshenko’s Bloc faction) has presented alternative Draft Laws “On Revision of the Budget Code of Ukraine (in respect of Energy Efficient Measures in Budgetary Institutions)”26 (Reg. No. 1409-1); “On Peculiarities of Energy Service Procurement”27 (Reg. No. 1532); and “On Introducing Amendments to the Law of Ukraine “On Energy Saving” Providing a Legal Basis for Energy Performance Contracts” (Reg. No. 1533)28. The explanatory note thereto refers to Ukraine’s obligations to the Energy Community. Following numerous consultations, which involved SAEE, civil society experts, and representatives of international technical assistance projects (USAID and EBRD), the authors of both packages of Draft Laws have reconciled all the discrepancies and jointly prepared the text of documents.

SAEE of Ukraine. 28.09.2015: http://saee.gov.ua/uk/news/839 22

23

24

72

On EPC mechanism regulation // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 26.09.2014: http://www.minregion.gov.ua/zhkh/reforma-zhitlovo-komunalnogogospodarstva/schodo--vregulyuvannya-esko-mehanizmu-42667/ Energy performance contracting is a way to improve country’s energy efficiency // Opora. 30.10.2014: http://oporaua.org/news/7337-energoservisni-kontrakty-shljah-do-energoefektyvnosti-krajiny Draft Law “On Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization”: http://w1.c1.rada.gov.ua/pls/ zweb2/webproc4_1?pf3511=52775

25

Draft Law “On Revision of the Budget Code of Ukraine (Regarding Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for LargeScale Energy Modernization)”: http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=52878

26

Draft Law “On Revision of the Budget Code of Ukraine (in respect of Energy Efficient Measures in Budgetary Institutions)”: http://w1.c1. rada.gov.ua/pls/zweb2/webproc4_1?pf3511=53020

27

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=53023

28

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=53024

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

31

 aw of Ukraine “On Revision of the Budget Code of Ukraine RegardL ing Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization” // Vidomosti Verkhovnoyi Rady Ukrainy (Bulletin of the Verkhovna Rada of Ukraine), 2015, No.26, P.221: http://zakon2. rada.gov.ua/laws/show/328-19

32

Reforms in Energy Sector: New Laws on Energy Efficiency Signed // Government Portal. 08.05.2015: http://www.kmu.gov.ua/control/uk/ publish/article?art_id=248147589&cat_id=244276429

33

The working group, preparing regulations on implementation of energy services in budgetary institutions, held its first meeting // Government Portal. 15.06.2015: http://www.kmu.gov.ua/control/uk/ publish/article?art_id=248247712&cat_id=244277212

34

SAEE prepares the standard EPC template // Government Portal. 31.07.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Law of Ukraine “On Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization” // Bulletin of Verkhovna Rada (BVR), 2015, No.26, P.220: http://zakon2.rada.gov.ua/laws/show/32719

Environment

30

On June, 10, SAEE created a working group for preparing regulations, aimed at implementation of energy services in budgetary institutions. Within the same month, the working group held the first meeting to develop a standard EPC template33, which is required for ESCOs and local authorities to start delivering services for budgetary institutions. According to the Agency’s representatives, the first version of the template is already drafted. However SAEE anticipates that the work will last for almost six months (including with the EBRD support) in order to prepare a document of adequate quality. Yet SAEE notes that the legislation does not require obligatory use of an EPC template, and expects to attract city mayors, willing to negotiate with administrators of budget funds on early introduction of energy services. Nevertheless, as soon as in July, SAEE expressed cautious optimism regarding soon completion of the document scrutiny by the Ministry of Regional Development and stressed upon the necessity to assist local councils in drafting some document templates. It also addressed international donors34.

Renewables

Resolution of the Verkhovna Rada “On Principal Approval of the Law of Ukraine “On Revision of the Budget Code of Ukraine Regarding Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization”: http://zakon1.rada.gov.ua/laws/show/163-19

Security of supply

29

According to SAEE, about 100,000 budgetary institutions require thermal modernisation of their buildings. This, if carried out, shall increase annual savings of gas and other fuel resources up to 200 million m3 by 2020. The estimated amount of necessary investments accounts for €4.4bn. The Agency estimates the energy service market potential at UAH 200bn, prognoses relevant job creation, and expects overall energy consumption to reduce by 0.8 billion m3 of gas and other fuel resources, which comprises UAH 6.5bn budget expenses per year. Besides, such measures will increase the effective lifespan of buildings by 15-25 years at least.

Regulatory authority

In April, the Parliament approved and the President singed the Laws No. 327-VIII “On Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization” 30 and No. 328-VIII “On Revision of the Budget Code of Ukraine Regarding Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization” 31. The former lists key definitions, outlines energy service procurement procedures, specifies basic assessment criteria, describes key elements of any EPC as well as its conciliation process, allows budgetary institutions to conclude multi-year EPCs, guarantees premium for investors depending on achieved savings, provides adequate tools for estimating EPC value etc., thus setting the legal framework for energy service. This Law envisages no less than a 30-percent reduction of energy consumption as well as related expenses on fuel & energy resources and/or public utility services by 2020. The latter provides for corresponding

amendments to the Budget Code of Ukraine. Both Laws will take effect in October 32.

Electricity

In February, the two Draft Laws “On Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization” (Reg. No. 1313) and “On Revision of the Budget Code of Ukraine (Regarding Introduction of New Investment Opportunities, Security of Rights and Legitimate Interests of Business Entities for Large-Scale Energy Modernization)”29 were approved in the first reading.

73


In August SAEE and MRD35 published draft resolution of the Cabinet “On Approval of the Standard Template of Energy Performance Contract” with Annexes thereto. This document, literally being a contract template, covers subject and price of the contract, describes target facilities, energy usage modes and conditions, basic consumption level; specifies consumption reduction rate, contract period, payment terms, methods of assessing real consumption reduction and/or cost saving; explains rights, obligations and liabilities of contracting parties; describes integrated equipment test; explains conditions, procedure and outcomes of contract termination, and title transfer procedure; provides means of correction for service definition and result estimation etc. In the attached explanatory note36 the authors highlight best practices in CEE countries, where energy efficiency potential of buildings accounts for 40 to 70 per cent. In September, the Agency reported that the draft template had been approved without objections by all involved parties and after its finalization by the Ministry of Justice the document would be submitted to the Cabinet of Ministers. SAEE intends to prepare all the required documents and specifications (most of all those related to procurement procedures) by the end of the year, and expects the energy service market to start EPC operations at the beginning of 2016. Meanwhile the Ministry of Regional Development has published ISO standards for energy management systems37, mentioning that their introduction would help in resolving the problem. id=248374500&cat_id=244277212 35

74

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of the Standard Template of Energy Performance Contract” // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 05.08.2015: http://www.minregion.gov. ua/regulatory/proekty-reguljatornyh-aktiv-dlja-obgovorennja-taanalizy-reguljatornogo-vplyvu/proekt-postanovi-kabinetu-ministrivukrayini-pro-zatverdzhennya-primirnogo-energoservisnogo-dogovoru-125943/

It is against this background that Ukrainian Parliament has adopted in its general principles the Draft Law No. 1565 “On Peculiarities of Exercising Ownership Rights in Apartment Building”38, which shall allow dwellers to choose a format and methods of house management by themselves. Besides, the law clearly defines rights and obligations of apartment owners as joint owners of common facilities, describes an algorithm of collective decisionmaking through the agency of a condominium or by majority without a condominium. Successful implementation of this law will facilitate energy efficient measures by offering a clear model of dwellers’ involvement in building management.

COMMERCIAL METERING Concerning commercial metering issue, the authorities need to select an appropriate approach out of three different opinions at least: a separate law on commercial metering or relevant amendments to the enacted public utility legislation or adoption of separate laws for each type of utility. They have spent much time debating, which they might have spent improving and promoting a common vision instead. In October 2014 MRD announced that they abandoned their plans on supplying up to 42 - 45 per cent of buildings with heat meters39 since the assigned funds had been reallocated to projects, related to gas economy and replacement, while the metering issue would be solved “within the next 1.5 - 2 years”. According to provided data, total loss of heat energy throughout its production and transportation amounts to 45%40 (standard rate is 38

The Parliament introduces a law that eliminates ZhEKs’ monopoly, enabling apartment owners to efficiently manage common facilities // Government Portal. 14.05.2015: http://www.kmu.gov.ua/control/ uk/publish/article?art_id=248155813&cat_id=244276429

36

http://www.minregion.gov.ua/attachments/content-attachments/47 21/%D0%9F%D0%BE%D1%8F%D1%81%D0%BD%D1%8E%D0%B 2%D0%B0%D0%BB%D1%8C%D0%BD%D0%B0%20%D0%B7%D0 %B0%D0%BF%D0%B8%D1%81%D0%BA%D0%B0.pdf

39

Thermal modernization of a dwelling can be carried out by effective owners only (Serhiy Kushnir) // http://www.minregion.gov.ua/news/ termomodernizaciyu-zhitlovih-budinkiv-zmozhe-zabezpechitilishe-efektivniy-vlasnik-zhitla---sergiy-kushnir-459849/

37

International Standards (ISO) of Energy Management Systems:  http://www.minregion.gov.ua/zhkh/energozberezhennya-ta-energoefektivnist-288033/mizhnarodniy-dosvid--739025/mizhnarodnistandarti-ISO-sistemi-energetichnogo-menedzhmentu-529093/

40

6th International Forum for Renewable Energy and Energy Efficiency in Ukraine: http://www.minregion.gov.ua/zhkh/reforma-zhitlovokomunalnogo-gospodarstva/6-y-mizhnarodniy-forum-z-vidnovlyuvanoyi-energetiki-ta-energoefektivnosti-v-ukrayini-143829/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

43

The National Commission suggests to introduce a new law on complete commercial metering for heat and watter supply: http://www. nerc.gov.ua/index.php?news=4388

44

SAEE and European Commission Support Group for Ukraine intensify cooperation to approximate national legislation to the European energy efficiency standards // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 10.07.2015: http://www.minregion.gov.ua/news/te-8263/

47

By returning old gas consumption rates they will drive people into debt (S. Dyachenko) // “Holos Stolytsi” Radio. 07.07.2015: http:// newsradio.com.ua/2015_07_07/Povernennja-do-starih-normspozhivannja-gazu-zazhene-naselennja-v-borgi-Djachenko-5838/

48

Draft Law “On Partial Revision of Certain Acts of Legislation regarding Commercial Metering of Natural Gas, Heating, Hot and Cold Water Supply for Population”: http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?id=&pf3511=54776

49

Arseniy Yatsenyuk demands from NEURC revoking licences and  amercing regional gas providers, which do not provide citizens with free gas meters // Government Portal. 27.05.2015: http://www.kmu.gov.ua/ control/uk/publish/article?art_id=248192381&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

http://saee.gov.ua/sites/default/files/documents/2014_05_05_draft_ Law.doc

A. Kobolev pleads the Cabinet to increase statutory rates of residential gas consumption // “Ekonomichna Pravda”. 06.07.2015: http:// www.epravda.com.ua/news/2015/07/6/549433/

Environment

42

46

Renewables

http://www.minregion.gov.ua/attachments/content-attachments /4378/%D0%94%D0%BE%D0%B4%D0%B0%D1%82%D0%BE%D 0%BA_1.pdf

Resolution “On introducing amendments to statutory rates of natural gas consumption by residents, who lack metering devices” // Cabinet of Ministers of Ukraine. No.237 of 29.04.2015: http://zakon4. rada.gov.ua/laws/show/237-2015-%D0%BF

Security of supply

41

45

Regulatory authority

In accordance with the updated 2015 Action Plan for Regulatory Acts Preparation by MRD, SAEE shall prepare a Draft Law on commercial metering for district heating, water supply and drainage and other public utilities41 by December. On February, 17 SAEE published the Draft Law “On Commercial Metering in District Heating, Water Supply and Drainage, Public Utilities”42, which defines terms and conditions for metering of heat energy supply, district heating, water supply, drainage and sewage, and domestic hot water; specifies funding sources for installation, maintenance and repair of metering devices as well as mechanisms of public control and levels of liability. This Draft Law defines the only funding source for installation, maintenance and repair of metering devices (heat meters in residential houses and hot/cold water meters in both houses and apartments) being own costs of a service provider/supplier, reimbursed via corresponding tariffs. The Regulatory has also announced preparation of corresponding Draft Law and has sent it for approval to the Cabinet43. In June, SAEE representatives informed that their initiatives related to development of a separate Draft Law were being impeded by Minregion, which advocates including certain provisions to their own Public Utility Draft Law and sees no sense in a separate law. At the same time, the European Commission Support Group for Ukraine pointed out the necessity of a separate law on commercial metering of energy resources44. SAEE continued working over the Draft Law and discussed it in August with NEURC officials, MPs and civil society experts.

Naturally, debates over metering issue will become more intense with adoption of a law on natural gas market. To encourage local gas provider to install utility meters the Cabinet had cut by half statutory consumption rates for citizens, who do not have gas meters45. However, as early as June “Naftogaz” NJSC reported that this initiative caused blanket refusal of meter installation among private consumers, as actual monthly consumption of gas in most households exceeded the new statutory rates. Therefore NJSC suggests to increase the statutory rate at least to the level of an average monthly consumption amount in order to make meter installation reasonable46. Although some public experts insist that resetting the old rates may lead to increased arrears47. A People’s MP V. Stashuk (“People’s Front” faction) has registered a Draft Law “On Partial Revision of Certain Acts of Legislation regarding Commercial Metering of Natural Gas, Heating, Hot and Cold Water Supply for Population”48 (Reg. No. 2636), which proposes to apply a discount coefficient on the price of gas for those households, where a gas meter is not installed within a prescribed deadline. Given that, providers’ lost revenues shall not be reimbursed, and cut-offs of gas supply shall be prohibited. The Draft Law is refined and registered at Verkhovna Rada on July, 21 2015. The Prime Minister demands that NEURC revokes licences and amerces those gas providers, which fail or refuse to install utility gas meters at their own cost49. A number of legislative intentions, aimed

Electricity

23.6%). It means that over 3.7 billion m3 of gas are wasted.

75


at commercial metering of natural gas, have been turned out to the authors – for instance, the draft amendments to the Law of Ukraine “On Commercial Metering of Natural Gas” (regarding free-of-charge installation and replacement of gas meters and appliances for retirees, disabled and military personnel); the Draft Law on prevention of residential utility tariff increase if no measuring devices (utility meters) are installed; the Draft Law, revising the Law of Ukraine “On Commercial Metering of Natural Gas” (regarding procedures of reimbursement of gas meter installation costs to customers by local gas providers) and others. As for heat energy metering, NEURC has decided to assign first ranking priority for public investment programs to the licensed installers of heat metering devices in residential units50. At that, NEURC reiterates that according to the draft Memorandum on Economic and Financial Policy, approved by the Decree of the Cabinet No.129p of 27.02.2015 Ukraine assumes obligation to achieve 100 per cent commercial metering of consumed heat energy by the end of 2016. In this respect MP Prime Minister H. Zubko emphasizes that heat meter installation falls51 within the scope of the government program, which compensates 30% of loan amount for energy efficient devices and materials. SAEE Head mentions that the most applications from condominiums refer to installation of individual heating plants (IHP). According to MP Prime Minister H. Zubko, 36% of dwellers already have heat meters installed. He also informs that NEURC is currently elaborating a point of correlation between heat energy supply, heating period length, and outside temperature52. MRD estimates total financing needs for house-

76

50

NEURC decides to assign first ranking priority for public investment programs to the licensed installers of heat metering devices in residential units: http://www.nerc.gov.ua/index.php?news=4390

51

A.Yatsenyuk’s office promised 30% compensation of expenses on heat meters // “Ukrains’ka Pravda”. 24.05.2015: http://www.pravda. com.ua/news/2015/05/24/7068940/

52

Commercial metering and reduction of consumed energy resources will allow Ukrainians to save more costs // Government Portal. 07.05.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=248143535&cat_id=244276429

hold meters installation as UAH 3bn53, and the officials are convinced that the process can be carried out efficiently only if sufficient funds from international organizations are invited. In June Verkhovna Rada approved the Draft Law “On Introducing Amendments to Public Utility Legislation”54 in the first reading. The document contains proposals, aimed at prevention of setting lower tariffs/prices for public utility services than reasonable expenses for their production, while all disputes concerning public utility pricing shall be adjudged. The Draft Law also envisages that the tariffs must include prime cost of heat energy and provide for the enterprise’s profitability. When presenting the Draft Law before the Parliament H. Zubko made reference to Energy Community and mentioned that the Draft Law would allow “public utility companies to bring in investments thus bringing customer service delivery to a new level of quality”. In January MRD published the draft resolution of the Cabinet regarding procedures of periodic inspection, maintenance and repair of privately owned metering devices55, used for measuring domestic consumption of electricity, heat, gas, and water. This Resolution was approved by the Cabinet in July56.

53

Hennadii Zubko: “We need to solve the benefits monetization issue” // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 26.05.2015: http://www.minregion.gov.ua/ news/gennadiy-zubko--neobhidno-virishiti-pitannya-monetizaciyipilg-61852/

54

The Draft Law, providing a consistent approach to governmental control of utility pricing and tariff setting, has passed the first reading in the Parliament // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 18.06.2015: http://www.minregion.gov.ua/news/verhovna-rada-v-pershomu-chitanni-pidtrimala-zakonoproekt-ediniy-pidhid-v-sferi-derzhavnogo-regulyuvannyapitan-formuvannya-ta-v-261663/

55

Draft Resolution of the Cabinet of Ministers of Ukraine “On approval of the Procedure of submitting privately owned metering devices (used for measuring domestic consumption of electricity, heat, gas, and water) for periodic inspection, maintenance and repair”: http:// www.minregion.gov.ua/regulatory/proekty-reguljatornyh-aktiv-dljaobgovorennja-ta-analizy-reguljatornogo-vplyvu/proekt-postanovikabinetu-ministriv-ukrayini-pro-zatverdzhennya-poryadku-podannya-zasobiv-vimiryuvalnoyi-tehniki-rezultati-vimir-557498/

56

Resolution on Approval of the Procedure of Submitting Metering Devices for Periodic Inspection, Maintenance and Repair // Cabinet of Ministers of Ukraine. No.474 of 08.07.2015: http://zakon4.rada.gov. ua/laws/show/474-2015-%D0%BF

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

58

http://www.minregion.gov.ua/attachments/content-attach ments/4717/%D0%97%D0%BC%D1%96%D0%BD%D0%B8 %D1%89%D0%BE %D0%B2%D0%BD%D0%BE%D1%81%D1 %8F%D1%82%D1%8C%D1%81%D1%8F %D0%B4%D0%BE %D0%9F%D0%BB%D0%B0%D0%BD%D1%83 %D0%B4%D1%96 %D1%8F%D0%BB%D1%8C%D0%BD%D0%BE%D1%81%D1%82 %D1%96 %D0%9C%D1%96%D0%BD%D1%80%D0%B5%D0%B3% D1%96%D0%BE%D0%BD%D1%83 %D0%A3%D0%BA%D1%80%D 0%B0%D1%97%D0%BD%D0%B8 %D0%B7 %D0%BF%D1%96%D 0%B4%D0%B3%D0%BE%D1%82%D0%BE%D0%B2%D0%BA%D0 %B8 %D0%BF%D1%80%D0%BE%D0%B5%D0%BA%D1%82%D1 %96%D0%B2

59

 esolution on Revision of Allocation of Resources from the State R Budget for Efficient Use of Energy Resources and Energy Efficiency // Cabinet of Ministers of Ukraine. 01.10.2014: http://www.kmu.gov. ua/control/uk/cardnpd?docid=247650502

60

Resolution on Revision of the State Target Economic Program for Energy Efficiency, Renewable Energy and Alternative Fuel 2010-2015 // Cabinet of Ministers of Ukraine. No.449 of 03.09.2014: http://zakon4.rada.gov.ua/laws/show/449-2014-%D0%BF/page

