Energy Reforms: October 2018 review

This publication has been produced with the assistance of the European Union in the framework of the EU4Energy Initiative and with the support of the International Renaissance Foundation. The contents of this publication are the sole responsibility of NGO “DIXI GROUP”, as well as Civil Network “OPORA”, AllUkrainian NGO “Energy Association of Ukraine”, Resource & Analysis Center “Society and Environment”, Association “European-Ukrainian Energy Agency”, and can under no circumstances be regarded as reflecting the position of the European Union and/or the International Renaissance Foundation.

The EU4Energy Initiative covers all EU support to improve energy supply, security and connectivity, as well as to promote energy efficiency and the use of renewables in the Eastern Partner countries Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. It does this by financing projects and programmes that help to reform energy markets and to reduce national energy dependence and consumption. Over the longer term, this makes energy supply more reliable, transparent and affordable, thus reducing energy poverty and energy bills for both citizens and the private sector. More information on: www.EU4Energy.eu

The project “Enhancing impact of civil society in monitoring and policy dialogue on energy and related sectors’ reforms in line with the Association Agreement implementation” aims at strengthening the role of civil society in advocating reforms in the energy and related sectors.

The key objectives of the project are: • monitoring of the implementation of the energy provisions of the Association Agreement, including relevant environmental and trade-related commitments; • strengthening the civic experts’ and local actors’ capacity to track actual implementation of the reforms; • facilitation of public dialog to lead in proper implementation of the European energy and environmental reforms; • informing stakeholders and the Ukrainian society about the meaning and potential benefits of European reforms in energy and related sectors in order to empower them to keep the government accountable for pursuing these reforms.

The Project is supported by the European Union within the framework of EU4Energy initiative and cofunded by the International Renaissance Foundation

www.enref.org

Executive Summary Experts from the Gas Task Force took note of the adoption by the Government of the new regulation on public service obligations that provides for a gradual increase in gas prices for households and district heating companies by mid2020, as well as the criticism associated with this document. Positive assessments were received by the efforts of the Cabinet of Ministers for the development of the gas production industry, including the introduction of e-auctions, and the regulator’s activity, in particular amendments to the GTS Code, the Gas Storage Code, and the Methodology for Determining Tariffs for Natural Gas Transmission Services.

The Electricity and Nuclear Safety Task Force noted that the state sector of the coal industry of Ukraine is in a critical condition. Insufficient financing of the industry (technical re-equipment, modernization, building new longwall faces) and the lack of measures to eliminate unprofitable coal-mining and coal-processing enterprises are the main reasons for the decline of the state coal sector.

Experts from the Energy Efficiency and Social Issues Task Force noted only some progress in the implementation of energy efficiency legislation. E.g., the government approved the Technical Regulations on Eco-Design, and the Ministry of Regional Development started to publish data on the level of the implementation of metering under new methodology. Unfortunately, the procedure and timing of housing subsidy monetization remain unclear, and there are no news about the process of approving the draft law on energy efficiency.

In the field of Environment, in October 2018, implementation of the Law On Strategic Environmental Assessment has started, and the relevant procedures regarding two documents have already been launched.

The experts of the Oil sector welcome the government’s decision to introduce e-auctions for the sale of special permits for the use of subsoil and positively assess the establishment of a three-year transition period to calculate tariffs for the oil and oil products transportation on a simplified basis. At the same time, experts are concerned about the slowdown of development and amendment of technical regulations regarding the requirements for motor fuel and the actual cessation of the implementation of directives on the quality of petrol and diesel fuel and on the control of VOC emissions.

Experts from the Business Climate Task Force point out that the authorities at various levels continue to gradually simplify and implement new effective regulatory mechanisms. It will be much easier for companies to conduct a bankruptcy procedure with minimum asset depreciation and a minimum of time. All public procurement will be also monitored automatically, which will reduce the risk for companies dealing with an unscrupulous customer. However, through lawsuits, the competition for 2 vacant positions in the NEURC has been blocked for 5 months.

Most used abbreviations:

ChNPP – Chernobyl Nuclear Power Plant DSO – distribution system operator ESCO – energy service company GTS – gas transmission system IAEA – International Atomic Energy Agency IMF – International Monetary Fund MBCA – multi-apartment building co-owners association NEURC – National Energy and Utilities Regulatory Commission NNEGC - National Nuclear Energy Generating Company

PSO – public service obligations RNPP – Rivne Nuclear Power Plant SAEZM – State Agency on Exclusion Zone Management SNF – spent nuclear fuel SNRI – State Nuclear Regulatory Inspectorate SUNPP – South Ukraine Nuclear Power Plant TSO – transmission system operator UES of Ukraine – United Energy System of Ukraine WANO – World Association of Nuclear Operators ZNPP – Zaporizhzhia Nuclear Power Plant

Gas In October, no draft law were adopted by the Verkhovna Rada in the area of gas sector reform. The draft law considered by MPs, which proposed a fundamentally new model for connecting to engineering networks, including gas networks, was submitted for a repeated first reading. At the same time, MPs reacted promptly to increase in the price for natural gas by registering several legislative initiatives.

The main government’s decision in October was the approval of the new regulation on imposing public service obligations (PSO) upon business entities in the process of functioning of the natural gas market, which is intended to increase the price for gas for households and district heating companies, starting from November 1, 2018, and ensure the step-by-step leveling of gas prices for industry and these categories of consumers by mid-2020. In parallel, the Cabinet of Ministers updated the action plan for implementing the concept of development of the gas production industry, approved the introduction of e-auctions for the sale of special permits for use of the subsoil, and adopted a number of decisions in support of the economic activities of Naftogaz group.

Information about the government’s decisions in the area of unbundling was not disclosed, while Naftogaz approved the internal plan for the separation of gas transportation aimed at the transformation of Ukrtransgaz branches, with the prospect of establishing a new TSO based on the branch.

A significant amount of current and reformatory modifications was made by the Regulator in October. As part of the continuation of the gas licensing campaign, the Regulator registered 20 new natural gas suppliers, in addition, the NEURC simplified the reporting procedure for licensees, by adopting the terms and forms for using this online service. In the transmission sector, the commission approved the amendments to the GTS Code by introducing special (escrow) accounts for the purpose of settling for gas procured on the trading platform, and the Methodology for Determining Tariffs for Natural Gas Transportation Services based on multi-year stimulating regulation. Amendments to the Gas Storage Code and the Standard Natural Gas Storage Contract were also approved, in the terms of improving the use of gas storage facilities in the “customs warehouse” mode. In parallel, the Regulator approved longterm plans for the development of gas distribution networks of a number of distribution operators.

2018/19 heating season was started in Ukraine with record gas reserves in storages. As of October 30, 2018, the volume accumulated in gas storage facilities exceeded the mark of 17 bcm.

Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (Art. 338, 341, Annex XXVII of the AA) in accordance with Art. 278 of the AA In early October, the VRU considered the draft law No. 66711 related to the introduction of different, than the current ones, principles of connection to all engineering networks intended to guarantee “the equal and competitive access to goods of natural monopolies”. The essence of the proposed model is to cover the cost of the connection exclusively at the expense of the investment component of the tariff, which will make corruption and covert or duplicate payments impossible (a monopolist either provides the investor with a ready “connection point” free of charge or ensures the compensation of the cost of the corresponding infrastructure to it).

The draft law provides for gas supply networks and other facilities of the gas distribution system to be considered as facilities of engineering and transport infrastructure2 and to apply new rules to connection to them. In addition to the new economic approach, the introduction of the principles provided for by the draft law will also ensure the openness of the technical documentation of monopolists on the state of networks, free capacities, the appropriateness of the development of specifications, procedures for interaction with investors and sanctions for their violation. The monitoring of compliance with the legislation in the field of GDM is proposed to be imposed on the Antimonopoly Committee of Ukraine by

1 2

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=62209 Amendments to the Law on Regulating City Planning Activities

Gas extending its scope of responsibility to the powers regulated by the Law On the Natural Gas Market3. 228 MPs supported the decision to finalize the draft law and send it to repeated first reading.

The draft law on clarifying certain terms of the Tax Code of Ukraine (No. 91584), besides other adjustments, contains a proposal for a purely technical correction of the term “new well” used for the calculation of rent payments. In defining of this term – “... a well drilling of which has begun from the bottom surface of the land ...” (sub-clause 14.1.124-1 of clause 14.1 of Article 14) - instead of the term “bottom”, it is proposed to use the scientifically recognized term "daylight” surface of the dry land5.

The rest of the registered legislative initiatives are one way or another devoted to changing the price of natural gas. The simplest of the proposals is to abolish the decision taken by the CMU on October 19 to increase the price of natural gas for the population and DHC by 23.5% (draft resolution of the VRU No. 92306). Among others, two draft resolutions of the Verkhovna Rada on the introduction of a moratorium on gas price increase for the needs of the population (No. 91987 and No. 9198-18). If the draft of the first resolution submitted before the approval of the relevant decision by the Cabinet of Ministers refers to the prohibition to increase the price for this category of consumers by January 1, 2020 and to adopt other legislative acts that contradict this requirement, as well as the requirement to the CMU to recalculate “the unreasonably excessive natural gas price for the population”, then in an alternative draft registered after the decision of the Government, it is proposed to oblige the CMU in a half-year period to introduce a new procedure for directing gas of domestic production exclusively for the needs to the population, followed by the sale at the cost price, and, by the moment of entry into force of this procedure, to introduce a ban on price increases, and, during the moratorium, to sell gas to the population at the old price9 (which amend the CMU resolution No. 187).

Two more draft resolutions of the VRU in the same area were registered. Thus, the authors of the initiative No. 925210 proposed, first of all, to carry out an audit of the justification of prices and tariffs for housing and communal services (including for gas) in all regions of Ukraine11. According to the results of the audit, it is proposed to provide for household consumers the revision (decrease) of prices and tariffs of those manufacturers of housing and communal services, the actual costs of which for the provision of services are lower than the planned ones, on the basis of which the current tariffs are calculated. In addition, the Government is instructed to take into account the price of gas of domestic production in pricing and consider the plan of using this gas to meet the needs of the population. The moratorium on the price increase is also included for the period of the audit and measures of response to its results, but not less than for 2 years from the date of entry into force of the proposed resolution of the VRU. And finally, according to the draft resolution of the VRU No. 925712, it is provided for to recognize the urgent need to revise the price of natural gas for the population and heat energy producers (for the population) in order to reduce the price of gas for them and recommend the Cabinet of Ministers to repeal

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Amendments to the Law on the Antimonopoly Committee of Ukraine http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=64734 5 Minor Mining Encyclopedia ed. V.S. Biletskyi (in 3 volumes). - D.: Eastern Publishing House, 2004-2013 - v.2 - P. 362 6 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=64848 7 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=64794 8 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=64866 9 Provided for by the CMU resolution No. 187 before the adoption of a new regulation on the price of gas on October 19 10 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=64880 11 According to the results of monitoring by the NEURC of the tariffs for the period 2017-2018, at least, in heat supply, their unjustified increase by local self-government authorities (at constant gas prices) by 10-20%, in some cases up to 50%, was recorded (http://www.nerc.gov.ua/?news=8140) 12 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=64885 4

Gas the decision taken13. In addition to the above, the author proposes to hear the report at the meeting of the VRU: the report of the head of Naftogaz - on the general state of the gas sector, formation of prices and tariffs for gas and the reform of the energy market, as well as the payment of bonuses to employees of the company in particularly large amounts, the report of the head of Ukrgazvydobuvannya on the state of extraction and cost of natural gas in Ukraine.

During the October negotiations between the representatives of the CMU and the IMF regarding the change of the formula for calculating the gas price for households and district heating companies, and the format of the regulation on PSO, the Government adopted three decrees on the validity of this regulation in the previous wording14, which stipulated the preservation of the “old” price of gas for these categories of consumers: No. 83415, No. 83616 and No. 83817. According to the first of them, Naftogaz was given a special obligation to supply under these conditions the natural gas to certain heat production facilities, transferred to the National Agency for the Detection and Investigation of Assets Derived from Corruption and Other Crimes (in particular, Novorozdilska CHPP and Novoyavorivska CHPP). According to the second resolution (No. 836), the said wording of the regulation on PSO was extended for 2 weeks - until October 27, and according to the third one (No. 838) – it was extended once again, this time - until November 1, 2018.

Meanwhile, at a meeting on October 19, the Cabinet of Ministers finally approved the new terms and conditions of PSO, which lead to the transition to the introduction of “market” prices for natural gas for all categories of consumers in three phases (Resolution No. 86718). The new provision, and with it, a new method of calculating the price, will come into force on November 1, 2018 and will be valid until May 1, 2020 (at the same time, the resolution No. 187 and previous amendments to it lose validity, including according to resolutions No. 781, 834, 836 and 838).

Under the new regulation on PSO, for the period from November 1, 2018 to December 31, 2019, Naftogaz should sell/supply natural gas for the needs of the population at the price determined by the formula: P = (Pbas х Cd), where Pbas — the average arithmetic price of sale by Naftogaz of natural gas to industrial customers for the period from July 1, 2018 to September 30, 2018; Cd — discount coefficient.

Provided that Pbas = 8,981 UAH/tcm, and Cd is set at the level of 0.66943 for calculation from November 1, 2018 and 0.8 from May 1, 2019, the price of gas for households as final consumer is: 8,548.92 UAH/tcm19 from 01.11.2018 and 9,851.66 UAH/tcm from 01.05.201920. In the third stage, that is, from January 1 to April 31, 2020, if Pbas indicator is maintained at the same level (at the moment, the situation does not contain a mechanism for changing this indicator), the new gas price for households under the resolution 13

According to mass media, citizens appeal to the President of Ukraine and initiate a vote on the cancellation of the price increase for natural gas (https://www.unn.com.ua/uk/news/1759570-prezidenta-zasipali-petitsiyami-schodo-skasuvannya-pidvischennyatsin-na-gaz) 14 That is, wording of the resolution No. 187, the extension of which until October 18, 2018, was regulated by the September decision of the Cabinet of Ministers No. 781.