61

Ministry of Regional Development: The Government will partially compensate people costs of electric heaters // Government Portal. 16.09.2014: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247608444&cat_id=244277212

62

Volodymyr Groysman: Alternative fuel use for heating is becoming profitable // Government Portal. 22.09.2014: http://www.kmu.gov. ua/control/uk/publish/article?art_id=247620304&cat_id=244276429

63

Heating tariff from alternative fuel is balanced with natural gas heating // Government Portal. 23.09.2014: http://www.kmu.gov.ua/control/uk/publish/article?art_id=247621672&cat_id=244276429

64

Andrii Bilousov informed of Government’s actions for energy efficiency // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 19.09.2014: http://www.minregion. gov.ua/news/andriy-bilousov-poinformuvav-pro-zahodi-uryadu-usferi-energozberezhennya-641840/

65

Resolution on Encouraging Migration of Natural Gas and Heat Energy Consumers to Electrical Heating and Hot Water Supply // Cabinet of Ministers of Ukraine. No. 540 16.10.2014: http://zakon1.rada.gov. ua/laws/show/540-2014-%D0%BF

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

Installation of Utility metering devices in multi-dwelling units goes on // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 17.08.2015: http://www.minregion.gov. ua/news/osnaschennya-bagatokvartirnih-budinkiv-pobudinkovimizasobami-obliku-trivae-249537/

Environment

57

Renewables

At the beginning of the last heating seasons central government (and SAEE in particular) made things hum about natural gas substitution, calling it ‘energy efficiency’. For instance, the government promised to compensate 20% (but not exceeding UAH5000 per loan) of principal amount of loans, taken in Oshchadbank (State Savings Bank of Ukraine) for purchase of any non-gas heating boiler59. In 2014 UAH 50M out of UAH 500M financial assistance from EU60 were allocated on this activity in accordance with appropriate revisions of the State Target Program for energy efficiency, renew-

Security of supply

PUBLIC PROGRAMS

Furthermore, the government has balanced the tariff per Gcal of heat, derived from natural gas and alternative fuel sources62 for the period from October, 2014 till October, 2019 (particularly aiming at budgetary institutions), by issuing the Resolution No.453 “On encouraging gas substitution in heat energy production for institutions and organizations, funded from the State budget or local budgets”63. MRD has also prepared two draft resolutions: “On connecting residential-grade electric heating sets (household appliances) for conversion to electric heating” (provides for free-of-charge connection of electric sets up to 16 kW that, as MRD assures, may help reduce expenses, incurred by house owners, by UAH10,000); and “On encouraging migration of natural gas and heat energy consumers to electrical heating and hot water supply” (increases monthly limit of power consumption in winter period from 3600 kWh to 5000 kWh without tariff increase)64. In October the Government issued Resolution No.540 “On Encouraging Migration of Natural Gas and Heat Energy Consumers to Electrical Heating and Hot Water Supply”65, which sets a ‘feed-in tariff’ on electricity for those gas/heat consumers, who have migrated to electric power for space and water heating. NEURC, in its turn, has raised bottom tariff application range

Regulatory authority

The Ministry has also published draft updates to its Action Plan for Regulatory Acts Preparation for 2015, which include a governmental resolution, which provides a calculation method of fees for district heating if no metering devices are installed in an apartment (or a private residence) and at the inlet of building’s heating system58. Its submission is planned for December.

able energy and alternative fuel production for 2010-201561. This program was expected to cover appx. 33,000 households by the end of the year. However, public access to the detailed information about the Program was very insufficient at first.

Electricity

According to MRD data: 28.6% of buildings (41,321) were equipped with Utility cold water meters, 15.9% (6,247) with Utility hot water meters, 34.7% (29,906) with heat meters within the first half of 201557.

77


to 5000 kWh for those residents, who use electric heating66 (Resolution No. 164 “On Approval of Residential Electricity Tariff Revision”).

that, the Government has revoked customs privileges for import of energy-saving materials, equipment, appliances and their components72.

The Government has approved a schedule of medium- and long-term measures aimed at reduction of gas consumption till 201767, allocating a portion of budget resources to partial reimbursement of loans, taken by enterprises for procurement of energy efficient equipment and credit assistance to residents, development of motivating mechanisms, including energy-saving measures in buildings etc. SAEE has published a Road Map of regulatory and legislative actions for expansion of energy efficiency and renewable energy, including, but not limited to: attractive payback period for gas substitution projects; reducing amount of gas, consumed by residents, budgetary institutions, and district heating companies, by 3.66 billion m3 before 2020; thermal modernization of 33% multidwelling and single-family units by 2020; achieving 100 per cent commercial metering of heat energy and water; consistent institutional basis for EUcompliant energy certification of buildings; nationwide energy efficiency and power balance monitoring system; fulfilment of Ukraine’s obligations to Energy Community and others68.

In January 2015 SAEE suggested to use the same method as in case of non-gas heating boilers to reimburse 30-40 per cent of principal amount of loans for purchasing energy-saving lamps73 and enhance range of activities, supported by government to installation of multiple glazed units, purchasing energy-saving materials, meter installation etc74. Proposed reimbursement rates were 30% (within amount of UAH10,000 per contract) for private loans, and 40% of principal amount for loans, issued to condominiums, for energy-saving equipment/materials purchase. SAEE prepared a respective draft resolution in January.

SAEE informed that the total amount of originated loans for non-gas boilers accounted for: UAH 4M as on November, 6, 2014; UAH 16M as on December, 1, 201469; UAH 19M as on December, 17, 201470; and over UAH 28M in January, 201571. Apart from 66

21.01.2015: http://ua-energy.org/post/50059 72

Resolution on Invalidation of specific Resolutions of Cabinet of Ministers of Ukraine regarding Importation of Energy-Saving Materials, Equipment, Appliances and Their Components to the Customs Area of Ukraine. No.719 of 29.12.2014: http://www.kmu.gov.ua/control/ uk/cardnpd?docid=247852588

73

SAEE proposes housing a 40% reimbursement on LED bulbs // Ukrainian Energetics. 26.01.2015: http://ua-energy.org/post/50170

74

Governmental support helped save over 3 billion m3 of gas // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 23.01.2015: http://www.minregion.gov.ua/news/zaprovadzhennya-derzhavnoyi-pidtrimki-spriyalo-skorochennyu-spozhivannya-prirodnogo-gazu-na-ponad-3-mlrd--kub--m--484803/

67

Decree on Approval of Schedule of Medium- and Long-term Measures, aimed at Reduction of Gas Consumption till 2017 // Cabinet of Ministers of Ukraine. No.1014-p of 16.10.2014: http://zakon4.rada. gov.ua/laws/show/1014-2014-%D1%80

68

Road Map of Regulatory and Legislative Actions for Expansion of Energy Efficiency and Renewable Energy: http://saee.gov.ua/sites/ default/files/documents/dor-karta.pdf

75

Government support for energy efficiency: focusing on residential houses // SAEE. 27.11.2014: http://www.saee.gov.ua/sites/default/ files/documents/osbb-04122014.pdf

Decree No.177 of 08.04.2015 “Issues of Budget Resources Allocation for Energy Efficient and Energy-Saving Activities in 2015”: http:// zakon4.rada.gov.ua/laws/show/177-2015-%D0%BF

76

SAEE Head Serhiy Savchuk’s interview for Facts Newspaper // SAEE 24.04.2015: http://saee.gov.ua/uk/news/605

77

UAH 6.3 millions allocated in budget for non-gas boiler reimbursement program // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 22.06.2015: http://www. minregion.gov.ua/news/63-mln--grn--vidileno-z-derzhavnogo-byudzhetu-na-pogashennya-chastini-sumi-kreditu-za-programoyu-

69

78

NEURC increases residential electric power consumption limit at the bottom tariff to promote electric heating // Government Portal. 23.10.2014: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247703701&cat_id=244276429

In April the government prolonged the non-gas boiler reimbursement program to 201575: in total 2,339 loans were provided amounting at UAH 28M, of which UAH 2.4M were reimbursed76. However, starting this year there was a delay in payments, caused by an extensive paperwork due to prolongation of the program. SAEE promised to redeem and resume payments to those who took loans in that period, and subsequently fulfilled the promise. Yet, in spite of announced resumption of payments in May, actual payments started in end-June77, though SAEE promises that in future

70

Gas substitution has became Government’s first priority // Government Portal. 23.12.2014: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=247837354&cat_id=244276429

71

Due to energy efficient measures gas consumption in Ukraine has decreased by 3 billion m3 in 2014 – Savchuk // Ukrainian Energetics.

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

The aggregate amount of loans, issued under the program within the period since August, 3 till 31, Arseniy Yatsenyuk urges local governments to decide co-fi nancing of energy efficiency programs // Government Portal. 26.06.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=248282531&cat_id=244276429

83

Serhiy Savchuk: Our task is to involve local budgets into co-financing energy efficiency activities // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 05.06.2015: http://www.minregion.gov.ua/news/sergiy-savchuk--nashe-zavdannya---zaluchiti-i-miscevi-byudzheti-do-spivfinansuvannya-zahodivz-energoefektivnosti--589060/

84

80

81

 overnment publishes Resolution No.231 of 08.04.2015, which proG motes energy efficient activities of residents, condominiums and housing offices // SAEE: http://saee.gov.ua/uk/news/608

SAEE Head Serhiy Savchuk’s interview for OKNA.ua online media // SAEE 27.07.2015: http://saee.gov.ua/uk/news/712

85

Over UAH 100M loans already issued within the national program on energy efficiency // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 23.06.2015: http://www. minregion.gov.ua/news/ponad-100-mln-griven-vidano-na-kreditiza-derzhavnoyu-programoyu-z-energozberezhennya-478301/

Government will partially compensate expenses on house insulation (Arseniy Yatsenyuk) // Government Portal. 08.04.2015: http://www. kmu.gov.ua/control/uk/publish/article?art_id=248079620&cat_ id=244276429

86

 krainians may apply to three banks for their compensation for U energy efficient activities // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 08.04.2015: http://www.minregion.gov.ua/news/ukrayinci-mozhut-zvertatis-zakompensacieyu-ta-kreditami-na-energoefektivni-zahodi-do-trohbankiv-108277/

Within the last month banks have issued almost UAH 60M loans under the national energy saving program // Government Portal. 07.07.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=248306573&cat_id=244277212

87

Another 2000 families have joined the energy efficiency program // Government Portal. 27.07.2015: http://www.kmu.gov.ua/control/uk/ publish/article?art_id=248365290&cat_id=244277212

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

82

Environment

79

Resolution No.231 of 08.04.2015 “On Introducing Amendments to the Resolutions of the Cabinet No.243 of March, 1, 2010; and No. 231 of October 17, 2011”: http://zakon4.rada.gov.ua/laws/show/231-2015%D0%BF

Renewables

SAEE reports that by June almost 6000 households have obtained loans for non-gas boiler and energy efficient equipment at the total amount of UAH 100M85; by July, 6 – already 7400 households at the amount of UAH 130M86; and 12,000 households at UAH 210M by the end of July87. As mentioned by SAEE Head S. Savchuk, an average monthly payment incurred by each participant of energy efficiency lending program, amounts to UAH500 for boilers and UAH489 for equipment/materials.

na-pridbannya-negazovih-kotliv-666023/ 78

Security of supply

In June the government urged local authorities to co-finance means of energy efficiency promotion. The Prime Minister addressed this issue to regional

As SAEE explained, they seek to involve local budgets in reimbursement of interests on issued loans for house insulation: they offered local authorities and self-governance to sign memoranda83 in order to make appropriate provisions for these expenses in local budgets within this year. 18 such memoranda had been concluded till July84. Alongside this, several local-level projects in the same direction have been launched: in Lviv (region), Dnipropetrovsk (region and city), Sumy (region), Boryspil (district), Transcarpathia, Zaporizhia.

Regulatory authority

In April the government also introduced two new mechanisms: partial reimbursement of principal amount of private loans for energy-saving equipment and/or materials, and commercial loans, taken by condominiums for energy efficient activities78. Reimbursement rates were set as 30% (within amount of UAH10,000) for private loans, and 40% of principal amount for loans, issued to condominiums. Budget allocations on these needs in 2015 comprise UAH 344M for condominiums and housing offices (with additional outsourcing of UAH 1.23bn from banks), and UAH 198M for reimbursement of private loans79. Cooperation with banks also expanded: in addition to Oshchadbank the program now involves Ukrgazbank and Ukreximbank. According to government’s forecasts the program will cover 134,000 families80: non-gas boiler reimbursement – 14,000; 30 per cent reimbursement – 22,000; and 98,000 via condominiums (10 per cent of condominiums, which amounts to total of 1630 dwelling units81).

administration heads82, relying on an average 40 per cent growth of local budget revenues, and requested to appoint MP heads in charge of energy efficiency at regional and district administrations.

Electricity

the gap between loan finalization and governmental reimbursement payout should not exceed 3 months. The Agency had reported beforehand submission of documents for program prolongation for 2016. Total amount of budget funds, allocated in 2015 to promotion of energy efficient activities of residents, condominiums and housing offices accounts for UAH 343,525.87

79


accounts for UAH 139.4M88. In general, for the duration of both reimbursement programs for nongas heating boilers and for energy-saving equipment/materials purchase, 23,107 loans have been issued at the total amount of UAH 389.5M. In addition, 22 regional governments have already joined SAEE’s initiative on partial reimbursement of loan principal or interests from local budgets by signing respective memoranda89. In the meantime public banks, involved in these projects, demonstrate certain competition for clients. For instance, one of these banks have increased loan term for condominiums/housing offices90 from 5 to 10 years, and maximum lending amount from UAH 3M to 10M. Moreover, it has arranged for the program promotion with a chain of hardware superstores91. Another bank has simplified formalities for condominiums considerably after enactment of the Law “On Enjoyment of Property in Multiple-Dwelling Units”92 by shortening the list of application documents, lowering required revenues from condominiums, and setting common voting terms for all projects at 75 per cent of total co-owners’ votes In accordance with the Government’s Resolution No.61493, issued in August, grantees of public

80

88

The aggregate amount of loans, issued under the program within the period since August, 3 till 31, 2015 accounts for UAH 139.4M // SAEE. 01.09.2015: http://saee.gov.ua/uk/news/789

89

House insulation and heat meter installation will help save people’s costs (Hennadii Zubko) // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 26.08.2015: http:// www.minregion.gov.ua/news/uteplennya-pomeshkan-vstanovlennya-lichilnikiv-na-teplo-zaoschadyat-koshti-ukrayinciv--gennadiyzubko-878500/

90

UKRGAZBANK improves lending terms for condominiums and  housing offices upon energy efficiency programs // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 28.07.2015: http://www.minregion.gov.ua/news/ukrgazbank-pokraschiv-umovi-kredituvannya-osbb-ta-zhbk-na-zahodi-zenergozberezhennya-193963/

91

UKRGAZBANK and country-wide chain of hardware stores “Epitsentr” concluded a partnership contract for implementation of energy efficiency programs // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 28.07.2015: http://www. minregion.gov.ua/news/ukrgazbank-ta-nacionalna-merezha-epicentr-uklali-dogovir-pro-partnerstvo-ta-spivpracyu-v-energoefektivniy-sferi-636217/

92

 E Loans for condominiums become more affordable // Ministry of E Regional Development, Building and Housing and Utility Services of Ukraine. 30.07.2015: http://www.minregion.gov.ua/news/energoefektivni-krediti-dlya-osbb-stali-dostupnishimi-245101/

93

Resolution on Revision of Allocation of Resources from the State

corrective subsidies may apply to Oshchadbank or Ukrgazbank for 70 per cent compensation on purchase of a non-gas boiler or energy-saving equipment/materials94. Besides, the Resolution provides for increase of reimbursement limit per contract. In September SAEE reported that the total amount of issued loans has reached UAH 500M, of which UAH 43M were reimbursed. The Agency notes that currently time gap between loan finalization and reimbursement payoff is 2.5 – 3 months, but promises to achieve the timeline of 1 – 1.5 months starting from October. Average weekly amount of issued loans is UAH 45M. At that, 99.5% of loans are taken by individual customers, while condominiums take only 0.5% (28,000 individuals vs. 38 condominiums). SAEE explains that condominiums are required to supply more documents, and decision-making procedure in condominiums is rather time-consuming. Moreover, most condominiums are still hesitant about borrowing large amounts of money, thus they start at smaller loans (IGU installation, heat substations, metering devices etc.), yet some of them apply for a second loan and at least one condominium has taken a loan for complex thermal modernization. According to information, provided by SAEE, 65% of borrowers apply for loans for balcony and window glazing, 31% – for thermal modernization of single-family houses. In particular, while 95% loans, taken by apartment dwellers, are used for glazing, those taken by detached house owners are used for both glazing and insulation in an almost equal proportion (54% vs. 43%). If we compare the two programs (energy efficient materials and non-gas boilers), the former comprises two thirds of all loans, while the remaining one third goes to non-gas heating boilers. Besides, only 5 per cent of all heating boilers, purchased under Budget for Efficient Use of Energy Resources and Energy Efficiency // Cabinet of Ministers of Ukraine. № 614. 12.08.2015: http://zakon4. rada.gov.ua/laws/show/614-2015-п 94

Government signed a resolution that allows reimbursement of energy efficient loans for public grantees // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 26.08.2015: http://www.minregion.gov.ua/news/pidpisano-postanovu-yaka-dae-mozhlivist-subsidiantam-otrimati-kompensaciyu-zaenergoefektivniy-kredit-168505/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

SAEE will draw on EU experience to create the Energy Efficiency

Energy efficiency

96

Institutional basis for establishment and functioning of the Energy Efficiency Fund will be created in the closest time // Government Portal. 26.12.2014: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=247844162&cat_id=244277212

SAEE conducted negotiations with its international partners98 and representatives of IFIs99 concerning EEF activity models, funding and sustainable financing. Among considered possibilities was EEF association with the Donation Fund, supposedly to be managed by EBRD. EEF model was developed by joined efforts of SAEE, the Federal Ministry for the Environment of Germany and Berlin Economics GmBH. The EEF is expected to commence operations within 2015, while energy efficiency market

Environment

95

Renewables

In November 2014 SAEE furthered an initiative of establishing a special-purpose fund for financing respective government programs after depletion of resources, committed by EU, and investing in energy efficient projects. SAEE prepared a draft executive decision on foundation of such fund and initiated its discussion with civil society experts and donating institutions95. A number of essential issues, including funding sources and performance assessment, were contemplated. SAEE and representatives of the Support Group for Ukraine have agreed to form a working group for concept development96.

Security of supply

SPECIAL FUND FOR ENERGY EFFICIENCY

Regulatory authority

Summarizing the foregoing, we should point out introduction of mechanisms that encourage citizens and especially co-owners of multi-dwelling housing units for specific energy efficient actions. However, along with amounts of expenditures, we require a consistent criterion (or a range of criteria) to assess their efficiency, economic justifiability etc.

Draft Resolution of the Cabinet “Public Specialized Financing Institution “Energy Efficiency Fund” Issue” that should envisage allocation of budget resources, accumulated from respective projects and provided by international organizations, on financing energy efficient activities, was published only in February97. Draft Charter of the Fund was published on SAEE web-site, but removed later. Charter capital of the Fund was estimated as UAH 100M; its primary objectives were defined as: (1) substitution (reduction) of natural gas consumption by budgetary institutions and agencies, and heating provider utilities; (2) increase in energy efficiency of residential buildings as well as those of budgetary institutions/agencies and heating providers; (3) GHG emission reduction; (4) achieving energy efficiency indicators in accordance with Ukraine’s obligations to Energy Community. Specific tasks of EEF included, among others, implementation of national programs on energy efficiency and gas substitution, formulation of domestic energy efficient target programs, accumulation of assets from individuals and legal entities, providing suggestions for appropriate policy improvements; and promotion of policy mechanisms, related to energy efficiency. In addition, draft Procedure of cost estimation of the Fund’s statutory activities was published.