15 https://www.kmu.gov.ua/ua/npas/pro-pokladennya-specialnogo-obovyazku-dlya-zabezpechennya-zagalnosuspilnih-interesiv-uprocesi-funkcionuvannya-rinku-prirodnogo-gazu 16https://www.kmu.gov.ua/ua/npas/pro-vnesennya-zmin-do-postanovi-kabinetu-ministriv-ukrayini-vid-22-bereznya-2017-r-187-37 17 https://www.kmu.gov.ua/ua/npas/pro-vnesennya-zmin-do-postanovi-kabinetu-ministriv-ukrayini-vid-22-bereznya-2017-r-18 18 https://www.kmu.gov.ua/ua/npas/pro-zatverdzhennya-polozhennya-pro-pokladennya-specialnih-obovyazkiv-na-subyektiv-rinkuprirodnogo-gazu-dlya-zabezpechennya-zagalnosuspilnih-interesiv-u-procesi-funkcionuvannya-rinku-prirodnogo-gazu 19Price offers of Naftogaz for supply of gas under conditions of the regulation on PSO until April 30, 2019 is published on the company’s website (http://www.naftogaz.com/www/3/nakweb.nsf/0/AB7DBFB3BD13F498C2258336004F00EB?OpenDocument&year=2018&month= 10&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&) 20 https://www.epravda.com.ua/news/2018/10/31/642154/

Gas No. 867 will exceed 12 thousand UAH/tcm. That is, on the one hand, there is a gradual reduction of the difference in gas prices for households and industrial consumers; on the other hand, the absence of exchange indicators or other price benchmarks that respond to market changes can create even greater price distortions in the future.

In addition to the fact that the establishment of a “market” price is based on the prices of Naftogaz, and the above-mentioned uncertainty regarding the change in the value of the base price (Pbas) exists, some other positions also raise questions. In particular, the fact that the PSO right for sales intermediaries (Annex 1 of the resolution) – so-called “gazzbuts” (gas supply companies) - which receive it from Naftogaz at a discounted price - remains unchanged21. Two possible suppliers simultaneously are actually assigned to the household consumer: Naftogaz and gazzbuts, operating, however, under different conditions. Gazprom does not have the right to refuse the consumer in supplying gas, but Naftogaz, under certain conditions, has the right not to sell gas for gas to gazzbut for the needs of the consumer, as well as the right to supply gas to the consumer even if he has a debt to gazzbut22.

At the same time, under certain conditions (represented in clause 9 of the resolution), Naftogaz may refuse to sell gas to a consumer too. Another unacceptable aspect of the new provision is also regulated in it - the requirement to track the personal data of the gas consumer by DSOs and transfer them to the Ministry of Finance, which contravenes the rules of the Law On Protection of Personal Data. The new powers of the Ministry of Finance, which will de facto administer the consumer register, create the risks of manual control in favor of certain market players.

According to the assessment of the State Regulatory Service23, the practical application of rules of the regulation on PSO in the wording of clause 9 of the regulation may lead to the monopolization of the retail gas market in favor of Naftogaz. In addition, the delegation of the right of Naftogaz independently to decide which of the enterprises under its control will carry out special obligations within a specific period (under clause 3), may lead to the concentration of Naftogaz’s control over PSO and the loss of this control by the state.

Thus, the approved wording of the new format of public service obligations needs to be finalized, since it does not fully meet the requirements of Article 11 of the Law On the Natural Gas Market and the provisions of other legislative acts.

In order to improve the transparency of the gas sector and improve its regulation, the Cabinet of Ministers has modified the action plan for the development of the gas production industry of Ukraine by 202024.

According to the updated document, by the end of 2018, relevant department will prepare a new wording of the Code on Subsoil, which, at the legislative level, will ensure the implementation of new conceptual framework for regulating the use of subsoil. The approved measures of the plan also provide for the switch to an electronic format for the exchange of information between extractive companies and authorities and the creation of a portal with open access to information about Ukrainian resources.

Another important document in the area of subsoil use was approved by the Government in October - a resolution on the implementation of a pilot project on electronic auctions with special permits for the use of subsoil (No. 84825). In order to ensure open and transparent competition for such special permits, the Cabinet of Ministers introduced carrying out by the State Service of Geology and Mineral Resources from October 24, 2018 to December 1, 2019 of online auctions, in which an unlimited range of representatives of 21

One of the most discussed provisions within negotiations with the IMF For more details – see clause of the resolution No. 867 23 http://www.drs.gov.ua/wp-content/uploads/2018/10/10478-26.10.18.pdf 24 https://www.kmu.gov.ua/ua/news/uryad-aktualizuvav-plan-zahodiv-shchodo-realizaciyi-koncepciyi-rozvitku-gazovidobuvnoyigaluzi-ukrayini-do-2020-roku 25 https://www.kmu.gov.ua/ua/npas/pro-realizaciyu-eksperimentalnogo-proektu-iz-789 22

Gas economic entities, regardless from their location, will be able to participate on the day of the tenders. The resolution approved a temporary procedure for conducting such auctions26.

The Cabinet of Ministers has also adopted several decisions aimed at supporting the ongoing activities of Naftogaz, in particular, the reduction of nonproductive costs of companies of the group (Decree No. 778p27, No. 793-p28). Approving by the Government of obtaining by Naftogaz of external lending in the amount of USD 1 billion from Condor Finance Plc (Decree No. 792-p29) is also noteworthy. According to media reports30, raising this loan for Naftogaz’s division is risky, and according to the director of the Energy Community Secretariat J.Kopac, this decision may have negative consequences both for the company, in terms of carrying out unbundling, and for the Government, about which it informed the Minister of Energy I.Nasalyk by the letter.

For its part, Naftogaz, at the meeting on October 18, finally approved a plan for the unbundling of the TSO31, for the implementation of which it was instructed to create a project office, delegating the powers to approve the organizational structure and staffing of the project to the manager of Ukrtransgaz P. Stanchak (until December 1, 2018). The approved project “Unbundling of Gas Transportation Activities”, according to the media, consists of three stages: 1) the creation of the branch “Gas Storage Facilities Operator of Ukraine” by January 1, 2019; 2) expansion and optimization of the Ukrtransgaz branch “TSO of Ukraine” (TSOU) by June 1, 2019; 3) legal separation after obtaining the final decision of the NEURC on the certification of an independent TSO by December 31, 201932.

At the same time, representatives of the European Commission, the US Embassy in Ukraine, the World Bank, the Energy Community and the EBRD, are concerned about the lack of proper preparation of the TSO for unbundling under the EU rules and the slight progress made over the past two years, insist on a meeting on this matter with representatives of Ukraine by mid-November. This is stated in the letter to Prime Minister V. Groysman, signed in particular by Vice-President of the European Commission M. Shefchovich33.

Meanwhile, the Ministry of Energy and Coal Industry has finalized the draft resolution34, which proposes to establish “social” rates for gas consumption for the population without counters, namely: for households that use only gas stove in the presence of central hot water supply to accept a rate of 5.17 cm per month per person (from April to September) and 8.11 cm per person (from October to March); for households with a stove and without central hot water supply - 6.85 cm per person (from April to September) and 12.27 cm per person (from October to March); for households using a gas stove and a water heater, the Ministry of Energy and Coal Industry offers to fix a rate of 15.63 cm per person (from April to September) and 28.08 cm per person (from October to March).

By the beginning of November 2018, the total number of licenses issued by the Regulator for the supply of natural gas in the domestic market of Ukraine reached 48635. In order to simplify the submission of reports 26

At the same time, on October 25, 2018, the first for two years, auction for the sale of special permits for the use of subsoil, which was announced earlier, took place (http://www.geo.gov.ua/na-pershomu-vidkritomu-aukcioni-derzhgeonadr-cinao-okremixgazovix-dilyanok-rosla-na-430/). The price of separate gas fields during the auction increased by 430%, the winners were Stryinaftogaz and Ukrgazvydobuvannya.