Electricity

this program, are electric boilers, which means 95 per cent are boilers, fired with alternative fuels (firewood, pellets, briquettes, straw etc.). Starting from August, 27, 2015, financing of purchase of electric boilers is ceased. Instead, the program for energy efficient materials/activities covers loans for variable rate electricity meters, solar collectors, and heat pumps. SAEE claims to be working on involvement of other commercial banks, but this initiative is being obstructed by other executive authorities. At the same time the Agency is considering means of assessment of saved natural gas amount. Apart from that, SAEE warns condominiums that starting from 2017 they won’t be able to receive governmental support without performing energy audits.

Fund // Government Portal. 17.12.2014: http://www.kmu.gov.ua/control/uk/publish/article?art_id=247825453&cat_id=244277212 97

http://saee.gov.ua/uk/activity/zakonoproektna-diyalnist

98

SAEE together with the Federal Ministry for the Environment of Germany works on funding models of EEF // SAEE. 20.02.2015: http:// saee.gov.ua/uk/news/523

99

EEF creation will allow to introduce best energy efficient technologies and ensure sustainable return of investments // Government Portal. 28.04.2015: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=248126705&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

81


(estimated by SAEE Head S. Savchuk at €40bn) will allow to reduce yearly gas consumption to 13 billion m3 by 2030, according to SAEE’s forecasts. In conclusion, EEF mechanism is not yet officially launched, negotiations and discussions regarding specific aspects of its activity continue, not allowing to speak of any finalized policy and subsequent prospects of already initiated public programs on energy efficiency.

CRITICAL COUNTERMEASURES Due to limited resource stock at the beginning of last heating season, its progress was rather fussy. Prime Minister A. Yatsenyuk urged all central and local authorities to save natural gas and requested governors, MRD, Naftogaz and NEURC to set up appropriate consumption limits for licensees and consuming subjects100. The Government had already set these limits in July101: they varied depending on region, budgetary institution, heating provider, and commercial consumer. In total 30% gas savings were targeted. However, in spite of numerous calls to adhere to the limits and threats of administrative sanctions, consumption discipline was often breached. Notwithstanding decrease in consumption comparing to previous years, the limits were exceeded. By the end of the season total economy amounted to 21%, which comprised 1.8 billion m3102. Deviation from limits was explained at MRD by abrupt air temperature drops. Instead, after heating season Prime Minister demanded to amerce heating providers for redundant heating and inefficient gas usage103. SAEE informed that

82

100

 rseniy Yatsenyuk calls upon all public authorities to gas economy // A Government Portal. 31.10.2014: http://www.kmu.gov.ua/control/uk/ publish/article?art_id=247721270&cat_id=244276429

101

Resolution “Some Issues of Natural Gas Supply to Residents, Enterprises, Institutions and Organizations till the End of 2014/15 Heating Season” // Cabinet of Ministers of Ukraine. No.296 of 09.07.2014: http://www.kmu.gov.ua/control/uk/cardnpd?docid=247496069

102

 nergy resource consumption in Ukraine reduced by 21% // GovE ernment Portal. 16.04.2015: http://www.kmu.gov.ua/control/uk/ publish/article?art_id=248096626&cat_id=244277212

103

Arseniy Yatsenyuk demands from NEURC to amerce heating  providers for overdue heating: “Every 10 seconds they burn up an average monthly salary in Kyiv only” // Government Portal. 15.04.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_

such categories as residents, budgetary institutions, district heating providers have managed to cut gas consumption from 26 to 22.9 billion m3104. The Government reported $3.4bn economy for 2014 and planned consumption reduction by 10 billion m3 within 2 years105. In the meantime IFC notices that Ukraine owes its achievements in gas economy to industrial sector in the first place106, yet in residential sector there was no reduction at all. It is against this background that the Cabinet announced its intention to evaluate each region by criteria of energy efficiency107 and provide more loan reimbursements to the best regions. This evaluation shall be conducted by the Ministry of Economy starting from July, 2015. In 2015 the government formed an inter-agency working group on preparation to the next heating season108, and the Prime Minister urged to fulfil 25 items, listed in the Energy Efficiency Action Plan, provided by international experts. The working group shall hold weekly meetings, while the Counter-Crisis HQ shall gather on a monthly basis. This group would contemplate “all issues, related to accounts of public and private companies as well as the state budget” for both natural gas and electric power.

id=248092430&cat_id=244276429 104

Independent Heat Energy Forum is a business platform for experience exchange in energy efficiency // Government Portal. 21.04.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=248108324&cat_id=244277212

105

Thanks to reducing gas consumption the Government and Ukrainian people have saved $3.4bn (Arseniy Yatsenyuk) // Government Portal. 15.04.2015: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=248092177&cat_id=244276429

106

World Bank states that Ukraine hasn’t reduced gas consumption in residential sector // Ukrainian Energetics. 04.06.2015: http://uaenergy.org/post/52998

107

Arseniy Yatsenyuk: The Government will put evaluation of regions in practice, especially concerning implementation of energy efficiency program // Government Portal. 26.06.2015: http://www.kmu.gov.ua/ control/uk/publish/article?art_id=248282426&cat_id=244276429

108

Arseniy Yatsenyuk: The Government forms an inter-agency working group on preparation to the next heating season // Government Portal. 03.08.2015: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=248380690&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

INSTITUTIONAL STRUCTURE

Resolution on Introducing Amendments to the Statutes of Ministry of Regional Development, Building and Housing and Utility Services of Ukraine // Cabinet of Ministers of Ukraine. No.690, 26.11.2014: http://zakon2.rada.gov.ua/laws/show/690-2014-%D0%BF

111

Expert Findings on the Draft Statutes of State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE): http://saee.gov.ua/ sites/default/files/Expert%20opinion.pdf

112

Within monitoring period a number of donors were involved in various programs, projects, skillexchange meetings and other activities, related to energy efficiency. List of key donors include but is not limited to: World Bank, IBRD, EBRD, European Commission, a number of countries (Germany, Italy, Norway, Sweden, Switzerland, Poland, France etc.) GIZ, USAID, ICFI, NEFCO, E5P, EIB and others. 115

EU advocate new paradigm of Agency’s Statute // SAEE. 26.09.2014: http://saee.gov.ua/uk/news/341

Resolution on Approval of the Statutes of State Agency on Energy Efficiency and Energy Saving of Ukraine // Cabinet of Ministers of Ukraine. No.676, 26.10.2014: http://zakon2.rada.gov.ua/laws/ show/676-2014-%D0%BF

116

113

 olodymyr Groysman tasks SAEE to contribute 38 commercial veV hicles for АТО needs // Government Portal. 21.10.2014: http://www. kmu.gov.ua/control/uk/publish/article?art_id=247694166&cat_ id=244276429

Introduction of European monitoring system for energy effi ciency and renewable energy is essential // Government Portal. 21.11.2014: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247767950&cat_id=244277212

117

114

 he Government extends SAEE competence // Ukrainian EnergetT ics. 26.11.2014: http://ua-energy.org/post/49024

Resolution on Certain Activity Issues of Central Executive Authorities // Government Portal. No.4, 14.01.2015: http://zakon2.rada.gov. ua/laws/show/4-2015-%D0%BF

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Energy efficiency

110

FINANCING POSSIBILITIES Environment

Resolution on Optimizing Central Executive Authority Structure // Cabinet of Ministers of Ukraine. No.442, 10.09.2014: http://zakon4. rada.gov.ua/laws/show/442-2014-%D0%BF

As a result of these changes SAEE has reshaped its statutory documents in pursuance of more efficient implementation of EU legislation. However, SAEE’s subsidiary position within another ministry imposes certain limitations upon its activity, making SAEE rather a project-developing unit, than a full-fledged executive authority that introduces and implements public policies.

Renewables

109

SAEE stated it willingness to introduce European monitoring system of energy efficiency and to extend cooperation with experts and public society116. In January the Government permitted SAEE abolish regional offices as its structural units117 (Resolution of the Cabinet No.4 of Jan, 14, 2015), which made up 24 regional offices throughout the country.

Security of supply

The Government approved the new version of the Regulation on SAEE in November, extending its functions according to Ukraine’s obligations to the Energy Community114 to establishing public sub-

Regulatory authority

In October 2014 SAEE revised it functions, abandoning public control in favour of stimulating and monitoring mechanisms113.

Electricity

In September 2014 the Cabinet placed SAEE under supervision of MP Prime Minister – the Minister of Regional Development, Building and Housing and Utility Services109. Later on, the corresponding amendments were made to the Statutes of the Ministry of Regional Development, Building and Housing and Utility Services of Ukraine110. Meanwhile the Agency had also prepared the draft of its revised Statutes, former Energy Community Secretariat Director – an energy expert S. Neykov – noted upon its compliance to the provisions of cl. 4.4 and cl. 5.2 of the Directive 2006/32/EC as well as cl.  10.4 of the Directive 2010/31/EC111, accentuating on precise definitions of its functions and responsibilities for pursuing a consistent national policy of energy efficiency and renewable energy use. The draft Statutes also describes SAEE’s role in implementing EU legislation and envisages appropriate coordination methods. In addition, according to the findings, means of cooperation with civil society and donating organisations, as well as development of special financing models and PPP112, are also provided for.

sidy funds (Art.11 of Directive 2006/32/ЕС), developing public-private partnership (cl.18 of Directive 2010/31/ЕU recitals), promoting energy end-use efficiency (Art.7 of Directive 2006/32/ЕС). The Regulation stipulates that SAEE activity is “guided and supervised by the Cabinet of Ministers of Ukraine through the MP Prime Minister – the Minister of Regional Development, Building and Housing and Utility Services”115.

83


Their projects, scopes, focuses and objectives are various: introducing energy efficient measures in specific cities (e.g. Word Bank), improving efficiency of district heating (IBRD), providing expert and technical assistance, exchange of skills (several countries, European Commission), pilot projects for energy efficient heat supply (NEFCO, E5P, Sweden), setting up ESCOs in regions of Ukraine (GIZ), joint measures and activities that improve legal framework of energy efficiency in residential sector/condominiums, investments in energy efficiency (USAID Municipal Energy Reform Project), maintaining energy efficiency in public buildings (EBRD), primary legislation drafting (ICFI), developing consistent financial tools for residential sector (EBRD), thermal modernization of buildings (E5P) etc. Stakeholders’ strong interest in these issues is an important signal indeed. However, in spite of a wide opportunity range for implementing numerous projects, varying by their objectives, level, coverage and involvement, a number of urgent and essential issues regarding synchronization of project information, inter-project navigation, comprehensibility of their highlights and objectives to both involved parties and common consumers of energy services still need to be resolved. In that case each successive project would enhance previous ones, while establishing a solid background for following advancement. Another essential issue is availability of information about consumer-oriented projects, magnitude of initiatives etc.

regulations, concept development of specific approaches. The second direction refers to information/media support by SAEE of public programs on energy efficiency, field work, communication with stakeholders (including condominiums), disclosure of program specifics and benefits. In particular, amid conventional public hearings on planned enactments, a discussion of EPC-mechanisms 118 was conducted in October, 2014. Again, in November the National Ecology Centre of Ukraine together with a communitybased organisation “EcoClub” arranged public hearings among leading experts in energy efficiency. Members of Energy Community Secretariat also took part in one of these hearings. Among other events, there was an International Roundtable Conference “Investments in Housing Energy Efficiency: European G2B Practices” within the framework of the Social Network Project “From Energy Efficiency to Energy Independence” for promotion of the Government Initiative “Energy Independence for Ukraine” 119. In December the Ministry of Energy and Coal Industry arranged a meeting of its expert group 120 with representatives of civil society and mass media on issues related to energy audits, energy-saving culture, lowrate credits for energy efficient activities etc. In return, public experts presented a concept of budget reimbursement of expenses for house insulation at the rate of 30 – 50% of total project value 121. 118

EPC as a way to countrywide energy efficiency // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 30.10.2014: http://www.minregion.gov.ua/zhkh/reformazhitlovo-komunalnogo-gospodarstva/energoservisni-kontrakti-shlyah-do-energoefektivnosti-krayini-619370/

119

Investments in Housing Energy Efficiency: European G2B Practices // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 24.11.2014: http://www.minregion. gov.ua/zhkh/reforma-zhitlovo-komunalnogo-gospodarstva/investiciyi-v-energoefektivnist-zhitlovogo-sektora---evropeyskiy-dosvidvzaemodiyi-derzhavi-ta-biznesu-248405/

120

Members of MECI and civil institutions discussed saving of energy resources // Government Portal. 11.12.2014: http://www.kmu.gov. ua/control/uk/publish/article?art_id=247812223&cat_id=244277212

121

Ukrainian experts introduce a concept of budget reimbursement of house insulation expenses at 30 – 50% // National Ecology Centre of Ukraine. 10.12.2014: http://necu.org.ua/ukrayinski-ekspertyinitsiyuyut-stvorennya-mehanizmu-derzhavnoyi-kompensatsiyi30-50-vytrat-na-uteplennya-zhytla/

INFORMATION SHARING The share of activities and events, related to energy efficiency, was among the largest throughout the year. There were mostly conferences, exhibitions, round tables, expert discussions and other meetings on specific legislative and executive initiatives. We can point out several directions of information campaigns. The first direction covers expert communication aimed at development of laws and

84

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

124

Energy-Efficient Ukraine: First Results and New Tasks till 2020 // Government Portal. 19.05.2015: http://www.kmu.gov.ua/control/uk/

Energy efficiency

 AEE introduces Energy Efficiency Calculator // Government Portal. S 05.05.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=248138455&cat_id=244276429

Summarizing implementation process of the EU Directive, we express a cautious optimism. Although a single obligation concerning energy servicing companies has been implemented so far (and even that is subject to reservations), many legislative and executive motions have been initiated and are currently being discussed upon by a wide range of stakeholders. On the other hand, much concern is caused by considerable delays on approval of political decisions, which implement already prepared documents, for it is their implementation, which affects effectiveness of Ukrainian reforms. This refers to key obligations, as specified in Directive: National EEAP and commercial metering. Ukrainian government needs

Environment

123

CONCLUSIONS Renewables

SAEE conducts elucidating activity in all regions // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 31.07.2015: http://www.minregion.gov.ua/news/derzhenergoefektivnosti-provede-rozyasnyuvalnu-robotu-u-vsih-rayonahkrayini-512944/

Apparently, intensive communication on the part of authorities, responsible for energy efficiency, is a good practice. Still, some issues surface with similar communication at everyday level, as it is primarily intended for common citizens, who require simple and accessible messages, the more so immediately in advance of heating season.

Security of supply

122

Regulatory authority

Another online tool – energy efficiency calculator123 – was announced in May. As SAEE explains, it allows economic estimation of expenses, incurred due to installation of a new boiler as well as its payback period. Energy Community Secretariat, “DiXi Group” Analytical Centre, Inter-Factional Parliamentary Union for Energy Independence of Ukraine, and SAEE have run the Roundtable Conference “Energy-Efficient Ukraine: First Results and New Tasks till 2020”124, where the delegates have

discussed attained results of energy efficient activities and a road-map of priority legislation to be prepared and enacted by the end of 2015. Besides, at the Energy Efficiency Partnership Forum125 SAEE Head S. Savchuk called regional representatives for cooperation and urged citizens to take advantage of ongoing government programs on energy efficiency. International Forum for Sustainable Urban Development GREEN CITY126, which took place in May, focused upon energy efficient technologies and financial tools for sustainable energy-saving.

Electricity

In April SAEE initiated an information campaign about functioning of new compensating programs, including seminars for officials, condominium agents and other stakeholders. Within the following months this campaign was expanded: a number of briefings and seminars in several regions of Ukraine were held in cooperation with USAID Municipal Energy Reform Project and GIZ Energy Efficiency in Municipalities Project. In July SAEE launched its call-centre and started preparations for regional meetings (Plan 476122), public service announcements on TV and billboard advertisements (under IFC Ukraine Residential Energy Efficiency Project). SAEE officials consult with major stakeholders (e.g. banks, donating institutions, retail networks) regarding expansion of stimulating mechanisms, targeted at energy efficiency in residential sector. Some stakeholders conduct their own campaigns: thus, in some regions information about energy efficient programs is placed on the back of billing statements. SAEE launched its callcentre and communication centre, which helps local authorities share information among the residents. The Agency’s aim is to inform people in all regional centres, so communication centre employees will help local authorities share information among the residents. Also over 90 workshop seminars were conducted by SAEE in August.

publish/article?art_id=248166264&cat_id=244277212 125

126

SAEE Head urges citizens to take advantage of ongoing government programs on energy efficiency. 22.05.2015: http://www.kmu.gov.ua/ control/uk/publish/article?art_id=248181655&cat_id=244277212

Energy efficient technologies as a way to energy independence of Ukraine (Serhiy Kushnir) // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 26.05.2015: http://www.minregion.gov.ua/news/vprovadzhennya-energozberigayuchih-tehnologiy--shlyah-do-energetichnoyi-nezalezhnostiderzhavi---sergiy-kushnir-825844/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

85


to facilitate implementation of these obligations, ensuring transparent and dynamic progress. As for governmental programs, their evaluation has to be expanded from mere calculation of budget expenses to dynamic assessment of their effects on energy end-use efficiency. Regarding investment possibilities, a comprehensive action plan is required to streamline efforts of stakeholders, including donors, add to careful scheduling and create opportunities for synergy of projects. Immediate implementation of prepared reforms without further delays and protractions is essential for comprehensive and efficient fulfilment of

86

Ukraine’s obligations, specified in this Directive. In view of oncoming new, even more ambitious tasks and obligations in energy efficiency Ukraine really needs to facilitate implementation of the current ones. Therefore the nearest future shall reveal whether Ukraine is able to step forth towards real reforms in energy efficiency, or prepared initiatives will be forced out of public focus by new unfeasible obligations.

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas Electricity

Directive 2010/30/EU on labelling energy-related products requires provision of accurate, relevant and comparable information on the specific energy consumption of energy-related products. This Directive covers not only household appliances, but extends its scope to industrial and retail equipment or devices. Labelling applies to: refrigerators, deep freezes, washing machines, cloth driers, dishwashers, baking ovens, cooking units, water heaters, hot water tanks, air conditioners, electric bulbs, TV sets, and vehicles.

Regulatory authority

In addition, European Commission has adopted a number of Delegated Regulations to supplement this Directive. Namely, Delegated Regulations (EU) No 626/2011 (on energy labelling of air conditioners), No 1059/2010 (on energy labelling of household dishwashers), No 1060/2010 (on energy labelling of household refrigerating appliances), No 1061/2010 (on energy labelling of household washing machines), No 1062/2010 (on energy labelling of televisions). For most of them the deadline of implementation in Ukraine is December, 31, 2012 (according to Energy Community Acquis for Ukraine).

In October 2014 the Cabinet introduced amendments to the Technical Regulation regarding permissible maximum energy consumption by refrigerating appliances127 to specify terms and scope of application.

128

129

Resolution on amendments to the Technical Regulation regarding permissible maximum energy consumption by refrigerating appliances // Cabinet of Ministers of Ukraine. 08.10.2014: http://zakon4. rada.gov.ua/laws/show/528-2014-%D0%BF Resolution on Approval of the Technical Regulation on Energy labelling of Electric Lamps and Lanterns // Cabinet of Ministers of Ukraine. No.340 of 27.05.2015: http://www.kmu.gov.ua/control/uk/ cardnpd?docid=248200810  overnment approves Technical Regulation on energy labelling of G electric lamps and lanterns // SAEE. 28.05.2015: http://saee.gov.ua/

Energy efficiency

127

SAEE has prepared a draft government resolution “On Approval of Technical Regulation on Energy Labelling of Electric Tumble Driers”132 with supporting documents133. The draft resolution envisages that manufacturers, suppliers and distributors of household dishwashers shall align with the technical regulation in 6 months since its enactment. Moreover, the draft regulation on energy labelling of TV sets, submitted by SAEE to the Governmental Committee of Regional Development, has been elaborated by the Committee and now is be-

Environment

On May, 27, 2015 the Government approved Technical Regulation on energy labelling of electric lamps and lanterns128, and assigned provision of its application to SAEE. Thus, electric lamps, produced in Ukraine and abroad, shall be supplied with a printed energy label, compliant with respective EU regulations, and suppliers/distributors shall be required to include a product fiche in all product brochures129.