27 https://www.kmu.gov.ua/ua/npas/pro-pogodzhennya-vidchuzhennya-osnovnih-fondiv-publichnogo-akcionernogo-tovaristvaukrgazvidobuvanny 28 https://www.kmu.gov.ua/ua/npas/pro-pogodzhennya-vidchuzhennya-osnovnih-fondiv-publichnogo-akcionernogo-tovaristva321 29 https://www.kmu.gov.ua/ua/npas/deyaki-pitannya-diyalnosti-publichnogo-akcionernogo-123 30 https://zn.ua/ECONOMICS/kredit-v-1-mlrd-dollarov-mozhet-stat-yadovitoy-pilyuley-i-dlya-naftogaza-i-dlya-pravitelstva-yanezkopach-298654_.html 31 https://www.epravda.com.ua/news/2018/10/24/641939/ 32 Ibid.

33 https://www.epravda.com.ua/news/2018/10/30/642134/ 34 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245310029&cat_id=167475 35 http://www.nerc.gov.ua/?id=11957

Gas by licensees and facilitate their timely delivery to the Regulator, the NEURC adopted amendments to the reporting forms regulated by a number of resolutions of previous years (resolution No. 123336). An important asset of the document is to provide licensees with the opportunity to report through the online service on the Unified State Administration Services Portal (https://poslugy.gov.ua/), having authorized with an electronic digital signature.

At the same time, the Regulator has approved plans for the development of gas distribution systems of a number of DSOs until 2027, for which 4 resolutions have been approved (No.1320-132337). At the end of the month, the NEURC published draft amendments to the DSO Code38, which provides for that DSO shall replace a gas meter to domestic consumers (after making a decision on the inexpediency of repairs) only if the corresponding costs are provided for in the structure of the tariff for gas distribution services and/or the plan for development of the gas distribution system for the next 10 years. At the same time, the Regulator noted that current structure of tariffs do not provide for such costs, approval of new tariffs (with the costs of replacing meters or establishing an exchange fund of meters) is possible after the entry into force of the Provisional Methodology for Determining and Calculating the Tariff for Natural Gas Distribution Services39.

According to the results of monitoring the natural gas market, which is constantly carried out by the Regulator, in October, the NEURC reported40 that, in September 2018, the maximum price of natural gas for consumers not subject to PSO (excluding tariffs for the services of natural gas transportation and distribution) was UAH 14,000 for 1 tcm (including VAT).

Against the backdrop of rising prices from November 1 for the population and DHCs, Naftogaz has decided not to change them for industrial and other consumers not falling within the scope of the Regulation on Public Service Obligations41. Thus, the October price list, the price of gas under which for the specified categories of consumers with VAT is UAH 13,438.8 – 14,586.0 per tcm, depending on the terms of the contract, remained current in November.

Given the scale of the Ukrainian gas market and its progress by market transformations, the international pricing agency Argus Media (London), specializing in information on prices and market conditions of energy markets, has launched the publication of natural gas quotes for Ukraine42.

Regulation (EC) No. 715/2009 on conditions for access to the natural gas transmission networks, replacing Regulation (EC) No. 1775/2005 (Art. 338, 341, Annex XXVII of the AA) according to Art. 278 of the AA, trade issues (Art. 269-274 of the AA) By a separate resolution (No. 128043), the Regulator regulated amendments to the methodology for determining and calculating tariffs for gas transportation services for entry points and exit points on the basis of multi-year stimulating regulation. We remind that these amendments include separate approaches to determining the tariff for domestic and cross-border entry points, switching the double-rate to one-rate tariff for the cross-border exit points (deducting the cost of expenditures on production and technical expenses), the same tariff for domestic exit points and exit points for direct customers.

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http://www.nerc.gov.ua/?id=35285 http://www.nerc.gov.ua/index.php?id=30382&cpage=1 38 http://www.nerc.gov.ua/index.php?news=8200 39 http://www.nerc.gov.ua/data/filearch/Proekty/2018/pr_372/pr_372-2018.pdf 40 http://www.nerc.gov.ua/?news=8126 41 http://www.naftogaz.com/www/3/nakweb.nsf/0/7F03CF7675CDD6ADC225832F002DC43F?OpenDocument&year=2018&month =10&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 42 https://www.argusmedia.com/ru/press-releases/2018/argus-launches-ukraine-gas-assessment?page=1 43 http://www.nerc.gov.ua/?id=35617 37

Gas Under the Resolution No.128144 of the NEURC, provisions of two basic documents of the gas storage sector - the Gas Storage Code and the standard storage agreement - were immediately transformed. The amendments made are intended to increase the attractiveness and improve the services of use by the “customs warehouse”.

Finally, the modifications made by the NEURC to the GTS Code relate to the procedure and means for making payments for gas in the course of its acquisition on a trading platform, for which the code is supplemented with the concept of “conditional storage accounts” (escrow account), as well as the powers of the platform operator in this process (resolution No. 128245).

Ukrtransgaz appealed to the Regulator asking to carry out state control over the “unauthorized” gas withdrawal of 32 DSOs46. According to the TSO, for the 9 months of 2018, the amount of gas spent on balancing exceeded 1 bcm, of which 50% is the gas withdrawn for the needs of production and technical expenses (PTE) by DSOs, in the absence of nominations for gas transportation. The debt accrued as of the end of September 2018 for this gas withdrawal for PTE reached almost UAH 26 billion, of which 65% (UAH 17 billion) is accounted for the enterprises of Regional Gas Company group. Thus, the problem of debt to the TSO for balancing before the start of the heating season has become critical. In the appeal, Ukrtransgaz asks the NEURC for an unscheduled audit of the indicated enterprises and report on the results.

Preparations for the introduction of the daily balancing of the GTS of Ukraine from December 1, 2018 are ongoing. The approval by the Regulator of nine electronic document circulation forms developed and submitted by the TSO47, used to fill the information balancing platform, was an important step.

In October, Ukrtransgaz set up the information platform by conducting training and providing DSOs with connection instructions48. However, as of October 22, only 9 out of 45 DSOs completed the necessary preparatory work on technical connection to the platform, provided the TSO with confirmation protocols for receiving/transmitting data and are ready to participate in the testing. At the same time, the positive moment of the preparatory process is that on October 23, Ukrtransgaz loaded the adjusted consumers’ data49 provided by 8 DSOs to the information platform of daily balancing and is currently completing the elimination of the revealed errors. Although, as of today, not all 25 DSOs (of 45), the data of which needed to be corrected, fully provided the necessary information, Ukrtransgaz emphasized that the filling of the consumer base allows the continuation of the testing started on October 19, so that to finish the testing process on time, till November 30.

Meanwhile, JSC Ukrtransgaz modernizes the largest in Ukraine “Bilche Volytsia” gas storage facility, about which a tender with an expected value of UAH 998 million was announced in Prozorro electronic auctions system50. For these funds, it is planned to reconstruct the compressor shop No. 4 of the buster pump station of this storage facility. Services will be procured according to the EPC contract. This contract differs from Ukrainian standard contractor agreements by the fact that the winner of the tender independently develops the project documentation, carries out searching works and coordinates the documentation, and at the end, together with the customer, commissions the facility. The whole complex of works is scheduled to be executed until December 31, 2019.

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Gas Directive 2004/67/EC concerning measures to safeguard security of gas supply (Art. 338, 341, Annex XXVII of the AA), action of “Early Warning Mechanism” (Annex XXVI of the AA), actions in emergencies (Art. 275-276, 309, 314 of the AA) In October, the Ministry of Energy and Coal Industry published the draft resolution of the CMU On Approval of the Amount of Reserve Stock of Natural Gas for 201951, which actually prolonged the current procedure for the creation of the reserve stock (0% of planned supply volumes for the following month - under normal conditions, 10% - in the event of a crisis situation of the emergency level).

The department has also published the draft update of the Rules for the Safety of Natural Gas Supply for the 2018/2019 gas year52. In particular, amendments determined the algorithm for developing by TSOs and DSOs, as well as the approval by the state administrations of lists of consumers, to which, in the event of a crisis situation of the emergency level, gas supplies will be discontinued (limited), requirements for the lists, procedure for discontinuation (limitation) of gas supply for different categories of consumers. The internal gas market parameters applied for risk assessment have been also updated.

The measures to prepare for the heating season 2018/19, as foreseen by the decree of the Cabinet of Ministers No. 717-p53, which have been taken in proper time, ensured the successful start of the heating season in Ukraine. On October 26, the Ministry of Regional Development reported54 that 60% of social infrastructure facilities (schools, kindergartens and hospitals) and 45% of residential buildings were already connected to heat carriers after the start of the heating season.

According to the operational data of Ukrtransgaz55, from April 8, 2018 until the start of the new heating season (October 14), the company has increased gas reserves in underground gas storage facilities by more than 9.2 bcm – up to 16.7 bcm. A further pumping of gas injection into storage facilities ensured, as of the end of October, a record level of gas reserves of 17.1 bcm – this is the volume ~ 2% higher than at the beginning of November 2017, and in general, the largest volume of stocks for the last 4 years56. According to Naftogaz, the indicated volume is sufficient for a stable passing of the heating season.

Ukrtransgaz has published the results of work of the Ukrainian GTS for the nine months of the current year57. From the beginning of 2018, the volume of transit from the Russian Federation to the EU and Moldova decreased by 5.5 bcm (7.3%), compared with the corresponding period of 2017, and reached 69.8 bcm (Ukrainian consumers of all categories during this period were transported 20.8 bcm). Imports of gas from European countries also decreased, compared to the same period in 2017 - by 2.7 bcm (23%), which is caused by the accumulation, before the start of the season of withdrawal, of significant volumes of gas reserves in storage facilities. As before, the gas transit transport corridor from Slovakia remained the most productive route of delivery of imports - 5.6 bcm of gas were received through it in Ukraine. The volume of domestic production for 9 months of 2018 remained at the level of last year - 17.3 bcm.

According to the media58, the President of Poland A. Duda urged Germany to abandon plans for the construction of Nord Stream 2 pipeline. This time this happened during a joint press conference with the President of the Federal Republic of Germany F.-V. Steinmeier in Berlin on October 23, at which the President of Poland stressed that it was not about an economic but a geopolitical project. According to A. Duda, the construction of this gas pipeline will lead to disrupting the energy balance of Europe, threats to the energy security of a number of Central and Eastern European countries, and the strengthening of the dominance of one gas supplier - Russian Gazprom.

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Gas At the same time, according to the operator of Nord Stream 2 project59, an intensive pipelaying on the sea section of this gas pipeline was started in Germany in October. In addition to the already operating pipelayer Castoro Dieci, the second vessel, Audacia of Allseas, which, by the end of 2018, has to lay two pipe strands of a total length of 38 km, has begun to work.

As for the continuation of tripartite negotiations on transit of gas through Ukraine after 2020, according to estimates of the Minister of Energy of the Russian Federation A.Novak, the next round may take place in the second half of November60. The latest meetings within the framework of consultations between the European Commission, Ukraine and the Russian Federation, launched in July, took place on September 12 and 26.

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Electricity and Nuclear Safety The draft law On Amendments to the Law of Ukraine On the Electricity Market (regarding the provision of a universal service) (No. 9223) was registered with the VRU. The draft law provides for postponing the start date of the retail market launch from December 11, 2018 to January 1, 2019.

The NEURC approved a number of important decisions regarding the operation of the new electricity market in relation to the formation of tariffs for distribution and supply of electricity, the licensing of suppliers, the formation of the procedure and the fee for connecting to networks.

The state sector of the coal industry of Ukraine is in critical condition. Insufficient financing of the industry (technical re-equipment, modernization, building new longwall faces) and the lack of measures to eliminate unprofitable coal-mining and coal-processing enterprises are the main reasons for the decline of the state coal sector.

Directive 2009/72/EC of 13 July 2009 on common rules for the internal market in electricity and repealing Directive 2003/54/EC (Art. 269, Chapter 11, Section IV of the EU-Ukraine Association Agreement) On October 19, a group of MPs (O. Dombrovskyi, L. Pidlesetskyi, M. Bondar and others) registered the draft Law of Ukraine On Amendments to the Law of Ukraine On the Electricity Market (on the provision of a universal services) (No. 9223)61. The draft law proposes: to postpone the final date of separation of electricity distribution activities from its supply activities, as well as the commencement of electricity supply on the basis of universal service from December 11, 2018 to January 1, 2019; to empower the Cabinet of Ministers of Ukraine to appoint a “last hope” supplier for a transitional period (for a period of two years) without the need for a competition provided for by Article 64 of the Law of Ukraine On the Electricity Market. It is also proposed to expand the range of consumers who can use the service of electricity supply on the basis of a universal service (non-residential consumers with the contracted capacity up to 50 kW, and for the transitional period - from January 1, 2019 to December 31, 2020, budgetary institutions, regardless of the contracted capacity and consumers, electrical plants of which are connected to electric networks with the contracted capacity up to 150 kW).

In addition, the draft Law proposes more precise definition of the term “domestic consumer”, adding household consumer settling with electricity suppliers using the general settlement metering tool to this category.

A simplified mechanism for concluding contracts for the provision of a universal service during a transitional period by committing by the consumer of any actions that confirm his desire to conclude a contract (signed application for connection, payment for a bill of a universal service provider and/or fact of consumption of electric energy). For contracts for the provision of distribution services, a standard form is established; contracts for the provision of electricity distribution services, the provision of universal services and electricity supply by a “last resort” supplier are public.

On October 18, the FEC Committee of the Verkhovna Rada of Ukraine, at its meeting, considered the draft Law of Ukraine On Amendments to the Law of Ukraine On the Electricity Market (No. 8468)62. The draft law concerns the legal status of property that is not subject to privatization and is an integral part of fixed assets of the TSO – NPC Ukrenergo. It is proposed to allocate the property of the TSO, under the right of economic management upon the transformation of the enterprise from the state into joint stock form of ownership in the process of corporatization. The FEC Committee recommended the Verkhovna Rada of Ukraine to adopt the draft law On Amendments to the Law of Ukraine On the Electricity Market No. 846863.