Besides, the Cabinet brought another three regulations on energy labelling (energy-using products, refrigerators, and washing machines) into conformity with EU legislation130. Amending Resolution covers scope of application of these technical regulations, requirements to technical documentation, responsibilities of suppliers and distributors, design of energy label and product fiche131.

Renewables

The deadline of Directive 2010/30/ЕU implementation in Ukraine is February, 1, 2012 (according to Decree of the Cabinet); December, 31, 2011 (according to Energy Community Acquis for Ukraine).

Security of supply

Apart from those, Energy Community Acquis includes the following Directives on energy labelling: Directive 2002/40/EC on household electric ovens, Directive 98/11/EC on household lamps, Directive 96/60/EC on household combined washer-driers, and Directive 95/13/EC on electric tumble driers (implementation deadline: December, 31, 2011).

uk/news/645 130

Resolution No. 338 of 27.05.2015 on Introducing Amendments to the Resolution of the Cabinet No.702 of August, 7, 2013: http://zakon4. rada.gov.ua/laws/show/338-2015-п

131

Technical regulations on energy labelling updated to comply with EU law // SAEE. 28.05.2015: http://saee.gov.ua/uk/news/644

132

http://saee.gov.ua/sites/default/files/Barabanni%20susharky.rar

133

http://saee.gov.ua/sites/default/files/PZ_BS.doc

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

87


ing reconciled with stakeholders. Draft Technical regulation on energy labelling of baking ovens and household exhaust hoods undergoes reconciliation procedures as well.

exhaust hoods”, while MRD included this document into its Action plan of regulatory documents preparation for December140. This resolution shall to come into effect 6 months after publishing.

On July 17 the Cabinet of Ministers approved Technical Regulation on energy labelling of household dishwashers134 (Resolution No. 514), which comes into effect 6 months after its publication.

CONCLUSIONS

In January Verkhovna Rada enacted the law on technical regulations and conformity assessment135 in order to bring relevant national legislation to conformity with EU laws. This law establishes uniform legal and institutional frameworks of development, enactment, and implementation of technical regulations as well as procedures and practices of conformity assessment136.

Implementation of this EU Directive proceeds rather smoothly, in contrast to other Ukraine’s obligations. The Government issues and updates corresponding technical regulations. However, conformity monitoring and control as well as consistent extension of application scope are more important at the time being. In this respect, it is essential to put these standards into sustainable practice in Ukraine, and to comply with all relevant requirements.

In late May the Government approved EU Legislation Implementation Plan, prepared at SAEE137. This Plan envisages preparation of a range of national standards and technical regulations. Before that the Cabinet had approved Implementation Plan of EU Legislation in Eco-design138, which is in line with Ukraine’s obligations in terms of UkraineEU Association Agreement. In August SAEE published139 draft resolution of the Cabinet “On approval of Technical Regulation on energy labelling of household baking ovens and

88

134

Resolution on Approval of the Technical Regulation on Energy  Labelling of Household Dishwashers // Cabinet of Ministers of Ukraine. No.514 of 17.07.2015: http://www.kmu.gov.ua/control/uk/ cardnpd?docid=248359180

135

Draft Law on Technical Regulations and Conformity Assessment: http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=52478

136

Verkhovna Rada has approved European approach to technical  regulations and conformity assessment // Ministry of Economic Development and Trade of Ukraine. 16.01.2015: http://www.me.gov. ua/News/Detail?lang=uk-UA&id=6b8ff611-006c-428c-b21786d997d5066e&title=VerkhovnaRadaUkhvalilavropeiskiiPidkhidDoTekhnichnikhReglamentivTaOtsinkiVidpovidnosti

137

 ecree on Approval of Selected EU Legislation Implementation D Plan, prepared by State Agency on Energy Efficiency and Energy Saving of Ukraine // Cabinet of Ministers of Ukraine. No.499-p, 20.05.2015:http://zakon2.rada.gov.ua/laws/show/676-2014%D0%BF

138

Government introduces EU legal standards for eco-design // Government Portal. 18.05.2015: http://www.kmu.gov.ua/control/uk/ publish/article?art_id=248165599&cat_id=244276429

139

http://saee.gov.ua/sites/default/files/documents/Postanova_ KMU_1908.doc

140

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

http://www.minregion.gov.ua/attachments/content-attach ments/4717/%D0%97%D0%BC%D1%96%D0%BD%D0%B8 %D1%89%D0%BE %D0%B2%D0%BD%D0%BE%D1%81%D1 %8F%D1%82%D1%8C%D1%81%D1%8F %D0%B4%D0%BE %D0%9F%D0%BB%D0%B0%D0%BD%D1%83 %D0%B4%D 1%96%D1%8F%D0%BB%D1%8C%D0%BD%D0%BE%D1% 81%D1%82%D1%96 %D0%9C%D1%96%D0%BD%D1%80% D0%B5%D0%B3%D1%96%D0%BE%D0%BD%D1%83 %D0 %A3%D0%BA%D1%80%D0%B0%D1%97%D0%BD%D0%B8 %D0%B7 %D0%BF%D1%96%D0%B4%D0%B3%D0%BE%D1 %82%D0%BE%D0%B2%D0%BA%D0%B8 %D0%BF%D1%80 %D0%BE%D0%B5%D0%BA%D1%82%D1%96%D0%B2


Gas

Electricity Regulatory authority

Security of supply Renewables

Environment

Energy efficiency

89

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Directive 2010/31/ЕU on the energy performance of buildings requires taking appropriate measures for application of minimum requirements to the energy performance of both new and existing buildings and building units. It encourages cost-effective transformation of existing buildings (especially public and community-owned) into nearly zero-energy buildings. In order to achieve required level of energy performance of buildings the government needs to draw up and regularly update national and regional financing programs. Additional measures include establishing a system of certification of the energy performance of buildings; regular independent inspection of heating and air conditioning systems; public display of energy performance certificates.

Ministry of Regional Development estimates share of multi-dwelling units in need of thermal modernization at 75%141 (SAEE considers 85%142 of housing stock outdated and assesses total cost of required energy efficient measures at UAH 1T by 2020), and notes that consumption and losses of heat energy in most multi-dwelling units exceed EU standards 3 – 3.5 times. As estimated by SAEE, yearly energy saving potential due to energy efficient housing projects amounts to 0.8 billion m3 of natural gas143, while MRD assesses investment potential in energy performance of buildings at UAH 686bn, of which UAH 154bn can be covered by government support144. Cost of full thermal modernization of housing stock in Ukraine is estimated by SAEE at €35bn145, €4.4bn of which is required for buildings of budgetary institutions. This shall allow to save up to 200 million m3 of gas in 2020.

141

Thermal modernization of a dwelling can be carried out by effective owners only (Serhiy Kushnir) // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine/ 08.10.2014: http://www.minregion.gov.ua/news/termomodernizaciyu-zhitlovihbudinkiv-zmozhe-zabezpechiti-lishe-efektivniy-vlasnik-zhitla--sergiy-kushnir-459849/

142

Cost of energy-saving in housing stock by 2020 amounts to UAH 1T // Trymaj Kurs. 25.10.2014: http://kurs.if.ua/news/v_ukraini_ na_energozberezhennya_v_zhytlovomu_fondi_do_2020_r_neobhidno_1_trylyon_gryven_8416.html

143

 raft Law on ESCOs passed the first reading // Government Portal. D 05.02.2015: http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247929875&cat_id=244277212

144

145

90

 krainians may apply to three banks for their compensation for U energy efficient activities // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 08.04.2015: http://www.minregion.gov.ua/news/ukrayinci-mozhut-zvertatis-zakompensacieyu-ta-kreditami-na-energoefektivni-zahodi-do-trohbankiv-108277/ EEF creation will allow to introduce best energy efficient technologies and ensure sustainable return of investments // Government Portal.

EBRD came with an initiative of establishing a $100M credit line to finance thermal modernization of buildings146 and encouraged soonest enactment of appropriate legislation. For this purpose EBRD offers financing of software development for calculating energy performance of buildings. It is against this background that Ukrainian Parliament has adopted in its general principles the Draft Law “On Peculiarities of Exercising Ownership Rights in Apartment Building”147, which “provides building co-owners with a viable decision-making mechanism on maintenance and management of common property, including energy efficient renovation of the building”148 (Resolution of the Verkhovna Rada No. 89-VIII of 13 January 2015). The National Standard DSTU-N B В.3.2-3:2014 “Guidelines for Thermal Modernization of Residential Buildings” takes effect as from October, 1. This standard specifies requirements to working procedures, documentation, assistance to architects, designers, and authorized workers, executing agencies; sets building usage regulations; and brings domestic standards into conformity with existing rules. The authors claim that it ensures uniformity of approaches to complex thermal modernization of buildings149. 146

SAEE advocates EBRD initiative as refers establishing a $100M credit line for thermal modernization of buildings.

147

Resolution of the Verkhovna Rada “On approval in principle of the Draft Law “On Peculiarities of Exercising Ownership Rights in Apartment Building”. 13.01.2015: http://zakon4.rada.gov.ua/laws/ show/89-19

148

 raft Law “On Peculiarities of Exercising Ownership Rights D in Apartment Building”:http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=53058

149

Adopted National Standard helps minimize energy demands for maintenance of residential buildings // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine.

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Gas

Decision No. 3/3 by the Community Council at the Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 08.10.2014: http://www.minregion.gov.ua/attachments/ files/press/08.10.2014/Рішення%203-3.pdf

152

Draft Law “On Energy Performance of Buildings”: http://w1.c1.rada. gov.ua/pls/zweb2/webproc4_1?pf3511=53059

153

154

 RD Action Plan for Regulatory Acts Preparation for 2015: http:// M www.minregion.gov.ua/attachments/content-attachments/3842/ План%20діяльності%20Мінрегіону%20з%20підготовки%20 проектів%20регуляторних%20актів%20на%202015%20рік.pdf/  esolution of the Verkhovna Rada “On return of the Draft Law “On R Energy Performance of Buildings” for finalization”. 13.01.2015:

Energy efficiency

151

The Energy Community Secretariat cautioned Regional Development Minister H. Zubko about non-conformity of the Draft Law with provisions of the corresponding EU Directive157. The Minister suggested to harmonize the contents of the Draft Law in the course of its preparation for the second reading at the Parliament. Among discussed issues was mandatory energy performance certification of buildings that are offered for sale or for rent, which may be postponed till a later period. This

Environment

Draft Law “On Energy Performance of Buildings” // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 16.09.2014: http://www.minregion.gov.ua/regulatory/ proekty-reguljatornyh-aktiv-dlja-obgovorennja-ta-analizy-reguljatornogo-vplyvu/proekt-zakonu-ukrayini-pro-energetichnuefektivnist-budivel-638822/

The Draft Law also secures Energy Efficiency Fund and defines that budgetary support is conditioned upon energy performance certificate and targeted at increasing a building’s performance to a higher rating than C. Priorities are set being thermal modernization, installation of heating systems (fully or partially generating energy from renewable sources), heat pumps, co-generation units. The Draft Law was reconciled by a respective working group and submitted to central government for consideration.

Renewables

150

Security of supply

However, in January the Parliament reported the Draft Law back for elaboration154. At the end of the

on February, 20 SAEE published the updated Draft Law156, which required energy performance certification of both new and existing buildings as for assessing precise performance indicators, evaluating their compliance with minimal requirements, preparing recommendations on improvement of a building’s energy performance. This certification is mandatory providing its economic feasibility, which is to be defined by owners or tenants, as well as technical prerequisites and adequate budgeting of energy efficient measures (for budgetary institutions).

Regulatory authority

In late December the Cabinet submitted the Draft Law to the Parliament152, having mentioned Ukraine’s obligations to the Energy Community in the explanatory note thereto. The Central Scientific Experts Office has directed to elaboration of terms and definitions, inexpediency of listing energy efficient measures; and disagreed with incorporation of such measures as meter installation and inspections of heating, ventilation, air conditioning and hot water supply. The Committee on Construction, Urban Development, Housing and Utility Services pointed up the necessity of elaboration of the Draft Law as refers defining specific mechanisms and measures to improve energy performance, financing sources, guarantees, and control of spending. MRD planned153 drawing up methodology and procedures of energy performance certification of buildings and building elements within six months after enactment of the Draft Law.

month, upon consultations involving members of the Parliament, MRD, Ministry of Economy, EBRD, USAID, and public experts155, SAEE prepared a new version of the Draft Law.

Electricity

In September 2014, MRD published the Draft Law “On Energy Performance of Buildings” together with explanatory note and regulatory impact assessment (RIA) on its web-site150. As the experts report, there have been attempts to emasculate the content of the Draft Law on the part of some ministries. Moreover, the MRD Community Council harshly criticized the Draft Law, opposing compulsory energy performance certification of buildings and more so – forced inclusion of energy performance certificate into the list of required design documents151.

http://zakon4.rada.gov.ua/laws/show/90-19 155

Energy performance of buildings in Ukraine will be legislated // SAEE. 30.01.2015: http://saee.gov.ua/uk/news/499

156

http://saee.gov.ua/sites/default/files/2015_02_20_Draft%20 Law%20Energy%20Efficiency%20Buildings.rtf

157

Energy Community supports Ukraine’s EEAP 2020 // Government Portal. 19.05.2015: http://www.kmu.gov.ua/control/uk/publish/ article?art_id=248169390&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

91


Draft Law was also discussed at the roundtable conference among legislators, government agents, Energy Civil society experts, members of the European Commission Support Group for Ukraine, civic activists, multilateral lending institutions, and other stakeholders158. It was agreed that the Draft Law should be elaborated by joint endeavours and submitted for registration to the Parliament by the end of May. The Draft Law was pre-approved unconditionally by the MRD, the Ministry of Economy, the Ministry of Finance and the State Regulatory Service of Ukraine. On the other hand, the Ministry of Energy and Coal Industry and the Ministry of Justice (legal finding) have risen their comments to the Draft Law. In June SAEE reports that the Draft Law had been submitted to the Cabinet, initialled by the MP Prime Minister and motioned to the government committee. However, even then the officials made no secret about controversy on the Draft Law among SAEE, MRD and EC Secretariat. For instance, regarding licencing of energy auditors, SAEE stood for entrusting it to authorized universities, while MRD suggested to establish a self-regulatory organization. As a compromise decision, the Draft Law authorised the Government to specify licensing procedure; although officials admitted that it would pose a risk for passing the Draft Law, since the Parliament had rejected the first version, which placed this responsibility on MRD.

The Draft Law was discussed at SAEE during a meeting with legislators and members of the European Commission Support Group for Ukraine159. On July, 20, 2015 the Draft Law was considered by the Government Committee for Economic Development and European Integration and reported back for elaboration. Upon that MRD conducted a number of meetings with stakeholders. Early September the refined Draft Law was submitted to the Cabinet Secretariat and considered by its Legal Department. During October 1 – 2 the Reconciliation Meeting of MRD, SAEE, People’s Deputies of Ukraine and members of EC Secretariat was held it Vienna. MRD and SAEE are working on suggestions, provided by the Energy Community at this meeting. After that the finalized document will be submitted to the Cabinet.

Regarding energy audits the Draft Law defines them as a mandatory condition for public funding of energy efficient activities starting 2017. In the meantime SAEE through the Ministry of Justice revoked its orders on licensing energy auditors and lobbied for a new training and licensing institution in compliance with Directive 2010/31/ЕС. SAEE insisted upon clearing all discrepancies and ambiguities, including financerelated issues, prior to consideration of the Draft Law at the Parliament. 159

158

92

Adoption of the Draft Law “On Energy Performance of Buildings” will help reduce energy intensity of Ukrainian economy – experts // Ukrainian Energetics. 20.05.2015: http://ua-energy.org/post/52650

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

SAEE and European Commission Support Group for Ukraine intensify cooperation to approximate national legislation to European standards of energy efficiency // Ministry of Regional Development, Building and Housing and Utility Services of Ukraine. 10.07.2015: http://www.minregion.gov.ua/news/te-8263/


Gas

CONCLUSION

Electricity Regulatory authority

An essential Draft Law on energy performance of the buildings is not yet enacted, despite all efforts. Moreover, controversy on the Draft Law remains, which may result in too general wording, and lead to possible negligence of the respective provisions. All these issues are to be resolved/ cleared during motioning of the Draft Law at the Verkhovna Rada of Ukraine. Thus, providing transparent and professional motioning of the

Draft Law at the Parliament with involvement of both domestic and international experts. The process has not yet started, since the Draft Law is still undergoing reconciliation within the Government. The Draft Law and its implementation process are indicative of Ukraine’s readiness to fulfil its obligations: the documents are prepared, and now the matter depends on political decisions and expert dialogue.

Security of supply Renewables Environment Energy efficiency

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

93


OIL

94

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

Directive 2009/119/EC on maintaining minimum stocks of crude oil and/or petroleum products requires creation and maintaining minimum stocks of crude oil and/or petroleum products, corresponding, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption.

On April, 8, 2015 the Cabinet of Ministers approved the Directive Implementation Plan1.

1

Implementation Plan of Directive 2009/119/EС // CMU – http://www. kmu.gov.ua/document/248091904/Dir_2009_119.pdf

2

MECI Order of 02.07.2015 No.412 “On establishing Working Group on accumulation of minimum stocks of crude oil and petroleum products” // Ministry of Energy and Coal Industry. http://mpe.kmu. gov.ua/minugol/doccatalog/document?id=245027178

3

http://www.niss.gov.ua/public/File/2015_table/Energy%20Strategy.pdf

2) appropriate regulatory acts providing structural and economic basis of formation and management of oil stocks shall be introduced into Ukrainian legislation: in particular, a reasonable balance between public and commercial stocks shall be set; adequate terms and conditions for their accumulation, storage, usage or replenishment shall be developed; 3) an institutional structure of stock management shall be introduced, providing: an agency, which within its authority shall decide stock structure and manage the stock; an executive operating company for shaping a pool of market actors; an uniform regulations for all parties involved in accumulation, maintenance and service of the stock; allocation of minimum stocks of crude oil and petroleum products from public emergency stock, state reserve and country’s other target resources;

Reference to laws and regulations

Energy Strategy of Ukraine till 2030 is defined as the basic program document for creation of oil/ petroleum stocks. Its new version, prepared by the National Institute for Strategic Studies3, ensures

1) a mixed management model for oil/petroleum stocks shall be selected;

Social issues

As for execution of this Plan, on July, 2 the Ministry of Energy and Coal Industry gathered a working group2 of ministry officials (V.Kuyda, M.Orynchak, I.Ruban. S.Kolyadenko-Linetska), delegates of the EU to Ukraine (O.Simak, S.Ladny), representatives of SFS, State Reserve Agency, Naftogaz, and Ukrtransnafta.

Within the framework of these activities: Competition

It ensures approval by December 2015 of a model of crude oil/petroleum products minimum stocks, comprising a progressive stock build-up schedule, its financing program, information on responsible authority, approximation of relevant legislation. This decision shall be approved upon coordination with the Energy Community Secretariat. The next stage targets at adoption of a law on crude oil (petroleum products) stocks by December, 2016. Accumulation of minimum stocks, alongside with construction of additional reservoirs, including specifying appropriate financing sources, is scheduled for January 2017 – December 2022.

appointment and proper authorization of an executive agency in charge of strategic energy stocks by 2020; and formation of a state system of strategic energy stocks (crude oil, petroleum products, and natural gas) at an amount of 30 days of average daily inland consumption by 2025 (sub-target 6.3).