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Electricity and Nuclear Safety Regulation 714/2009/EC of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation 1228/2003 (Art. 270, Chapter 11, Section IV of the EUUkraine Association Agreement) In October, SE NPC Ukrenergo and SE Moldelectrika signed four annexes to the Operating Agreement on Parallel Work in the Common Control Block Ukraine - Republic of Moldova64. The annexes consist of the following regulations: Procedure for Compensation of Unforeseen Deviations in the Common Control Block; Procedure for Planning of Inter-System Flows in the Common Control Block; Dispatching Control over Parallel Operation of the UES of Ukraine and the ES of Moldova and Parameters of Synchronizing Devices on Inter-System Lines of SE NPC Ukrenergo and SE Moldelektrika. The operational agreement regulates the parallel operation of energy systems of Ukraine and the Republic of Moldova in accordance with European rules and standards and is one of the conditions for the possibility of synchronization of Ukraine’s energy system with the ENTSO-E. SE NPC Ukrenergo plans to coordinate the common position of Ukraine and Byelorussia on regulating the flow of Ukraine-Belarus intersection at the next meeting of BRELL energy circle participants in November.

This issue can affect the stability of operation of power systems and needs to be resolved while our energy systems are synchronized. After integration with ENTSO-E, this issue will be completely removed65.

Directive 2009/72/EC of 13 July 2009 on common rules for the internal market in electricity and repealing Directive 2003/54/EC (Art. 273, Chapter 11, Section IV of the EU-Ukraine Association Agreement) On October 5, the NEURC approved the main regulatory acts that define the procedure and mechanism for forming tariffs for electricity distribution and supply: -

Procedure for establishing (forming) tariffs for electricity distribution services (Resolution of 05.10.2018 No. 1175)66; Methodology for calculating the tariff for services of universal service provider (NEURC Resolution of 05.10.2018 No. 1176)67; Procedure for the formation of prices for universal services (NEURC Regulation of 05.10.2018 No. 1177)68; Method for calculating the tariff for the services of a “last resort” supplier (NEURC Regulation of 05.10.2018 No. 1178)69; Procedure for formation of the price, at which electricity supply to consumers is carried out by a “last hope” supplier (NEURC Resolution of 05.11.2018 No. 1179)70.

“The adopted documents will allow implementation of the Law of Ukraine On the Electricity Market in terms of the implementation of economic principles, and will define the procedure and methodology for the formation of prices and tariffs for electricity that will be supplied to consumers by universal service providers and “last resort” suppliers71.

On October 26, the NEURC also approved the Methodological Recommendations on the Transmission of Data of Small Non-Household Consumers to the Electricity Supplier, which, in accordance with the Law of Ukraine On the Electricity Market, is entrusted with the implementation of the universal service function

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Electricity and Nuclear Safety in the assigned territory72. The licensee must inform consumers about the changes and provide data transfer in 30 days before the day that is the last day of electricity supply at the regulated tariff.

Fee for connection to transmission and distribution networks On October 16, the NEURC published the draft Methodology (Procedure) for the Formation of the Fee for Connecting to the Transmission System and Distribution System for the second time.

The project provides for the following amendments, which, in the opinion of the Regulator, will be able to simplify and improve the conditions for connecting to networks. The amendments are as follows: •

• • • •

for the period up to December 31, 2020, the formula 7 of the Methodology shall not be applied and the specific value of the connection of 1 kW of capacity, determined according to the Standard SOU-N МЕV 45.2-37471933-44:2011, at the level of UAH 3.48 thousand/kW (without VAT) as an average indicator of the cost of creating 1 kW of capacity shall be establish for all operators of distribution systems; to change the approach to determining the load factor of transformer substations of the main network of DSO with voltage 35-110 (154) kV; for determining the forecast loading level, to use the coefficient of implementation of the technical conditions for the connection of customer’s electrical plants; to provide for the stimulation of the connection of high-power facilities (electrical plants) at a higher voltage level (fee for non-standard connection at higher voltage levels should be lower, compared with the cost of services at a voltage level of 0.4 kV); provide for the differentiation of rates for non-standard connection of capacity for urban and rural areas, as well as for electrical plants intended for the production of electricity generation73.

TSO certifiation On October 18, at the meeting of the MECI Commission for the reorganization (transformation) of NP NPC Ukrenergo, the issue of approval of assessment of the enterprise’s property was considered. The commission did not approve the property assessment report because, in the opinion of the commission, the documents have divergences and deficiencies. A new date for assessing the property of State Enterprise NPC Ukrenergo was determined - 31.10.2018 and a decision was made to transfer the powers of management of SE NPC Ukrenergo to the chairman of the Commission - Deputy Minister of the MECI Blyzniuk74. Such a decision was negatively perceived by the public75, the European community and the donors, which saw the delay in the process of corporatization of NPC Ukrenergo and its certification as TSO in it7677. The company has filed a petition for suspension of the decision and appeals against the decision of the Commission for the reorganization (transformation) of SE NPC Ukrenergo. The court proceedings are underway78.

TSO licensing On October 22, the NEURC resolution No. 1229 of October 18, 2018 On Ammending the Licensing Conditions for Conducting Business Activities on Electricity Distribution entered into force79. The resolution provides the opportunity to obtain a license by submitting a reduced package of documents. By

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Electricity and Nuclear Safety December 2018, nearly 40 distribution companies should be licensed. The Regulator provided an appropriate explanation regarding the procedure for submitting of a reduced package of documents80.

Art. 339, Chapter 1, Section V of the EU-Ukraine Association Agreement, Coal Market On October 18, the draft law of Ukraine On the State Budget of Ukraine for 2019 was adopted at first reading. The draft state budget provides for a reduction in financing of the state coal sector, in particular, it is not planned to finance the programs “State Support of Coal-Mining Enterprises for the Partial Covering of Expenses on the Cost Price of Finished Commodity Products (UAH 1.4 billion this year) and Implementation of Measure to Ensure Domestic Coal Production and Further Reform of the Coal Industry Sector” (UAH 1.3 billion this year), instead the Coal Industry Restructuring program with the amount of funding of UAH 1.630 billion was implemented81.

On October 19, 2018, the Committee hearing “The State Sector of the Coal Industry on the Way to ...

Strategic Vision and Budget Process” was held in the Verkhovna Rada.

At the hearing, issues of insufficient budget financing for the coal industry were discussed, in particular, politicians and government officials warned against repeating the mistake of the past year, when the 2018 budget did not provide for sufficient funds for modernization, technical support and the launch of new longwalls82. The Prime Minister of Ukraine Volodymyr Groysman, who noted that each year the funds for the modernization of the coal industry are allocated, but as a result they are used to compensate miners’ salaries, made a similar warning during the question hour83.

The Minister of Energy noted that Ukraine has reduced the consumption of imported coal by almost 2 times and stressed that Ukraine must develop domestic coal extraction, otherwise Ukraine’s energy security will depend on the supply of imported coal, and employment in the coal industry will be reduced, which in turn will have negative social consequences.

According to the Minister of Energy, as of October 1, arrears in wages in the coal industry amounted to UAH 488 million, and this debt is caused by the lack of budget coverage of the difference in the price of the cost price of products84. Instead, the chairman of the independent trade union of minors noted that the debt to miners, as of October, amounts to UAH 994 million and partly consists of debts of 2016 and 201785.

On October 19, the Ministry of Finance of Ukraine, within the framework of the implementation of the Law of Ukraine On Amendments to the Law of Ukraine On the State Budget of Ukraine for 2018 on the Appropriate Financial Provision of the State Sector of the Coal Industry, which provides for UAH 1.4 billion for repayment of arrears to miners, transferred UAH 136 million to the treasury accounts of state coalmining enterprises.

As a result of the committee hearings, it can be stated that the state sector of coal industry of Ukraine is in critical condition. Insufficient financing of the industry (technical re-equipment, modernization, opening of new lines) and the lack of measures to eliminate unprofitable coal-mining and coal-processing enterprises are the main reasons for the decline of the state coal sector.

It should be noted that during October, a number of protest campaigns related to the availability of wage arrears in the coal industry were held at state-owned mines86.

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Electricity and Nuclear Safety The coal industry remains one of the largest debtors in paying for electricity. State mines owe more than UA 13 billion for electricity. Despite the fact that during the period from 2017 to 2018, the selling cost of coal extracted at state mines increased several times, the tendency of non-settlements of state mines for consumed electricity continues.

Art. 342, Chapter 1, Section V of the EU-Ukraine Association Agreement, Cooperation in the Nuclear Field, Directive No. 96/29/Euratom, Council Directive No. 2006/117/Euratom, Council Directive No. 2003/122/Euratom From October 1, 2018, the support mission of the WANO on the topic of “Emergency Readiness.

Management of Beyond Design Basis Accidents, Operation of Alternative Mobile Equipment” started its work at the Khmelnitsky NPP. Experts from Bulgaria, the Czech Republic, Hungary and Ukraine were among the participants of the mission. According to the stay program, the WANO technical support mission lasted from 1 to 5 October at the KhNPP. At the end of the visit, the experts provided a report, suggestions and recommendations for improving the work in this area87.

On October 3, the U.S. Nuclear Regulatory Commission (NRC) delegation visited NNEGC Energoatom Directorate with a working visit. The visit took place within the framework of the implementation of the Agreement between the State Nuclear Regulatory Inspectorate of Ukraine and the US Nuclear Regulatory Commission on the Exchange of Technical Information and Cooperation in the Field of Nuclear and Radiation Safety of March 13, 2018. Representatives of the American delegation headed by the NRC commissioner Stephen Burns met with the management of Energoatom, during which areas of cooperation in the field of increasing the safety of NPP power units operation were discussed and the exchange of up-to-date technical information took place88.

On October 5, the press service of SE NNEGC Energoatom announced that it supported the initiative of the head of the NEURC Oksana Kryvenko to conduct an independent international audit of the reliability of the deficit in the tariff for Energoatom in the amount of UAH 13.9 billion89.

The SNRI Board unanimously supported the proposal to approve the report of the state examination on nuclear and radiation safety, report on the periodic reassessment of safety of the power unit 4 of the ZNPP and to set the date for the next periodic reassessment of this power unit’s safety to April 4, 2028.

The corresponding decision was made on October 11 at the meeting of the SNRI Board90. On October 16, the Head of the State Nuclear Regulatory Inspection of Ukraine (SNRIU) handed over an extended license for the operation of the nuclear installation of the power unit No. 4 of the Zaporizhia NPP to the Director General of Zaporizhia NPP91.

On October 16, at the power unit No 1 of South Ukrainian NPP, the implementation of the postFukushima measures included in the Integrated (Consolidated) Program for Improving the Safety of Power Units of Nuclear Power Plants of Ukraine was completed in full92.

The possibility of using the Ukrainian National Center for the Training Maintenance and Management Staff of Nuclear Power Plants in partnership with the European Union was discussed in particular during the meeting of the Ukrainian Supervisory Board (USB) regarding the Instrument for Nuclear Safety Cooperation (INSC). The meeting was held under the chairmanship of the Head of Unit B5 (Instrument for 87

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Electricity and Nuclear Safety Safety, Nuclear Safety) of the Directorate General for International Cooperation and Development of the European Commission in Brussels on October 1693.

On October 19, 2018, a working meeting on the topic “Project Institutions in the Nuclear Safety of Ukraine” in the context of improving the legal regulation of relations of project activities in the nuclear sector by amending the Law of Ukraine On the Use of Nuclear Energy and Radiation Safety with regard to the General Designer of the Nuclear Installation and the Facility Designed for Radioactive Waste Management” was held in the Committee of the Verkhovna Rada of Ukraine on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety with participation of MPs of Ukraine, representatives of the Ministry of Energy and Coal Industry of Ukraine, the State Nuclear Regulatory Inspectorate of Ukraine, the Ministry of Regional Development of Ukraine, SE NNEGC Energoatom, representatives of leading design organizations of Ukraine, scientific community. At the meeting, in particular, the following issues were discussed: world practice and experience in attracting or appointing general designers in the design of nuclear facilities; qualification requirements for general designers and their degree of responsibility; whether the proposed amendments to the legislation limit the participation of foreign institutions in the construction of facilities in Ukraine, whether the principles of competition, transparency, equality, etc. be violated?94 On October 22, at Rivne NPP, the Follow-Up Peer Review (FPR) was started by experts from the WANO’s Paris Center and the Follow-Up Corporate Peer Review by experts from the Moscow Center of the Association. As a result of gathering all the facts, experts from the Paris Center of the Association prepared a preliminary summary report, which was presented at the RNPP on October 26. As a result of the audit, the expert team leader noted the professionalism and openness of the Rivne atomists. The final report will be submitted within two months95.

On October 22, at the Khmelnitsky Nuclear Power Plant, the follow-up peer review of WANO was conducted. WANO experts were introduced to the results of the implementation of the Correcting Action Plan by Regions for the Improvement under the Results of the Corporate Peer Review within the period from 2 to 13 November 2015.

On 26 October, WANO’s peer review was started at SUNPP. The review will be carried out in two fundamental areas - professionalism of workers and leadership, six functional ones - operation, maintenance and repair, chemistry, radiation protection, personnel training, engineering and technical support, and will also cover ten general areas of production96.

The WANO’s follow-up corporate peer review is conducted for the Company as a whole, that is, during the week, the same inspections took place at the Rivne NPP, ZNPP, SUNPP and in the Company’s directories. Later, the Report on the Кesults of the Follow-up Corporate Review will be handed over to SE NNEGC Energoatom97.

Art. 342, Chapter 1, Section V of the EU-Ukraine Association Agreement, Cooperation in the Nuclear Field. Cooperation is aimed at solving the problems that arose as a result of the Chernobyl disaster, as well as the decommissioning of the Chernobyl NPP At the initiative of the Swedish radiation safety organization, the 3rd meeting of the Information Exchange on Technical Assistance to Ukraine in the field of nuclear and radiation safety was held in 93

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Electricity and Nuclear Safety Stockholm (Sweden) from October 8 to October 9. The meeting is aimed at establishing and further developing of international cooperation in this field, as well as exchange of experience in improving the regime of nuclear and radiological security between partners. Within the framework of the event, the Head of the State Agency of Ukraine on Exclusion Zone Management, Vitalii Petruk, who headed the Ukrainian delegation, informed the international partners of the effective implementation of projects of the Global Partnership on Physical, Nuclear and Radiation Safety. In addition, the agency presented a new project to create the “Center of Response to Emergency and Crisis with Intensification on Urgent Problems and Threats”, which will ensure proper informing of the public and the media in case of emergencies in the exclusion zone98.

On October 12, within the framework of the Agreement on Scientific Cooperation between the National Corporation, the University of Fukushima (Japan) and the Chornobyl Radiation and Ecological Biosphere Reserve reported on the future of work for ecological rehabilitation of the radioactive contaminated areas of the exclusion zone. In particular, this will be work to improve radiation and environmental monitoring of the environment and legislation in Ukraine. The new Ukrainian-Japanese project will help identify areas for reorganization of the exclusion zone based on an improved radiation and ecological monitoring system for the exclusion zone and adjacent populated areas99.