Statistics

THE GOVERNMENT HAS APPROVED IMPLEMENTATION PLAN OF THE EU DIRECTIVE ON MAINTAINING MINIMUM STOCKS OF CRUDE OIL (PETROLEUM PRODUCTS)

4) an appropriate infrastructure shall be established with due regard for local needs and reserve capabilities of oil-producing, transporting and refining enterprises, sea and railway terminals, petroleum-supplying companies, military and sectoral oil depots;

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

95


5) a public information system on accumulation, storage, usage and replenishment of the stock shall be created; In spite of certain positive tendencies as refers implementation of the Directive, rhetoric of “stock accumulation” has been used mostly to reason offences, committed, in opinion of law enforcement, by certain oil market actors. After over 675,000 tons of process oil were pumped out from the main pipeline within a period from March till May, 2014, central authorities’ explanations and groundings to those actions were often contradictory. For instance, this was justified by a threat of resource locking by separatists, although the resource volume inside the area of anti-terrorist operation accounted for 200,000 ton only. It was reported that the Ministry of Energy was drafting the Ordinance of the Cabinet of Ministers, according to which all pumped oil would be transferred to the State Reserve Agency for storage4. There were also rumours about the Government’s intentions to refine that oil and supply the obtained residues to thermal power stations instead of 3 billion m3 of Russian gas. Finally, “Ukrtransnafta” PJSC expressed its intent to use the pumped-out oil as a “strategic reserve”5. The company planned to refine appx. 400,000 tons of crude oil at Kremenchuk Oil Refinery, and 275,000 tons were to be put on storage into reservoirs, owned by Privat Group-controlled companies6. However, according to information in mass media, the only gainer of such development of events would be the mentioned Group7. 4

Process oil will be transfered to SRA (Draft Decree) // OilNews, 27.06.2014. – http://oilnews.com.ua/a/news/Tehnologicheskaya_ neft_budet_peredana_v_Gosrezerv_%E2%80%93_proekt_rasporyazheniya/213276

5

“Ukrtransnafta”, controlled by a Privat manager, would let Privat make a billion out of oil drainage // Our Money, 11.04.2014. – http:// nashigroshi.org/2014/04/11/ukrtransnafta-ocholyuvana-menedzherom-pryvatu-hoche-daty-pryvatu-milyardnyj-zarobitok-na-zlyvinafty/

6

7

96

“Ukrtransnafta” continues peddling a scheme of process oil refining // OilNews, 22.07.2014. – http://oilnews.com.ua/a/news/Ukrtransnafta_prodolzhaet_navyazivat_shemu_pererabotki_tehnologicheskoy_nefti/213560  ho’s making money on residues? // UaEnergy - http://uaenergy. W com.ua/post/20380/kto-zarabotaet-milliony-na/

Considering the fact of no project documents or ecological evaluation behind the oil bleeding works, no title perfection for the extracted crude oil, and no approval from the Cabinet of Ministers and the Ministry of Energy, Prosecutor General’s Office of Ukraine initiated verification of legality and validity of the company’s actions on processing oil extraction8. In May 2015 the Security Service of Ukraine announced investigation of the contracts on oil storage, concluded between “Ukrtransnafta” PJSC and Privat Group affiliates, which, as the Service officers say, had harmed country’s budget for UAH 456.4M. On September, 2015 the ex-director of “Ukrtransnafta” PJSC was put on the wanted list9. On July, 13, 2015 newly appointed “Ukrtransnafta” PJSC top-managers conducted inventory inspection of Kremenchuk Oil Refinery only to find out that the Urals oil, supposed to be stored there, was replaced with some domestic oil10. In its turn, Privat Group accused the inspectors of deliberate actions on behalf of the group’s major competitors at oil market. If the conflict between the Government, the Ministry of Energy and “Naftogaz Ukraine” NJSC on one side, and Privat Group on the other side persists and escalates further, activities on creating and maintaining minimum stocks of crude oil and petroleum products would become difficult, since Privat Group is a controlling shareholder of “Ukrnafta” PJSC, which extracts 70% of Ukraine’s live oil, and the only oil refinery in Ukraine (Kremenchuk) as well as over 1M-ton oil storage capacities.

8

Prosecutor General’s Office verifies legality of pumping over 600,000 t of processing oil out of the country’s main pipe // RBC-Ukraine, 2.08.2014. http://toplivo.rbc.ua/ukr/genprokuratura-proveryaetzakonnost-otkachivaniya-bolee-02082014152600

9

http://www.mvs.gov.ua/mvs/control/investigation/card/wantedPers on?ID=152555282927146810.

10

“Ukrtatnafta” ex-managers are being accused of oil displace ment // “Ekonomichna Pravda” – //www.epravda.com.ua/ news/2015/07/13/550417/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

CONCLUSION The Cabinet of Ministers of Ukraine has formed a working group and approved the Directive Implementation Plan, which acknowledges its obligations regarding approval by December 2015 of a model of crude oil/petroleum products minimum

stocks, comprising a progressive stock build-up schedule, its financing program, information on responsible authority, approximation of relevant legislation. However, rhetoric of “accumulating equalization stock” was used to protect a private company’s interests.

Statistics Competition Social issues Reference to laws and regulations

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

97


STATISTICS

98

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

Directive 2008/92/EC concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users requires taking measures to create a system of detailed statistical reports by undertakings supplying gas and electricity to end-users. Regulation (EC) No. 1099/2008 on energy statistics establishes a common framework for the production, transmission, evaluation and dissemination of energy statistics. In accordance with the Decision of the Ministerial Council of the Energy Community D/2013/02/MC-EnC, in order “to avoid gaps in data submissions to Eurostat” with regard to monthly and annual statistics, Regulation (EU) No. 147/2013 shall also be implemented.

Statistics

As follows from this Decision, Ukraine shall align its legislation with the requirements of the aforementioned documents before 31 December 2013. The Ordinance of the Cabinet of Ministers of Ukraine No. 833р defined 1 December 2013 as a deadline for the acquis in the field of statistics.

1

2

 ttp://www.ukrstat.gov.ua/operativ/operativ2014/energ/en_bal/ h Bal_2013_u.zip http://zakon4.rada.gov.ua/laws/show/481-2014-%D0%BF

On 4 June 2015, the Cabinet of Ministers approved plans for implementation of some EU rules and regulations in the field of statistics as developed by Derzhstat5, including the plan for implementation of Directive 2008/92/ЕС6. It was reported that Derzhstat, based on the data on actual gas and electricity prices for industrial and household endusers as provided by NEURC, submitted to Eurostat the relevant information for the second half of 2013 without any breakdown by consumer groups as the current gas and electricity pricing system is not fully compliant with the EU requirements.

Reference to laws and regulations

On 23 September 2014, the Cabinet of Ministers issued the Resolution No. 4812 which approved the Regulation on the State Statistics Service of Ukraine. In particular, Derzhstat takes measures aimed at cooperation with the EU, prepares proposals for alignment of Ukrainian legislation in the field of statistics to the EU aquis. The document also establishes the right of Derzhstat to exchange statistical data with the EU statistical bodies.

The Ordinance of the Cabinet of Ministers of 23 January 2015 No. 53-р3 approved the Plan for State Statistical Observations for 2014–2015. The Plan4 comprises a component providing for the harmonization of the legislation in the field of state statistics with relevant international standards and the EU regulations.

Social issues

Derzhstat reported consistent fulfilment of the requirements set in Regulations (EC) No. 1099/2008 and No. 147/2013, referring in its response to the request to the Energy Community Secretariat’s Annual Implementation Report 2014. In particular, the agency published the Energy Balance of Ukraine 20131 even earlier when it was planned — at the end of November 2014.

Competition

THE STATE STATISTICS SERVICE OF UKRAINE (DERZHSTAT) HAS DOCUMENTED AND AFFIRMED ITS EUROPEAN AGENDA; HOWEVER, IMPLEMENTATION OF DIRECTIVE 2008/92/EC IS STILL AHEAD AND DEPENDS ON THE NATIONAL COMMISSION FOR STATE ENERGY AND PUBLIC UTILITIES REGULATION (NEURC).

In order to ensure the implementation of the Directive, Derzhstat and NEURC have to develop systemic cooperation as opposed to ad hoc interaction by December 2015. The agencies have been 3

http://zakon4.rada.gov.ua/laws/show/53-2015-%D1%80

4

http://ukrstat.org/uk/plan_stat/2015/pl_plss_2014-2015.zip

5

http://zakon2.rada.gov.ua/laws/show/564-2015-%D1%80

6

http://www.ukrstat.gov.ua/m_diyaln/act_zak_ES_ss/ plan/%D0%BF.225,friz.pdf

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

99


entrusted with a task of developing a mechanism for collection and processing of data on prices for gas and electricity supplied to industrial consumers, taking account of the EU requirements. In particular, in its response to the request, Derzhstat reported that it began to develop the Methodological Provisions on Data Collection and Processing, and submitted the relevant request to NEURC.

INTERNATIONAL TECHNICAL ASSISTANCE IS OF MAJOR IMPORTANCE In accordance with the Action Plan for the Implementation of the EU-Ukraine Association Agreement for 2014–20177, by September 2016, Derzhstat, the Ministry of Energy and Coal Industry and other stakeholders shall improve energy statistics, including within the framework of activities under Component D “Support to statistical cooperation” of the INOGATE Project. It is worth mentioning that at the beginning of September8 the Draft Memorandum of Understanding between the Government of Ukraine and the European Commission on implementation of the EU assistance under the INOGATE Programme was approved.

sation for Economic Cooperation and Development (OECD)11, where the development of statistics was defined as one of the priority areas and forms of cooperation.

CONCLUSION On the one hand, the implementation of the European aquis in the field of statistics depends on the efficient interaction between Derzhstat and NEURC. Moreover, the earlier the regulator sets market monitoring instruments, the clearer the powers of both competent agencies as regards necessary data collection and processing will be. On the other hand, it is also important to develop institutional capacity to create the statistical reporting system pursuant to the EU requirements.

The implementation of the Twinning project in the field of statistics is in progress. In particular, over 20 missions and study visits with participation of European experts are planned9. The activities under the INOGATE Programme have also become more intense. The Programme held meetings on providing technical assistance in the course of implementation of the Energy Statistics Action Plan10 (including increased differentiation of tasks and data exchange among various agencies as well as increased awareness of energy statistics importance for sustainable energy planning). On 7 October 2014, the Government signed the Memorandum of Understanding with the Organi7

http://zakon2.rada.gov.ua/laws/show/847-2014-%D1%80

8

http://zakon4.rada.gov.ua/laws/show/845-2014-%D1%80

9

https://www.facebook.com/photo.php?fbid=524986157631470&set =a.175671512562938.38742.100003602715828&type=1&theater

10

100

http://www.inogate.org/media/documents/FINAL ESAP_UA_ENG. pdf

11

http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247660105&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil Statistics

Competition Social issues

Reference to laws and regulations

101

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


COMPETITION

102

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

The requirements to the aquis on competition are described in Title II, Chapter IV of the Treaty establishing the Energy Community. In accordance to this document, the Contracting Parties shall eliminate all agreements and concerted practices by market players aimed at distortion or restriction of competition in the market; prevent abuse by market players of their dominant position in the market; avoid providing any public aid which distorts competition in the market.

Progress in Implementation of the Competition Section of the EUUkraine Association Agenda // Antimonopoly Committee of Ukraine. – 16.07.2015. - http://www.amc.gov.ua/amku/control/main/uk/publish/ article/114142;jsessionid=12222061D49A328FB33E7CEFDCE38158. app1

2

Cabinet of Ministers to Abolish the Recommendations on Setting Preferential Prices for Electricity Exports — Ordinance // Finance. ua – 06.01.2015. - http://news.finance.ua/ua/news/-/341892/kabmin-skasuvav-rekomendatsiyi-shhodo-vstanovlennya-pilgovyhtsin-dlya-eksportu-elektroenergiyi-rozporyadzhennya

3

4

5

 rdinance of the Cabinet of Ministers No. 1280-р “On revocation O of certain ordinances of the Cabinet of Ministers of Ukraine” of 29 December 2014. — http://zakon4.rada.gov.ua/laws/show/1280-2014%D1%80 Ferroalloy Enterprises to Continue Their Work Despite Preferential Tariff Abolition // Ukrainian News. – 31.12.2014. - http://ukranews. com/news/152275.Ferrosplavnie-predpriyatiya-prodolzhat-rabotunevziraya-na-otmenu-lgotnogo-tarifa.uk Law of Ukraine “On State Aid to Undertakings” of 01 July 2014 No.

In March 2015, the Ordinance of the Cabinet of Ministers No. 167-р7 approved action plans, as developed by the Antimonopoly Committee, for implementation of the EU regulations, including Directive 89/665/EEC, Regulation (EC) No. 1/2003, Regulation (EC) No. 139/2004, and delegated Regulations No. 772/2004 and No. 330/2010. In addition, the action plans for implementation of the aforementioned Directives8 indicate deadlines for development of new legislation and implementation of key measures in 2016–2017.

Reference to laws and regulations

1

In addition, within the framework of the EU technical assistance project, the Antimonopoly Committee initiated preparation of the Action Plan for implementation of the pilot project aimed at development of the list of state aid schemes in the energy sector. The development of the Action Plan started in June 2015 and should end in September 2016.

Social issues

In July 2014, the Law of Ukraine “On State Aid to Undertakings”5 was passed. It provided for the

Competition

The new Law on the Gas Market, passed in June 2015, which will enter into force in October 2015, should improve competition and promote investments. In accordance with the requirements of international financial institutions, the cross-subsidization system is being phased out, which should improve competition and transparency in the market. In response to the tough situation in the electricity market in the winter of 2014/2015, the Government abolished its 2009–2012 resolutions2 which set preferential prices for electricity exports3 as well as preferential electricity prices4 for some ferroalloy enterprises.

monitoring of state aid to undertakings and control over its legality. For the purpose of implementation of this Law, in May 2015, the Verkhovna Rada passed the Law of Ukraine “On Introducing Amendments to the Budget Code of Ukraine Concerning the Decisions of the Authorized Agency in the Area of State Aid”6. In accordance with this Law, if a budget request provides for state aid to undertakings from the State Budget, it shall be approved by the decision of the Authorized Agency in the area of state aid.

Statistics

Despite numerous incidents of “manual control” and operation under the extraordinary conditions in the winter of 2014/2015, the Government managed to make steps which will promote strengthening competition in the energy markets. In accordance with the Antimonopoly Committee’s report on implementation of the European regulations1, in the current year Ukraine is showing fast progress in the areas of ensuring competition and protecting investments.

1555-VII / http://zakon4.rada.gov.ua/laws/show/1555-18 6

Law of Ukraine “On Introducing Amendments to the Budget Code of Ukraine Concerning the Decisions of the Authorized Agency in the Area of State Aid” / http://zakon4.rada.gov.ua/laws/show/416-19

7

Ordinance of the Cabinet of Ministers No. 167-р of 4 March 2015 “On approval of action plans for implementation of certain EU regulations, as developed by the Antimonopoly Committee” / http://zakon4.rada.gov.ua/laws/show/167-2015-%D1%80

8

Action Plans for implementation of the EU directives as approved by the Cabinet of Ministers / http://www.kmu.gov.ua/kmu/control/uk/ publish/article?art_id=247999312&cat_id=247984327

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

103


In May 2015, a new Head of the Committee was appointed. While presenting him, the Prime Minister highlighted that combatting monopolies and concerted practices in the energy market should be one of the Antimonopoly Committee’s (AMCU) priorities9. It is quite understandable as 14 per cent of monopoly position abuses documented by the Antimonopoly Committee in 2014 were detected in the energy markets. In general, this sector belongs to the five sectors with the highest rate of competition law violations in Ukraine. During the meeting of the National Reform Council in June 201510, the Head of AMCU called energy markets the most monopolized (at the level of 46.5 per cent). In this regard, in June the Committee started a comprehensive study of the electricity market and the thermal coal market11. As of 1 October 2015, the Committee was reported to obtain 90 per cent of information required for the analysis. Within the framework of this study, on 17 September 2015, AMCU provided its recommendations to NEURC on development and approval of the procedure for setting the projected wholesale market price, in particular, taking account of the system marginal price and semi-fixed costs of economic operators engaged in electricity generation at thermal power plants, as well as the procedure for setting the system marginal price12. At the end of December 2014, the Energy Community Secretariat published13 the Report on the instruments for attraction of investments in the Con9

104

Yatsenyuk Charged the New Head of Antimonopoly Committee  with “Combatting” Cartel Agreements and Monopolies// Newru. ua. – 25.05.2015. - http://www.newsru.ua/arch/finance/25may2015/ amku.html

10

AMCU Told What Markets Are the Most Monopolized // Espreso.TV. – 04.06.2015. - http://espreso.tv/news/2015/06/04/v_amku_rozpovily__yaki_rynky_naybilsh_quotzarazheniquot_monopolizmom

11

 ntimonopoly Committee of Ukraine started comprehensive study A of electricity markets in Ukraine / Website of the Antimonopoly Committee of Ukraine. – 20.07.2015. - http://www.amc.gov.ua/ amku/control/main/uk/publish/article/114266

12

http://www.amc.gov.ua/amku/control/main/uk/publish/article/116 275;jsessionid=E7BB28A7AFF6D63F2FFD26127F9288C4.app1

13

 eport on Realising Priority Infrastructure Projects for Energy R Community / Energy Community web-site. - https://www.energycommunity.org/portal/page/portal/ENC_HOME/DOCS/3532156/ Realising_PECI_merged.pdf

tracting Parties’ infrastructure projects, including Projects of Energy Community Interest. The Report contained the following recommendations: establishing the structure for financing short-term technical assistance to institutions engaged in management of the energy sector investments as well as strengthening the coordination of efforts of the Energy Community bodies. These issues should be prioritized in the cooperation between Ukraine and the Community. In general, in the context of strengthened requirements to the transparency of activities of public authorities and state-owned companies in different sectors, the energy sector shows a positive, though a very slow, dynamics. Some state-owned companies, including “Naftogaz of Ukraine” NJSC, started holding electronic auctions in ProZorro system14. Energoatom received the highest transparency rating among state-owned enterprises.15. In July, the Law of Ukraine “On Introducing Amendments to Certain Laws of Ukraine to Ensure Transparency in Mining Industries”16 was passed, which should improve the accountability of companies in the field of oil- and gas-bearing subsurface use. Among other steps towards greater transparency it is necessary to mention the establishment of the National Anti-Corruption Bureau (Decree of the President No. 217/201517), the approval of the Program for the Implementation of the AntiCorruption Strategy (Resolution of the Cabinet of Ministers No. 26518) etc. 14

Naftogaz made its first procurement through ProZorro system: it saved over 30 per cent / Website of “Naftogaz of Ukraine” NJSC. – 23.07.2015. - http://www.naftogaz.com/www/3/nakwebru.nsf/0/CF 167C2509AC54C8C2257E8B003BD37A?OpenDocument&year=201 5&month=07&nt=%D0%9D%D0%BE%D0%B2%D0%BE%D1%81% D1%82%D0%B8&

15

Energoatom ranked the first for transparency among state-owned companies / Website of NNEGC “Energoatom”. – 17.06.2015. - http://energoatom.kiev.ua/ua/press/nngc/43667-energoatom_ ocholiv_reyiting_z_prozorost_derjkompanyi/

16

Law of Ukraine “On Introducing Amendments to Certain Laws of Ukraine to Ensure Transparency in Mining Industries” No. 521-VIII of 16 June 2015. - http://zakon4.rada.gov.ua/laws/show/521-19

17

Decree of the President of 16 April 2015 “On establishment of the National Anti-Corruption Bureau”. - http://zakon2.rada.gov.ua/ laws/show/217/2015

18

Resolution of the Cabinet of Ministers of Ukraine No. 265 of 29 April 2015 “On approval of the State Program for Implementation of the Principles of State Anti-Corruption Policy in Ukraine (AntiCorruption Strategy) for 2015–2017”. - http://zakon2.rada.gov.ua/ laws/show/265-2015-%25D0%25BF

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

CONCLUSION Despite thorough preparation to introduction of legislative amendments, AMCU is rather “warming up” than acting in the area of strengthening competition and combatting monopolized markets in the energy sector. At the beginning of 2016, AMCU is expected to present new and more extensive information on competition in the energy markets which will help progress with implementation of reforms — not only legislative amendments, but also more clear regulation of the energy markets.

Statistics

In 2015, there has been a change of conditions for investors in the sector of renewable energy sources. The Law of Ukraine “On Introducing Amendments to Certain Laws of Ukraine to Ensure Competitive Conditions for Electricity Generation from Alternative Energy Sources”19, adopted in June, abolished the “local content” rules which used to rouse the investors’ indignation. Instead, a surcharge to the “green” tariff was introduced in case of domestic equipment use20. In addition, the Law introduced a “green” tariff for geothermal electricity generating plants and preserved the tariff rate for all types of renewable energy sources, except for industrial solar power plants.

Competition Social issues Reference to laws and regulations

19

Law of Ukraine “On Introducing Amendments to Certain Laws of Ukraine to Ensure Competitive Conditions for Electricity Production from Alternative Energy Sources” No. 514-VIII of 04 June 2015. - http://zakon4.rada.gov.ua/laws/show/514-19

20

Ukraine is reforming the “green” tariff and creating conditions for investments in renewable energy / http://www.asterslaw.com/upload/medialibrary/newsletters/asters_newsletter_ukr_10_06_15. html

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

105


SOCIAL ISSUES

106

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

Memorandum of Understanding on Social Issues in the Context of the Energy Community The Signatories will facilitate effective social dialogue in the energy sector and will promote it through information, consultation and other forms of the social partners’ involvement at all relevant levels. The aim is ensuring the highest possible levels of social protection for consumers compatible with a competitive market, and, if necessary, providing guarantees for the most vulnerable groups as well as improving the adaptability of workers, supporting investment in human capital and life-long learning, fostering workforce mobility. Social action plans, aimed at resolution of the aforementioned issues, should be developed in close cooperation with the social partners.

Pavlo Rozenko told about the Programme of Activity of the Government in the field of social policy // Government Portal, 10.12.2014. − http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247809510&cat_id=244277212

2

 atalia Khotsianivska: Approximation of utility tariffs to the economN ically justified levels is an objective need // Minregion, 18.03.2015. − http://www.minregion.gov.ua/news/privedennya-tarifiv-na-zhitlovo-komunalni-poslugi-do-ekonomichno-obruntovanogo-rivnya-eobektivnoyu-neobhidnistyu---nataliya-hoc-846500/

3

 EURC set new electricity tariffs for households // Government N Portal, 26.02.2015. − http://www.kmu.gov.ua/control/uk/publish/ article?art_id=247976782&cat_id=244276429

On 16 June, the Law of Ukraine No. 626-VIII “On Introducing Amendments to Certain Laws of Ukraine in the Area of Utility Services” was passed. The Law prohibits setting housing and utility prices/tariffs below the level of economically justified costs of their production. This document was a key requirement of Ukraine’s international partners, including the IMF, for granting macro-financial assistance. H. Zubko, MP Prime Minister and Minister of Regional Development, Construction and Housing and Utility Services, noted that this Law would allow setting economically justified tariffs6 and would relieve the burden on the State Budget related to the payment 4

Prices (tariffs) for households // NEURC. − http://www.nerc.gov. ua/?id=14665

5

From Today Housing and Utility Tariffs Have Increased in Ukraine // Ukrainska Energetyka (Ukrainian Energy) Web Portal, 01.04.2015. − http://ua-energy.org/post/51749

6

The Verkhovna Rada have approved in the first reading the Draft Law on the uniform approach to state regulation of tariff setting issues // Government Portal, 18.06.2015. − http://www.kmu.gov.ua/ control/uk/publish/article?art_id=248258085&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Reference to laws and regulations

1

Since the 1st of April, housing and utility services in Ukraine have become more expensive5: heating — by 71.8 per cent, hot water — by 55 per cent, electricity — up to 36.6–140.7 kopecks per kW·h. On the 1st of September, the second phase of electricity tariff increase started — its rate grew by 20 per cent.

Social issues

In February, the Commission set new electricity tariffs for households3. It noted that previous tariff rates covered only 21.3 per cent of actual costs of electricity production, transmission and supply. It was decided that the increase would take place in phases, and the first phase would start on 1 April 2015. NEURC also approved the procedure for setting tariffs for centralized water supply and sanitation (Resolution No. 13 of 15 January 2015) which is to be used when setting such tariffs. In addition,

the Commission approved amendments to the procedure for setting retail prices for natural gas for households (Resolution No. 1249 of 16 April 2015), and made public the structure of retail prices for natural gas used for the needs of households (Resolution No. 583 of 03 March 2015) as well as other structures of tariffs (prices)4.

Competition

As early as last autumn, the Ministry of Social Policy emphasized the need to “align gas and electricity tariffs with the market prices with parallel introduction and improvement of the compensation mechanism for low-income citizens”1, and noted that this process would continue till 2017. The Ministry of Regional Development, Construction and Housing and Utility Services of Ukraine (Minregion) stated that a review of utility tariffs was an objective need2, and NEURC highlighted that new tariffs would boost the energy sector development.

Statistics

THE GOVERNMENT HAD TO START APPROXIMATING GAS, HEATING AND ELECTRICITY TARIFFS TO THE ECONOMICALLY JUSTIFIED LEVELS

107


of state subventions to cover the difference between tariffs. In addition, MPs passed the Draft Law “On Peculiarities of Exercising Ownership Rights in Apartment Building” as prepared by Minregion. This Law (Registration No. 417-19) provides for a free choice of the form and manner of an apartment building management. At the same time, in order to improve current social norms of housing and utility services consumption for the purpose of defining state social guarantees for their provision, the Government presented the Draft Resolution “On introducing amendments to the Resolution of the Cabinet of Ministers of Ukraine of 6 August 2014 No. 409”. Its approval will provide for setting social norms of consumption of district heating services in case when heat meters are used; reviewing social norms of consumption of gas supply services etc. NEURC highlighted that it also took active measures to improve the current legal framework: in particular, its recent initiatives include the Draft Resolution of the Cabinet of Ministers “On approval of the Methodology for recalculation of district heating payments for households in case of absence of heat meters in the apartment (detached house) and at the apartment building entrance points based on the results of the heating period” and related review of estimated consumption rates7, as well as the Draft Law “On Commercial Metering in the Areas of Heating, Centralized Water Supply and Sanitation, Public Utility Services” providing for a 100-percent metering of energy resources and public utility services consumed by households.

DESPITE THE IMPROVEMENT OF THE TARIFF SETTING SYSTEM, SPECULATIONS OVER THIS ISSUE TEND TO CONTINUE The housing and utility tariff increase has led to political speculations. In particular, some people’s deputies believe that the tariffs for house-

holds are too high and call for investigation of their increase.8. In addition, the Verkhovna Rada registered a number of Draft Laws with regard to imposing a moratorium on increasing prices and tariffs or their deferral or exemptions for specific population groups (Registration No. 2342, 2347, 2483). In parallel, the Draft Law “On Introducing Amendments to Certain Laws of Ukraine (to Strengthen the Protection of Citizens Due to Setting New Housing and Utility Tariffs)” (Registration No. 2832) was introduced in the Verkhovna Rada. The document proposes strengthening the protection of citizens against “unjustified increase in housing and utility prices and tariffs” through publication of detailed information and calculations concerning the price/tariff structure on the NEURC official website, installation of domestic gas meters for 100 per cent of consumers before the beginning of the 2015/16 heating period, and use of total volume of gas produced by state-owned enterprises to satisfy the needs of households. In order to ensure unbiased review of the calculation of retail prices for natural gas for the needs of households, at the beginning of the month the Regulator established the Working Group with involvement of well-known audit firms (Deloitte, PwС, Ernst & Young and KPMG). The Big Four confirmed the accuracy of the calculation of the retail price for natural gas for households9. However, Minregion highlighted that Ukraine had to switch from old and inefficient methodologies for utility tariff setting to the European system10 as the review of housing and utility tariffs and their approximation to the economically justified levels was an objective need. The Ministry called for politicians to stop speculating on this issue 8

Tymoshenko and Dobrodomov Want Rada to Investigate Tariff Increase // Ukrainska Energetyka (Ukrainian Energy) Web Portal, 06.04.2015. − http://ua-energy.org/post/51823

9

Auditors Confirmed the Accuracy of the Calculation of the Gas Price for Households // Dzerkalo Tyzhnia (Mirror Weekly), 24.06.2015. − http://dt.ua/ECONOMICS/auditori-pidtverdili-korektnist-rozrahunku-cini-na-gaz-dlya-naselennya-176901_.html

10 7

108

 he Commission developed the Draft Methodology for recalculation T of district heating payments for households in case of absence of heat meters // NEURC, 15.05.2015. − http://www.nerc.gov.ua/index. php?news=4419

Hennadiy Zubko: Ukraine has to switch from the Soviet norm setting system to the European one // Minregion, 06.06.2015. − http:// www.minregion.gov.ua/news/ukrayina-mae-pereyti-vid-radyanskoyi-do-evropeyskoyi-sistemi-formuvannya-normativiv--gennadiy-zubko-569450/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

and using it as an instrument for stirring public resentment.

HAVING MADE STEPS TOWARDS TARIFF INCREASE, THE GOVERNMENT SEEKS WAYS TO MITIGATE SOCIAL IMPACT, IN PARTICULAR, THROUGH THE NEW SYSTEM OF SUBSIDIES

THE NEW SYSTEM OF SUBSIDIES PROMOTES ENERGY SAVING

In order to engage more people in the incentive program for implementation of energy efficiency measures by households, the Government approved the Resolution No. 614 of 12 August 2015, due to which recipients of subsidies will be able to receive 70 per cent of state compensation for the purchase of a boiler or materials for thermal insulation of an apartment or of a house. The Resolution also provides for the increase in the maximum amount of loan compensation to borrowers up to UAH 12–14 thousand. According to S. Savchuk, Head of the State Agency on Energy Efficiency and Energy Saving of Ukraine, the objective need to increase the maximum amount of compensation was confirmed by the distribution networks’

Pavlo Rozenko: The Law on Subsidies passed by the Parliament is impracticable // Government Portal, 26.06.2015. −http://www. kmu.gov.ua/control/uk/publish/article?art_id=248280645&cat_ id=244277212

13

Volodymyr Kistion: Preparation to the new heating period will  involve implementation of energy saving measures aimed at the improved energy saving // Minregion, 12.05.2015. − http://www. minregion.gov.ua/news/pidgotovka-do-novogo-opalyuvalnogo-sezonu-runtuvatimetsya-na-realizaciyi-energooschadnih-zahodivspryamovanih-na-bilshu-ekonomiy-85670/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Reference to laws and regulations

12

Social issues

Increase in social benefits will not affect the amount of subsidies // Minregion, 31.08.2015. − http://www.mlsp.gov.ua/labour/control/ uk/publish/article?art_id=180870&cat_id=107177

Competition

In order to simplify subsidy granting, on the 19th of June, the Verkhovna Rada passed the Law of Ukraine “On Introducing Amendments to the Law of Ukraine “On Housing and Utility Services” (Registration No. 2676). MPs stated that the Law simplified the procedure for granting subsidies to retirees and disabled persons. However, the Ministry of Social Policy disapproved the Law: in particular, Minister P. Rozenko said that the

The new system encourages recipients of subsidies to save energy resources as payments are not recalculated based on actual consumption volumes; the amount saved is credited as a payment for the next period. Minregion highlighted that the preparation to the new heating period would involve implementation of energy saving measures aimed at the improved energy saving as well as at responsible and thrifty energy use13. In particular, it is promoted by the Draft Law “On Peculiarities of Exercising Ownership Rights in Apartment Building”. The Ministry explains its feasibility by the fact that the social protection system should encourage state aid recipients to save energy resources.

Statistics

Further increase in gas and housing and utility tariffs is unavoidable; however, the Ministry of Social Policy states that the impact of this process will be mitigated by the new system of subsidies which will make state aid more open and accessible for people. In February, the Ministry of Social Policy presented the reform of the system of housing subsidies — the procedure for their granting was simplified to the greatest possible extent: a subsidy is granted based on only two documents (an application and a return); its amount may be calculated independently; a remote subsidy granting system has been introduced. As of September 2014, only 4.5 thousand households applied for compensation for utility payments. Due to introduction of the new procedure for subsidy granting which has become effective since 1 May 2015, as of September of the current year, over 2 million 600 thousand households applied to local authorities11. 4.5 million households are expected to apply for subsidies by the end of the year. As compared to the previous year, the amount of subsidies increased nearly fivefold. UAH 24.5 billion was provisioned in the State Budget for financing of subsidies.

11

document made the procedure for granting subsidies even more complicated and was impracticable12. Eventually, President P. Poroshenko vetoed the Law.

109


data14, according to which during the last half year prices for boilers using any types of fuel and energy (except for gas) increased, in average, by 38 per cent and prices for energy efficient equipment/ materials increased by 54 per cent.

THE GOVERNMENT RESPONDS TO THE FIRST RESULTS OF IMPLEMENTATION OF THE NEW SYSTEM OF SUBSIDIES The Ministry of Social Policy acknowledges the need to make state social support programs more targeted and the need to make certain programs, including the housing subsidy program, more accessible. The Ministry promises to make the social protection system more accessible and targeted. A switch to more targeted approach to granting benefits is also set in the Government’s Programme of Activity. In addition, there are some problems related with public awareness raising: according to statistics, in the Poltava, Kyiv and Dnipropetrovsk Oblasts 85 per cent of total number of applications result in granting subsidies, while in the Odesa, Kharkiv, Chernivtsi and Zakarpattia Oblasts this figure is less than 50 per cent. In this regard, P. Rozenko submitted a request to Prime Minister A. Yatsenyuk for heads of oblast and raion state administrations to personally control subsidy granting in regions. The Prime Minister noted that heads of oblast and raion state administrations would be personally liable for granting subsidies15 to households. Despite the need to strengthen public awarenessraising efforts, it is important to mention some positive trends: in particular, the Ministry of Social Policy reports that at present there are no technical issues with subsidy granting. In addition, at the end of the summer 2015, one more problem, arising from the implementation of the housing sub-

110

14

Recipients of subsidies will be able to use the Energy Efficiency Program // Minregion, 14.08.2015. − http://www.minregion.gov. ua/news/otrimuvachi-subsidiy-vidteper-zmozhut-skoristatisyaprogramoyu-z-energoefektivnosti--266257/

15

Ukrainians Will Again Receive Application Forms for Granting  Housing Subsidies // Ukrainska Energetyka (Ukrainian Energy) Web Portal, 06.08.2015. −http://ua-energy.org/post/54706

sidy program, was resolved. The problem was related to the inability of citizens to fill in a return in due manner. It was eliminated by the Resolution of the Cabinet of Ministers No. 475 “On simplification of the procedure for awarding and granting housing subsidies to households”. It allowed for more efficient cooperation of the Government with the State Fiscal Service and the Pension Fund.

SOCIAL DIALOGUE In accordance with the amendments to the Action Plan for Fulfilment of Commitments under the Treaty establishing the Energy Community as introduced by the Ordinance of the Cabinet of Ministers of 17 September 2014 No. 864-р, the Ministry of Social Policy, the Ministry of Energy and Coal Industry and NEURC were to develop, before 1 January 2015, a social action plan pursuant to the requirements set in the Memorandum of Understanding on Social Issues in the Context of the Energy Community. On the 21st of January, the Cabinet of Ministers issued the Ordinance No. 34-р “On approval of action plans for implementation of certain EU regulations, as developed by the Ministry of Social Policy”. However, implementation of the Memorandum of Understanding on Social Issues in the Context of the Energy Community as well as development and implementation of the social action plan were not included in the scope of the document. At the same time, the President appointed Minister of Social Policy P. Rozenko as Head of the National Trilateral Social and Economic Council. A standing trilateral advisory body for discussion of draft resolutions on modification and regulation of electricity tariffs and gas prices for households was established under NEURC. The advisory body comprises the representatives of the Joint Representative Body of Representative All-Ukrainian Trade Union Associations at the national level and the representatives of the Joint Representative Employers’ Body at the national level. The Ministry of Social Policy calls for social services to closer

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

cooperate with volunteer organizations and civil society organizations16. In this context, the World Bank granted USD 300 million to Ukraine17 to expand a targeted social assistance program. Ukraine also obtained a loan from the Japan International Cooperation Agency18 in the amount of about USD 100 million for a period of 20 years. This funding is to be, inter alia, targeted at the energy subsidy reform.

CONCLUSION Statistics

The first results of the subsidy system reform proved its efficiency. However, in the context of the tariff hike and war aggression in the country, there is a serious issue related to the social dialogue improvement, in particular, for the purpose of mitigating social impact of the housing and utility tariff increase. It can be promoted through the mechanisms proposed earlier by the Energy Community which have not been used by the Government to the full extent as well as through greater involvement of different stakeholders in the dialogue, in particular, international financial institutions, volunteer organizations and civil society organizations.

Competition

Prime Minister A. Yatsenyuk called for passing the Draft Law No. 2670 “On Introducing Amendments to Certain Laws of Ukraine to Improve Legislation in the Field of Heating and Housing and Utility Services”, giving as a reason that this would allow obtaining USD 500 million from the World Bank and USD 300 million of macro-financial assistance from the Government of Japan. The explanatory note states the need to introduce a uniform approach to setting economically justified tariffs. On the 21st of May, the Verkhovna Rada issued the Resolution No. 476-19 which returned the Draft Law for finalization.

establishing a working group comprising the representatives of Minregion and the World Bank20 which would develop proposals for introducing changes to operation manuals and statements of work for current and future projects implemented by the World Bank in Ukraine.

Social issues

16

Pavlo Rozenko: Social services to closer cooperate with civil society organizations // Government Portal, 23.01.2015. − http://www. kmu.gov.ua/control/uk/publish/article?art_id=247896138&cat_ id=244276429

17

World Bank to Grant $300 Million to Ukraine for Social Support // Yevropeyska Pravda (European Truth) Web Portal. – 04.07.2014. − http://www.eurointegration.com.ua/news/2014/07/4/7023928/

18

Ukraine’s Government obtained a loan from the Japan International Cooperation Agency // Government Portal, 29.08.2014. − http://www. kmu.gov.ua/control/uk/publish/article?art_id=247562479&cat_ id=244276429

19

World Bank Granted USD 732 Million to Ukraine for Energy Efficiency Improvement in the Housing and Utility Sector // Ukrainska Energetyka (Ukrainian Energy) Web Portal, 20.08.2015. − http://uaenergy.org/post/55032

Reference to laws and regulations

In addition, the World Bank granted USD 732 million19 for implementation of investment projects aimed at urban infrastructure development and energy efficiency improvement in Ukrainian district heating sector. During the meeting with World Bank Director for Ukraine, Belarus and Moldova Q. Fan, in order to speed up the implementation of joint projects aimed at modernization of water supply and waste water treatment and district heating networks, H. Zubko, MP Prime Minister and Minister of Regional Development, Construction and Housing and Utility Services, proposed

20

Hennadiy Zubko: Rapid reforms need simplified procedures and teamwork // Minregion, 17.08.2015. − http://www.minregion.gov. ua/news/shvidki-reformi-potrebuyut-sproschennya-procedur-takomandnoyi-roboti--gennadiy-zubko-826038/

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

111


REFERENCE TO LAWS AND REGULATIONS Energy Community •

Treaty establishing the Energy Community

Report on Realising Priority Infrastructure Projects for Energy Community

Conclusions of the 36th Permanent High Level Group

President of Ukraine •

Decree of April 28, 2014 No. 448/2014 “On Order of the National Security and Defence Council of Ukraine “On Conditions of Ensuring Energy Safety in Relation to Circumstances of Natural Gas Supply to Ukraine”

Decree of 10.09.2014 No. 715/2014 “On Approval of Regulation On the National Energy and Public Utilities Regulatory Commission”

Decree of 24.09.2014 No. 740/2014 “On Dismissal of S. Titenko From Position of the Head of National Energy and Public Utilities Regulatory Commission”

Decree of 12.01.2015 No. 5/2015 Sustainable Development Strategy “Ukraine — 2020”

Decree of 16.04.2015 “On Establishment of the National Anti-Corruption Bureau”

Decree of 26.05.2015 No. 287/2015 “On Order of the National Security and Defence Council of Ukraine of May 6, 2015 “On Strategy of National Security of Ukraine”

Decree of 29.06.2015 No. 385/2015 “On Dismissal of Acting Head of the National Energy and Public Utilities Regulatory Commission”

Decree of 29.06.2015 No. 386/2015 “On Appointment of D. Vovk to Position of the Head of the National Energy and Public Utilities Regulatory Commission”

Cabinet of Ministers of Ukraine •

112

Resolution of 01.08.2013 No. 927 “On Approval of Technical Regulation on Requirements to Motor Gasolines, Diesel Fuels, Marine Fuels and Fuel Oils”

Resolution of 09.07.2014 No. 296 “Certain Aspects of Providing Households, Industry, State-Funded Institutions and Organizations With Natural Gas For Entire 2014-2015 Heating Season”

Resolution of 03.09.2014 No. 510 “On Improvement of State Policy as Regards Regulation of Activities on Natural Gas Transportation by Main Gas Lines in the Territory of Ukraine»

Resolution of 03.09.2014 No. 449 “On Amendments to State Target Economic Program for Energy Efficiency and Development of Energy Generation From Renewable Energy Sources and Alternative Fuels 2010-2015”

Resolution of 10.09.2014 No. 442 “On Central Executive Bodies’ System Optimization”

Resolution of 10.09.2014 No. 453 “On Promotion of Natural Gas Substitution in Generation of Heat Power for Institutions and Organizations Funded From the State and Local Budgets”

Resolution of 23.09.2014 No. 481 “On Approval of Regulation on the State Statistics Service of Ukraine”

Resolution of 29.09.2014 No. 488 “On Use of Natural Gas by Producers of Mineral Fertilizers”.

Resolution of 01.10.2014 No. 491 “On the Introduction of Amendments to the Procedure of Use of Funds Allocated in the State Budget for Implementation of Energy Efficiency and Energy Saving Measures”

Resolution of 08.10.2014 No. 528 “On Amendments to the Technical Regulations of the Maximum Allowed Power Consumption by Refrigerating Equipment”

Resolution of 16.10.2014 No. 540 “On Incentives for Natural Gas and Heat Energy Consumers and Use of Electricity for Heating and Water Heating”

Resolution of 01.10.2014 No. 577 “On Certain Issues Concerning Activities of “Naftogas of Ukraine” National Joint Stock Company”

Resolution of 26.10.2014 No. 676 “On Approval of Regulation On State Agency on Energy Efficiency and Energy Saving of Ukraine”

Resolution of 09.07.2014 No. 293 “On Promotion of Natural Gas Substitution in Heat Supply Sector”

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

Resolution of 12.11.2014 No. 599 “On Introduction of Amendments to the Resolution of the Cabinet of Ministers of Ukraine of December 7, 2014 No. 596”

Resolution of 12.05.2015 No. 271 “On Conducting Transparent and Competitive Privatization in 2015”

Resolution of 26.11.2014 No. 647 “On Procedure of Natural Gas Procurement by Industrial, EnergyGenerating and Heat-Generating Enterprises (as regards industrial natural gas volumes)”

Resolution of 20.05.2015 No. 319 “On Introduction of Amendments to the Resolution of the Cabinet of Ministers of Ukraine of December 5, 2007 No. 1375”

Resolution of 26.11.2014 No. 690 “On Amendments to Regulation On the Ministry of regional development, construction and housing of Ukraine”

Resolution of 27.05.2015 No. 338 “On Introduction of Amendments to the Resolution of the Cabinet of Ministers of Ukraine of August 7, 2013 No. 702”

Resolution of 29.12.2014 No. 719 “On Invalidation of Certain Resolutions of the Cabinet of Ministers of Ukraine On Import of Energy-Saving Materials, Equipment and Their Components to the Customs Territory of Ukraine”

Resolution of 27.05.2015 No. 340 “On Approval of Technical Regulation on Energy Marking of Light Bulbs and Fixtures”

Resolution of 24.06.2015 No. 459 “On Stabilization (Reserve) Energy Fund”

Resolution of 08.07.2015 No. 474 “On Procedure for Submission of Public Utilities Meters in Use for Periodic Verification, Maintenance and Repair”

Resolution of 26.06.2015 No. 475 “On Simplification of the Procedure for Awarding and Granting Housing Subsidies to Households”

Resolution of 17.07.2015 No. 488 “On Introduction of Amendments to the Resolution of the Cabinet of Ministers of Ukraine of January 23, 2015 No. 13”

Resolution of 17.07.2015 No. 514 “On Approval of Technical Regulation on Energy Marking of Domestic Dishwashers”

Resolution of 24.07.2015 No. 540 “On Granting State Guarantees Under Obligations of “Naftogas of Ukraine” National Joint Stock Company”

Resolution of the Cabinet of Ministers of 05.08.2015 No. 549 “On Setting Up Intergovernmental Working Group for Preparation of Fuel and Energy Complex Facilities to Autumn-Winter Season 2015/16 and Functioning During It”

Resolution of 05.08.2015 No. 562 “On Invalidation of Resolutions of the Cabinet of Ministers of Ukraine of May 21, 2014 No. 149 and of October 16, 2014 No. 540”

Resolution of 12.08.2015 No. 614 “On Introduction of Amendments to the Procedure of Use of Funds Allocated in the State Budget for Implementation of Energy Efficiency and Energy Saving Measures”

Ordinance of the Cabinet of Ministers of 13.08.2014 No. 764-p “On Implementation of Temporary Extraordinary Measures in Electricity Market”

Resolution of 14.01.2015 No. 4 “On Certain Aspects of Central Executive Bodies Activity”

Resolution of 23.01.2015 No. 13 “On Increase of Registered Capital of “Naftogas of Ukraine” National Joint Stock Company”

Resolution of 28.02.2015 No. 66 “On Invalidation of Resolutions of the Cabinet of Ministers of Ukraine of March 25, 2014 No. 81 and of April 17, 2014 No. 106”

Resolution of 04.03.2015 No. 77 “On Liquidation of Selected Consultative, Advisory and Other Subsidiary Bodies Set Up by the Cabinet of Ministers of Ukraine”

Resolution of 08.04.2015 No. 177 “On Certain Aspects of Use of Funds Allocated For Energy Efficiency and Energy Saving Measures in 2015”

Resolution of 08.04.2015 No. 231 “On Introduction of Amendments to the Resolution of the Cabinet of Ministers of Ukraine of March 1, 2010 No. 243 and of October 17, 2011 No. 1056”

Resolution of 29.04.2015 No. 237 “On Amendment of the Rate of Natural Gas Consumption by Household Customers in the Absence of Gas Meters”

Resolution of 22.04.2015 No. 243 “On Certain Aspects of Regulation of Natural Gas Transportation Through Main Gas Lines In the Territory Of Ukraine”

Resolution of 29.04.2015 No. 265 “On Approval of the State Program for Implementation of the Principles of State Anti-Corruption Policy in Ukraine (Anti-Corruption Strategy) for 2015-2017”

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Reference to laws and regulations

Resolution of 07.05.2015 No. 263 “Peculiarities of Regulation of Relations in Electricity Sector in the Territories, Where Public Authorities Temporary Have No Power or Have limited Powers”

Social issues

Competition

Resolution of 07.11.2014 No. 596 “On Procedure of Natural Gas Procurement by Industrial, EnergyGenerating and Heat-Generating Enterprises (as regards industrial natural gas volumes)”

Statistics

113


Ordinance of 03.09.2014 No. 791-p “On Approval of the Action Plan for Implementation of Directive 2009/28/EC of the European Parliament and of the Council”

Ordinance of 03.09.2014 No. 845-p “On Signing Memorandum of Understanding Between the Government of Ukraine and the European Commission On Granting the EU Assistance Under the INOGATE Programme”

Ordinance of 17.09.2014 No. 864-р “On Amendments to the Action Plan for Fulfilment of Commitments under the Treaty Establishing the Energy Community”.

Ordinance of 01.10.2014 No. 915-p “On Implementation of Temporary Extraordinary Measures in Electricity Market”

Ordinance of 16.10.2014 No. 1014-p “On Approval of the Plan of Short- and Medium-Term Measures to Reduce Natural Gas Consumption for the Period until 2017”

Ordinance of 22.10.2014 No. 1024-р “On Approval of the Framework for Combatting Land Degradation and Desertification”.

Ordinance of 22.10.2014 No. 1038-р “On budget allowances for the National Commission of Ukraine for State Energy and Public Utilities Regulation in 2014”

114

Ordinance of 17.09.2014 No. 847-р “On Approval of the Action Plan for Implementation of Association Agreement Between the European Union and the European Atomic Energy Community and Their Member States, of the One Part, and Ukraine, of the Other Part, for 2014-2017”.

Ordinance of 30.10.2014 No. 1045-р “On Ensuring Energy Security of Ukraine and European Union in 2014/15 Autumn and Winter Period»

Ordinance of 26.01.2015 No. 47-p “On Introduction of High Alert and Emergency Situation Regimes”

Ordinance of 23.01.2015 No. 53-р “On Approval of the Plan for State Statistical Observations for 2014-2015”

Ordinance of 27.02.2015 No. 129-p “On Approval of the Letter of Intent of the Government and the National Bank of Ukraine (NBU) to the International Monetary Fund, and in the draft Memorandum of Economic and Financial Policies with the IMF”

Ordinance of 04.03.2015 No. 167-р “On Approval of Action Plans for Implementation of Certain EU regulations, as Developed by the Antimonopoly Committee”

Ordinance of 04.03.2015 No. 213-р “On Approval of the Action Plan for Implementation of the Program of Activity of the Cabinet of Ministers of Ukraine and the Sustainable Development Strategy “Ukraine-2020” for 2015”

Ordinance of 25.03.2015 No. 375-p “On Natural Gas Sector Reform”

Ordinance of 31.03.2015 No. 280-p “On Implementation of Temporary Extraordinary Measures in Electricity Market”

Ordinance of 08.04.2015 No. 346-р “On Approval of Action Plans for Implementation of Certain EU regulations, as Developed by the Ministry of Energy and Coal Industry”

Ordinance of 15.04.2015 No. 371-р “On Approval of Action Plans for Implementation of Certain EU regulations, as Developed by the Ministry of Environment”

Ordinance of 20.05.2015 No. 499-р “On Approval of Action Plans for Implementation of Certain EU regulations, as Developed by the State Agency on Energy Efficiency and Energy Saving of Ukraine”

Ordinance of 05.12.2014 No. 1188-p “On Temporary Measures for Ukrainian Electricity Market Balancing”

Ordinance of 19.12.2014 No. 1238-р “On Amendments to Resolution of the Cabinet of Ministers of Ukraine of December 5, 2014 No. 1188”

Ordinance of 04.06.2015 No. 564-р “On Approval of Action Plans for Implementation of Certain EU regulations, as Developed by the State Statistical Service”

Ordinance of 29.12.2014 No. 1280-р “On Revocation of Certain Ordinances of the Cabinet of Ministers of Ukraine”

Ordinance of 15.06.2015 No. 671 “On Launching Ukraine-EU Energy Bridge Pilot Project”

Ordinance of 21.01.2015 No. 34-р “On Approval of Plans for Implementation of Certain EU regulations, as developed by the Ministry of Social Policy”

Ordinance of 08.07.2015 No. 696-p “On Liquidation of Selected Loss-Making Mining Enterprises”

Ordinance of 05.08.2015 No. 809-p “On Approval of the Action Plan for Preparation of Fuel and

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

of Entrepreneurs Related to Timber Sale and Exports” (as Regards the Moratorium on Exports of Rough Timber and Lumber)”

Energy Complex Facilities to Autumn-Winter Season 2015/16 and Functioning During It” •

Ordinance of 19.08.2015 No. 844-p “On Approval of the Strategy of Technical Regulation Systems Development until 2020”

Verkhovna Rada of Ukraine European Ukraine Coalition Agreement of 27.11.2014

Law of Ukraine of 01.07.2014 No. 1555-VII “On State Aid to Undertakings”

Law of Ukraine of 31.07.2014 No. 1621-VII “On Introduction of Amendments to the Tax Code of Ukraine and Other Selected Laws and Regulations (on Improvement of Selected Provisions)”

Law of Ukraine of 28.12.2014 No. 73-VIII “On Measures for Stabilization of the Balance of Payments of Ukraine in Compliance with Article XII of General Agreement on Tariffs and Trade 1994”

Law of Ukraine of 13.01.2015 No. 85-VIII “On Introduction of Additional Guarantees for Protection of Rights of Individuals Residing within Anti-Terrorist Operation Areas, and Limitation of Liability of Housing and Utility Service Providers and Producers in Case of the Late Payment for the Consumed Energy Resources” Law of Ukraine of 15.01.2015 № 124-VIII “On Technical Regulations and Conformity Assessment”

Law of Ukraine of 11.02.2015 № 183-VIII “On Open Use of Public Funds”

Law of Ukraine of 07.04.2015 No. 284-VIII “On Amendments to the Law of Ukraine “On Electric Energy” as Regards Peculiarities of Regulation of Relations in Electricity Sector in the Territory of Anti-Terrorist Operation”

Law of Ukraine of 04.04.2015, No. 287-VIII “On Secondary Products of Animal Origin Not Intended for Human Consumption”

Law of Ukraine of 09.04.2015 No. 325-VIII “On Introducing Amendments to the Law of Ukraine “On Peculiarities of State Regulation of Activity

Law of Ukraine of 09.04.2015 № 329-VIII “On Natural Gas Market”

Law of Ukraine of 14.05.2015 No. 416-VIII “On Introducing Amendments to the Budget Code of Ukraine Concerning the Decisions of the Authorized Agency in the Area of State Aid”

Law of Ukraine of 14.05.2015 № 417-VIII “On Peculiarities of the Ownership of Apartment Buildings”

Law of Ukraine of 14.05.2015 No. 423-VIII “On Amendments to Certain Laws of Ukraine Regarding Stabilization of “Naftogaz of Ukraine” NJSC Financial Standing”

Law of Ukraine of 04.06.2015 No. 514-VIII “On Introducing Amendments to Certain Laws of Ukraine to Ensure Competitive Conditions for Electricity Production from Alternative Energy Sources”

Law of Ukraine of 16.06.2015 No. 521-VIII “On Introducing Amendments to Certain Laws of Ukraine to Ensure Transparency in Mining Industries”

Law of Ukraine of 18.06.2015 No. 538-VIII “On Ratification of the Memorandum of Understanding between Ukraine as the Borrower and European Union as the Lender, and Loan Agreement between Ukraine as the Borrower with the National Bank of Ukraine as the Borrower’s Financial Agent and European Union as the Lender (for the Third EU Macro-Financial Assistance Programme to Ukraine in the amount of €1.8 billion)”

Law of Ukraine of 15.07.2015 No. 603-VIII “On Ratification of Financial Agreement (UrengoiPomary-Uzhgorod main gas pipeline) (Project for the reconstruction, overhaul and re-equipment of the Urengoi-Pomary-Uzhgorod main gas pipeline”) Between Ukraine and European Investment Bank”

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Reference to laws and regulations

To the Draft Law of Ukraine of 09.04.2015 No. 328-VIII “On Amendments to the Budget Code of Ukraine (related to introducing new investment opportunities, securing rights and legal interests of business entities for large-scale energy modernization)”

Social issues

Competition

Law of Ukraine of 12.08.2014 No. 1638-VII “On Introducing Amendments to the Tax Code of Ukraine and Certain Laws of Ukraine to Strengthen the Control Over Circulation of Excisable Goods and Clarification of Certain Tax Provisions”

Law of Ukraine of 09.04.2015 No. 327-VIII “On Introducing New Investment Opportunities, Securing Rights and Legal Interests of Business Entities for Large-Scale Energy Modernization”

Statistics

115


Law of Ukraine of 16.07.2015 No. 626-VIII “On Amendments to Certain Utility Laws of Ukraine”

Draft Law of 22.12.2014 No. 1532 “On Peculiarities of Procurement of Energy Service”

Resolution of 11.12.2014 No. 26-VIII “On Program of Activity of the Cabinet of Ministers of Ukraine”

Resolution of 13.01.2015 № 89-VIII “On Taking the Law of Ukraine “On Peculiarities of Exercising Ownership Rights in Apartment Building” as a Framework”

Draft Law of 22.12.2014 No. 1533 “On Amendments to the Law of Ukraine “On Energy Saving” as Regards Legal Framework for Energy Service Contracts Fulfilment”

Draft Law of 22.12.2014 No. 1566 “On Energy Efficiency of Buildings”

Resolution of 13.01.2015 № 90-VIII “On Returning of the Law of Ukraine On Buildings Energy Efficiency For Follow Up”

Resolution of 05.02.2015 No. 163-VIII “On Taking the Law of Ukraine “On Amendments to the Budget Code of Ukraine (related to introducing new investment opportunities, securing rights and legal interests of business entities for largescale energy modernization)” as a Framework”

Draft Law of Ukraine of 28.12.2014 No. 1665 “On Introducing Amendments to Certain Laws of Ukraine (as Regards Fauna and Flora Protection and Strengthening Anti-Poaching Activities)”

Draft Law of 28.12.2014 No. 1674 “On Introducing Amendments to the Law of Ukraine “On Customs Tariff of Ukraine” as Regards Abolition of the Import Duty on Electric Vehicles”

Resolution of 21.05.2015 No. 476-VIII “On Returning of the Draft Law of Ukraine On Amendments to Certain Law of Ukraine For Improvement of Heat Supply and Housing and Utility Services Legislation For Follow Up”

Draft Law of 15.01.2015 No. 1769 “On Introducing Amendments to Certain Laws of Ukraine as Regards Strengthening the Environmental Network Protection”

Draft Law of 02.02.2015 No. 1912 “On Introducing Amendments to Section ХХ “Transitional Provisions” of the Tax Code of Ukraine as Regards Peculiarities of Taxation of Imports and Supply of Vehicles Equipped with Electric Motors”

Draft Law of Ukraine of 03.06.2015 No. 2009а “On Environmental Impact Assessment”.

Draft Law No. of 08.06.2015 2044а “On Introducing Amendments to the Tax Code of Ukraine with Regard to Development of Alternative Fuel Production and Market, Deregulation of Bioethanol Production and Harmonization of Legislation with the European Union and Energy Community Regulations”

Draft Law of 18.06.2015 No. 2114а “On Amending Article 215 of the Tax Code of Ukraine (as Regards Fuel Value Reduction)”

Draft Law of 30.06.2015 No. 2114а-1 “On Introducing Amendments to the Tax Code of Ukraine (as Regards Alternative Motor Fuel Taxation and Fuel Value Reduction)”

Draft Law of 01.07.2015 No. 2114а-1 of 01 July 2015 “On Introducing Amendments to the Tax Code of Ukraine to Support Biodiesel Production”

Draft Law of 30.06.2015 No. 2199a “On Amendments to the Law of Ukraine “On Operating Principles of Electricity Market of Ukraine” As Regards Fulfilment of Requirements of the Energy Community Treaty”

Draft Law of 10.09.2014 No. 5051 “On Introducing Amendments to Certain Laws of Ukraine (as Regards Strengthening the Environmental Network Protection)”

Draft Law of 16.09.2014 No. 5088 “On National Regulation in Energy and Public Utilities Sectors”

Draft Law of 16.09.2014 No. 5089 “On the National Energy and Public Utilities Regulatory Commission”

Draft Law of 14.10.2014 No. 5166 “On Introducing Amendments to Certain Laws of Ukraine (as Regards Gas Supply Rules Within the Period of Suspension or Termination of Supply to Ukraine’s Territory)”

Draft Law of 27.11.2014 No. 0919 “On Introducing Amendments to Certain Laws of Ukraine as Regards price (tariff) setting”

Draft Law of Ukraine of 11.12.2014 No. 1409 “On Amendments to the Budget Code of Ukraine (related to introducing new investment opportunities, securing rights and legal interests of business entities for large-scale energy modernization)”

116

Draft Law of Ukraine of 22.12.2014 No. 14091 “On Amendments to the Budget Code of Ukraine Related to Introduction of Energy Efficiency Measures in Public Institutions”

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

Draft Law of 26.02.2015 No. 2250 “On Natural Gas Market”

Draft Law of 04.03.2015 No. 2311 “On Introducing Amendments to Certain Laws of Ukraine as Regards Improvement of the Legislation in the Field of Conservation of the Nature Reserve Fund of Ukraine”

Draft Law of 07.07.2015 No. 2312a “On Amendments to Certain Laws and Regulations of Ukraine as Regards Alignment Thereof With Provisions of the Law of Ukraine “On Natural Gas Market” (as regards peculiarities of business activity in natural gas market during the transitional period)”

Draft Law of 20.05.2015 No. 2910 “On Introducing Amendments to Certain Laws of Ukraine (as Regards Implementation of Certain EU Directives in the Field of Environmental Impact Assessment)”

Draft Law of 25.05.2015 No. 2956 “On Amendments to the Law of Ukraine «On Moratorium on Forced Sale of Property» (as to mechanisms of influencing enterprises-debtors)”.

Draft Law of 28.05.2015 No. 2966 “On the National Energy and Public Utilities Regulatory Commission”

Draft Law of 06.03.2015 No. 2342 “On Moratorium On Increase of Housing and Utility Services Prices and Tariffs”

Draft Law of 29.05.2015 No. 2966-1 “On the National Energy and Public Utilities Regulatory Commission”

Draft Law of 21.07.2015 No. 2423a “On Specific Aspects of Granting State or Community-Owned Gas Distribution Systems on Lease”

Draft Law of 02.06.2015 No. 2966-2 “On the National Energy and Public Utilities Regulatory Commission”

Draft Law of 11.09.2015 No. 3072 “On Amendments to Certain Laws of Ukraine for Setting Conditions for the New Model of Natural Gas Market”

Draft Law of 10.04.2015 No. 2636 “On Introducing Amendments to Certain Laws of Ukraine as Regards Ensuring Commercial Metering of Natural Gas, Heat Energy, Cold and Hot Water Consumption”

Draft Law of 11.09.2015 No. 3073 “On Amendments to the Tax Code of Ukraine for Setting Conditions for the New Model of Natural Gas Market”

Draft Law of 20.04.2015 No. 2670 “On Amendments to Certain Law of Ukraine For Improvement of Heat Supply and Housing and Utility Services Legislation”

Draft Law of 11.09.2015 No. 3074 “On Amendments to the Customs Code of Ukraine for Setting Conditions for the New Model of Natural Gas Market”

Draft Law of 20.04.2015 No. 2676 “On Amendments to the Law of Ukraine “On Housing and Utility services” as Regards Granting Subsidies to Pensioners and Disabled People”

Draft Resolution of 06.03.2015 No. 2347 “On Moratorium On Increase of Prices and Tariffs for Housing and Utility Services, as well as Natural Gas and Electricity for Household Customers”

Minutes of the Meeting of Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety № 14 of 03.06.2015

Minutes of the Meeting of Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety № 17 of 15.07.2015

Draft Law of 05.03.2015 No. 2326 “On Amendments to the Law of Ukraine “On Ensuring Commercial Metering of Natural Gas Consumption” as regards free installation and change of gas meters, gas devices and equipment for pensioners, disabled and military people”

Draft Law of 27.03.2015 No. 2483 “On Amendments to Certain Laws and Regulations of Ukraine for Preventing Increase of Tariffs for Housing an Utility Services for Household Customers in the Absence of Gas Meters”

Draft Law of 13.05.2015 No. 2824 “On Amendments to the Law of Ukraine “On Ensuring Commercial Metering of Natural Gas Consumption” as regards procedure of compensation to consumers of cost of installed meters by natural gas suppliers”

Draft Law of 13.05.2015 No. 2832 “On Introducing Amendments to Certain Laws of Ukraine (to UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Reference to laws and regulations

Draft Law of 18.05.2015 No. 2889 “On Introducing Amendments to Certain Laws and Regulations of Ukraine as Regards Strengthening the Environmental Network Protection”

Social issues

Competition

Strengthen the Protection of Citizens Due to Setting New Housing and Utility Tariffs)”

Statistics

117


Ministry of Energy and Coal Industry of Ukraine

118

Order of 20.08.2014 № 583 “On Procedure of Definition of Test Laboratories”

Order of 09.09.2014 № 634 “On Appointment of Ernst & Young LLC as an Independent Auditor to Determine Fair Value”

Order of 09.09.2014 No. 635 “On Appointment of Auditor of2012, 2013 and 2014 Consolidated Financial Reporting of “Naftogas of Ukraine” National Joint-Stock Company”

Order of 23.09.2014 No. 659 “On Setting Up Intergovernmental Working Group for Updating Energy Strategy of Ukraine until 2013”

Order of 10.10.2014 No. 712 “On Setting the MinEnergy Working Group For Prompt Response and Overcoming Consequences of Irregularities in Electricity Market”

Resolution of 17.10.2014 No. 726 “On Approval of Standard Agreement on Natural Gas Transportation Through Main Gas Lines In the Territory Of Ukraine”

Order of 08.05.2015 No. 273 “On Approval of List of Electricity Producers”

Order of 07.02.2015 No. 412 “On Setting Up Working Group for Stockpiling of Oil and Oil Products”

Order of 16.07.2015 No. 451 “On Setting Up Working Group for Development of a Draft Law On Operating Principles of Coal Market”

Order of 17.07.2015 No. 453 “On Results of the MinEnergy Collegium Meeting of July 7, 2015”

“New Energy Strategy of Ukraine: safety, energy efficiency, competitiveness” Project

Draft Regulation of the Cabinet of Ministers “On Approval of Regulation on Imposing Special Obligations on Natural Gas Market Players to Ensure that General Public Interests are Met in Natural Gas Market Operation”

Draft Regulation of the Cabinet of Ministers “On approval of Temporary competitive procedure for “supplier of last resort”

Draft Regulation of the Cabinet of Ministers “On Appointment of Independent Organizations Authorized to Inspect Input Data Within Projects of Construction of Gas Transportation and Gas Distribution Systems Facilities”

Order of 24.10.2014 № 746 “On Agreement of Major Deed”

Order of 25.11.2014 № 837 “On Extraordinary Internal Audit of “Naftogas of Ukraine” National Joint-Stock Company”

Order of 25.11.2014 № 840 “On Programme for Integration of United Energy Systems of Ukraine to Europe’s Energy System”

Draft Resolution of the Cabinet of Ministers “On Procedure of Accumulation of Natural Gas Security Reserve”

Draft Order “On Approval of Natural Gas Supply Security Rules”

Order of 18.02.2015 No. 100 “On Approval of List of Electricity Producers”

Order No. 128 of 02.03.2015 “On Amendments to the Order of the Ministry of Energy and Coal Industry of 13.06.2013 No. 368”

Draft Order “On Certain Issues Concerning Activities of “Naftogas of Ukraine” National JointStock Company”

Draft Order “On Approval of Natural Gas Supply Emergency Action Plan”

Order of 17.03.2015 No. 150 “On Setting Up a Working Group For Review of the Provisions on Guidelines for Calculation of Specific Production and Engineering Loses of Natural Gas in Course of Transportation Thereof Through Distribution Networks”

Draft National Action Plan for Reduction of Emissions of Pollutants into the Air from Large Combustion Plants

Order No. 188 of 30.03.2015 “On Amendments to the Order of the Ministry of Energy and Coal Industry of 11.04.2014 No. 292”

Resolution of 23.10.2014 No. 164 “On Approval of Amendments of Tariffs for Electricity Sold to Population”

Order of 31.03.2015 No. 192 “On Appointment of Coordinator for Introduction of the Early Warning Mechanism Established Between Ukraine and the EU, and Approval of the List of Authorized Persons of Ukrainian Party”

Resolution of 09.12.2014 No. 752 “On Amendments to the NERC Resolution of December 20, 2001 No. 1241”

Resolution of 11.12.2014 No. 762 “On Approval of Action Plan for Preparation of Draft Regulations by NEURC for 2015”

NEURC

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Oil

Resolution of 11.12.2014 No. 763 “On Approval of the Procedure of Assessment, Calculation and Setting of Natural Gas Prices for Economic Operators, Which Carry Out Natural Gas Extraction”

Resolution of 12.01.2015 No. 9 “On Approval of the License Terms for Business Activities Related to Supply of Natural Gas, Gas (Methane) from Coal Mines at a Regulated Tariff”

Resolution of 03.03.2015 No. 502 “On Setting Price of Own-Produced Commercial Natural Gas for “Ukrgazvydobuvannia” PJSC”

Resolution of 03.03.2015 No. 583 “On Setting Retail Natural Gas Price for Household Consumers”

Resolution of 03.03.2015 No. 584 “On Approval of Natural Gas Price Thresholds for Undertakings, which Produce Heat Energy, Including Block (Module) Boiler Houses Installed on Roofs or on Premises (Based on Natural Gas Volumes Used For Production And Provision of Heating and Hot Water Supply Services to Household Customers, Providing That Such Undertakings Carry Out Individual Heat and Hot Water Metering and Accounting)”

Resolution of 15.01.2015 No. 20 “On Amendments to the License Terms for Business Activities Related to Supply of Natural Gas, Gas (Methane) from Coal Mines at a Regulated Tariff”

Regulation of 22.01.2015 No. 33 “On Approval of a Standard Agreement on Natural Gas Distribution”

Resolution of 16.04.2015 No. 1249 “On Amendments to Procedure of Setting Retail Natural Gas Price for Household Consumers”

Resolution of 23.07.2015 No. 2060, “On Approval of Additional Payments for Compensation of Benefits Not Received by Producers, Operating Under the Green Tariff as of July 2015”

Resolution of 06.08.2014 No. 2140, “On Establishing in July 2015 Tariffs For Electricity Sold in Ukrainian Wholesale Electricity Market For Producers to Which the Green Tariff and Additional Payment For Compensation of Benefits Not Received Are Set Out by the NEURC”

Resolution of 10.08.2015 No. 2144, “On Approval of Additional Payments for Compensation of Benefits Not Received by Producers, Operating Under the Green Tariff as of August 2015”

Decree of 17.09.2014 No. 3 “On Approval of Regulation On the National Energy and Public Utilities Regulatory Commission”

Order of 20.01.2015 No. 5 “On Establishment of a Standing Trilateral Consulting Committee of the National Energy and Public Utilities Regulatory Commission”

Order of 02.06.2015 No. 178 “On Establishment of a Working Group on Disclosure of Information regarding Calculation Methodology of Forming and Review of Retail Prices for Natural Gas for the Needs of Households”

Order of 15.07.2015 No. 200 “On Establishment of a Working Group for Resolving Problematic Issues of Gas Distribution Enterprises”

Letter of 09.07.2015 No. 6697/16/61-15 “On Conclusion of Agreements on Natural Gas Supply at a Regulated Tariff with Public Entities”

Regulation of 22.01.2015 No. 35 “On Approval of a Standard Agreement on Natural Gas Distribution at a regulated Tariff”

Resolution of 31.01.2015 No. 105 “On Setting Out Electricity Green Tariffs”

Resolution of 12.02.2015 No. 176 “On Approval of Procedure of E-Auctions for Distribution of Throughput Capacity of International Power Grids”

Resolution of 18.02.2015 No. 203 “On Amendments to the NEURC Resolution of 03.09.2008 No. 1052 and the NERC Resolutions of 21.12.2011 No. 2 and of 26.07.2013 No. 1036”

Resolution of 26.02.2015 No. 220 “On Setting Tariffs for Electricity Sold to Household Customers”

Resolution of 26.02.2015 No. 221 “On Amendments to Procedure of Application of Electricity Tariffs”

Resolution of 26.02.2015 No. 226 “On Setting Thresholds of Natural Gas Price for Institutions and Organizations Funded From the State and Local Budgets”

Resolution of 26.02.2015 No. 227 “On Setting Thresholds of Natural Gas Price for Industrial Consumers and Other Undertakings”

Resolution of 26.02.2015 No. 228 “On Setting Natural Gas Price for Religious Organizations”

Resolution of 27.02.2015 No. 492 “On Setting Out Electricity Green Tariffs”

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Reference to laws and regulations

Social issues

Regulation of 15.01.2015 No. 13 “On Approval of Procedure for Setting Tariffs for Centralized Water Supply and Sanitation (through inside-house systems)”

Competition

Statistics

119


Draft Law “On National Regulation in Energy Sector”

Draft Law “On Commercial Metering in the Spheres of Heat Supply, Centralized Water Supply and Sanitation, and Communal Services Provision”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Natural Gas Supply Rules”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Natural Gas Distribution System Code”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Natural Gas Transportation System Code”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Natural Gas Storage Facilities Code and Criteria, according to which Negotiated Access or Regulated Access is Applied to a Natural Gas Storage Facility”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Standard Agreement for Natural Gas Distribution”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Standard Agreement for Natural Gas Transportation”

120

Draft Resolution of the Cabinet of Ministers of Ukraine “On Introducing of Amendments to the Resolution of the Cabinet of Ministers of Ukraine of August 6, 2014 No. 409”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Standard Agreement for Natural Gas Supply to Domestic Customers” Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Standard Agreement for Natural Gas Supply by Supplier of Last Resort” Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Standard Agreement for Natural Gas Storing (Injection, Offtake)”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Procedure for distribution of funds credited to special current accounts of natural gas suppliers, which undertook special obligations”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Procedure for Pricing of Natural Gas Transportation by Main Gas Lines on the Basis of Entry-Exit Tariff System taking into account pricing parameters with long-term

perspective in order to stimulate and enforce regulatory return in the sphere of natural gas pipeline transportation within the system of regulated investment capital base” •

Draft Resolution of the Cabinet of Ministers of Ukraine “On Invalidation of Resolutions of the National Electricity Regulatory Commission of Ukraine of 31.03.2011 No. 466 and Certain Resolutions of the NEURC”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Revocation of Certain Resolutions of the National Electricity Regulatory Commission of Ukraine”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Revocation of Certain resolutions of the Cabinet of Ministers of Ukraine due to adoption of the Law of Ukraine “On Natural Gas Market”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Introducing Amendments to and Repealing Certain Resolutions of the Cabinet Ministers of Ukraine”

Draft Decree of the President of Ukraine “On Introducing Amendments to the Regulation on the National Energy and Public Utilities Regulatory Commission”

Ministry of Regional Development, Construction and Housing and Communal Services of Ukraine •

Resolution of 15.12.2014 No. 349 “On Approval the Action Plan of the Minregion regarding Drafting Regulatory Acts for 2015”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Standard Energy Service Contract”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Connecting Household Electric Equipment (Residential Electrical Customers) in order to Switch to Electric Heating”

Draft Resolution of the Cabinet of Ministers of Ukraine “On Incentives for Natural Gas and Heat Energy Consumers and Use of Electricity for Heating and Water Heating”

Ministry of Environment and Natural Resources of Ukraine •

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

Order of 06.04.2015 No. 114 “On Additional Measures to Preserve Biodiversity and Nature Reserve Fund Areas”


Oil

Draft Order “On Approval of the Form of the Permit for Emissions of Pollutants in the Air from Stationary Sources” Draft Order “On Introducing Amendments to the Technological Norms of Allowable Emissions of Pollutants from Thermal Power Plants, the Rated Thermal Input of which is greater than 50 MW”

Other •

«Ukraine’s Renewal» Action Plan

Reports of Government Office for the European Integration

National Energy Statistics Action Plan for Ukraine

Strategy of State Statistics Development till 2017

Progress in Implementation of the Competition Section of the EU-Ukraine Association Agenda

State Agency on Energy Efficiency and Energy Saving •

Memorandum of Understanding on a joint approach to address the natural gas diversification and security of supply security challenges in Central and South-Eastern Europe

Draft Resolution of the Cabinet of Ministers of Ukraine “Issues of the State Specialized Financial Institution “Fund of Energy Efficiency”

Memorandum of Understanding with the Organisation for Economic Cooperation and Development (OECD) to Strengthen Cooperation

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Technical Regulation on Energy Marking of Household Blanket Drying Machines”

National Standard DSTU – «Н Б B.3.2-3:2014» “Guidelines on thermal modernization of residential buildings”.

Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of Technical Regulation on Energy Marking of Household Ovens and Kitchen Hoods”

Competition

Draft Law “On Commercial Metering in the Spheres of Heat Supply, Centralized Water Supply and Sanitation, Communal Services Provision”

Statistics

Social issues

Ministry of Economic Development and Trade Order of 16.09.2014 No. 1111 “On Approval of the National Standards of Ukraine Harmonized with International and European Standards, Inter-State Standard as the National Standard of Ukraine, Approval of the National Standards of Ukraine, Amendments to Regulatory Documents of Ukraine, Repealing the National Standards of Ukraine and Inter-State Regulatory Documents of Ukraine”

Order of 29.04.2015 No. 433 “On Approval of the Threshold of Regular Rate of Return on Natural Gas Transportation through Trunk Pipelines for 2015”

Reference to laws and regulations

“Naftogaz of Ukraine”, NJSC •

Concept of Corporate Management Principles at Ukrainian State Enterprises

Annual Report for 2014

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS

121


The Energy Reforms coalition is an association of leading experts, think tanks and NGOs, established to enhance the effectiveness of the Ukrainian civil society efforts to advance reforms within Ukraine’s commitments in the Energy Community. The coalition monitors implementation of these commitments, builds political dialogue with key stakeholders, representatives and executive authorities, and develops an Energy Reforms Roadmap with specific proposals regarding relevant changes. For more information about our activities, please visit the Energy Reforms website (http://enref.org/) Members of the coalition:

122

Natalia Andrusevych

Chairman of the Board, Resource & Analysis Centre "Society and Environment"

Maryana Bulgakova

Director, Expert Advisory Centre "Legal Analytics"

Andriy Perevertayev

Independent expert

Georgiy Geletukha

Chairman of the Board, Bioenergy Association of Ukraine

Svitlana Golikova

Independent expert

Iryna Golovko

National coordinator, CEE Bankwatch Network

Vladyslav Deineko

Head of Energy Programs, Analytical Centre for Regional Cooperation

Sergiy Diachenko

Head, Bureau for Complex Analysis and Forecasting

Andriy Konechenkov

Chairman of the Board, Ukrainian Wind Energy Association

Olga Kosharna

Expert, Director for Public Relations, Directorate of the Ukrainian Nuclear Forum Association

Andriy Martyniuk

Head, International Youth NGO "Ecoclub"

Volodymyr Omelchenko

Energy Programs Director, Razumkov Centre

Olena Pavlenko

President, DiXi Group think tank

Sviatoslav Pavliuk

Key Expert, Covenant of Mayors - East

Gennadiy Riabtsev

Independent expert, Professor of the Chair of Public Policy and Policy Administration, National Academy for Public Administration under the President of Ukraine

Oleg Savytskyi

Coordinator of the Program for Energy Environmentalization, AllUkrainian NGO "National Ecological Centre of Ukraine"

Bogdan Sokolovskyi

Expert, former Special Envoy of the President of Ukraine on Energy Security

Oleksiy Khabatiuk

Director, Environmental (Green) Investments Fund

UKRAINE AND ENERGY COMMUNITY: ON THE ROAD OF REFORMS


Profile for Ukrainian Energy

Ukraine and Energy Community: On the Road of Reforms  

The Research carried out by the Energy Reforms coalition on the situation with Ukraine's progress in implementation of the European energy l...

Ukraine and Energy Community: On the Road of Reforms  

The Research carried out by the Energy Reforms coalition on the situation with Ukraine's progress in implementation of the European energy l...

Profile for uaenergy
Advertisement