With the assistance of the Radiological Safety Office of the US Department of Energy, the State Agency of Ukraine on the Exclusion Zone Management, State Corporation UkrDO Radon and the State Border Guard Service of Ukraine participated in training under the program for the search, detection and management of sources of ionizing radiation. Within the framework of the program, specialists of SAEZM, SC UkrDO Radon, corporation’s integrated plants, as well as the State Border Guard Service were trained on Realistic, Adaptive, Interactive Learning System (RAILS). While studying on this system, various scenarios for the search, detection and further treatment of abandoned IRS were practiced on an interactive simulation model100.

On October 16, С.Dufresne, an expert of the Department for Technical Cooperation in Europe, IAEA, met with the leadership of the SAEZM and the enterprises that are part of its management within the framework of a working visit to Ukraine. During the meeting, the Ukrainian side presented the current state of implementation of the current national project IAEA UKR9038. Ms. Dufer was introduced to the current status of UKR9038 project and noted the significant progress made by Ukraine in the main areas of coping with the Chernobyl accident101.

On October 16, the head of the State Agency of Ukraine on Exclusion Zone Management, together with the Deputy Minister of Environment and Natural Resources of Ukraine on European Integration, discussed with the representatives of the European Commission the implementation in Ukraine of projects of international technical assistance within the framework of the “Nuclear Safety Cooperation Instrument” program, which are being implemented with the EC financial support. According to the Head of the SAEZM, Ukraine can now independently finance a significant part of its work in the field of RW management. The funds of the RAW Fund in the near future will be allocated to the commissioning of the I phase of the Vector complex and the construction of a storage facility for the storage of vitrified highly radioactive RAW that will be returned from Russia after reprocessing of SNF from Ukrainian NPPs102.

Ukraine together with the European Commission is developing a national plan for RAW geological disposal. On October 17, at the start-up meeting of the national plan for dispoal of highly radioactive 98

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Electricity and Nuclear Safety waste (HRW) in Ukraine within the framework of the Instrument for Nuclear Safety Cooperation (INCS), the experts discussed the current European experience in this area and outlined the goals and objectives for the future. The project should identify the process of selecting the site for the future repository, ensure the development of the plan and estimates, training of specialists, as well as support in formation of the positive attitude of the public to this facility. It is designed for 2 years and will be implemented by a consortium of companies from France, Germany, Sweden, as well as with the participation of one of the enterprises of the National Academy of Sciences of Ukraine103.

On October 18, the Verkhovna Rada of Ukraine voted at second reading and as a whole for the draft law No. 6624, which provides for the continuation of the National Program for ChNPP Decommissioning and the Transformation of the Shelter Object into an Environmentally Safe System, as well as budget financing for this activity until 2020. 229 MPs voted for the relevant decision. Adoption of this bill will allow the adoption of a single document that will identify priority areas for the decommissioning of the Chernobyl Nuclear Power Plant and transforming the Shelter Object into an environmentally safe system and, accordingly, provide budget financing for this activity by 2020104.

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Energy Efficiency and Social Issues October did not bring radical breakthroughs in the implementation of energy efficiency legislation. As before, there is no information on the progress of the draft Law on Energy Efficiency by bureaucratic corridors, and the introduction of monetization of housing subsidies still lacks full clarity and even confidence that the process will actually begin from January next year.

However, the Cabinet of Ministers managed to adopt the important Technical Regulations on Eco-Design of Energy-Consuming Goods, and the Ministry of Regional Development started publishing data on the equipment of the housing stock by individual heat meters in accordance with the new methodology. The sector of ESCO-contracts, as well as the area of training and certification of energy auditors shows a sure positive trend.

Directive 2012/27/EC on energy efficiency Despite the long-term process of harmonizing the draft Law of Ukraine On Energy Efficiency, at the end of October, the draft law was not sent to the Cabinet of Ministers of Ukraine, and its latest agreed wording was not published on the official website of the developer.

Energy audits and energy management systems (Article 8) According to data provided by the Ministry of Regional Development in response to a request for information, as of the end of October 2018, energy management systems were introduced in 97 cities (including 21 regional centers), 13 regions, 46 districts and 9 united territorial communities of Ukraine. In addition, the development of such systems is carried out in 9 regions, 15 districts, 35 UTCs and 27 cities of the country. In accordance with the CMU resolution, which sets out the action plan for the implementation of energy management systems in budgetary institutions, the State Agency on Energy Efficiency and Energy Saving also develops a procedure for certification of such systems. Unfortunately, the procedure links the deadline for the introduction of such certification to the adoption of the law on energy efficiency, which has not yet happened.

Accounting (Article 9) In compliance with the Law On Commercial Metering of Heat Energy and Water Supply, the Government adopted the Resolution No. 829 of October 10, 2018 On the Approval of the Procedure for Determining the Technical Capacity to Establish Distribution Heat Energy Metering Units and the Economic Feasibility of Installing Heat Energy Distributors105. The document lays down general rules for determining the technical options for the installation of individual metering tools, as well as provides a formula for calculating the economic feasibility of installing such a system. However, the final decision on such economic feasibility remains with the owners of the respective apartments or premises.

The Cabinet of Ministers of Ukraine also adopted the amendments to the current Resolution On Determining State Social Standards in the Field of Housing and Communal Services, which are intended to provide social protection of the population by granting benefits and subsidies for installments, maintenance and replacement of building-level heat and water meters, as well as providing subsidies for payment for Ń onsumer servicing (within the limit)106.

According to the Law, the fees for the installation, maintenance and replacement of commercial meetering units are regulated. That is, the costs that are included in fees shall be calculated according to the Methodology, and the amount of fees shall be set for each building separately by the executive bodies of the village, town and city councils. The specified amendments to the resolution provide for granting a subsidy for payment for consumer servicing. Thus, the Government is trying to meet the needs of the most vulnerable segments of the population, as well as speeding up the implementation of complete metering in the entire residential sector.

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Energy Efficiency and Social Issues Draft Orders of the Ministry of Regional Development On Approval of the Procedure for Registering a Metering Device and On Approval of the Methodology of Distribution among Consumers of the Scope of Communal Services Consumed in a Building (combined with the draft Act on the Approval of the Methodology for Determining and Calculating Correctional Coefficients for the Distribution of the Scope of Heat Energy Consumed Between Individual Consumers (in external corridors (premises), apartments (premises), placed on the ground and last floors of a building, etc.) are being approved by central executive authorites, while the first document has been already submitted for state registration to the Ministry of Justice, and, during October, the second one was submitted by developers for public discussion in the wording that takes into account the findings of the State Regulatory Service107.

In October, data on monitoring the state of equipping buildings with units of commercial metering of communal services in accordance with the procedure approved by the resolution of the Cabinet of Ministers of Ukraine No. 603 of 26.07.2012 were published for the first time. According to the data published108, Cherkasy region (98%), Mykolayiv region (97%) and Vinnytsia region (92%) hold the leading positions in equipping with metering devices, while Ternopil region (15%), Luhansk region (22%) and Sumy region (38%) do not reach the level of 50%. The leader in the number of non-residential buildings equipped with commercial heat energy metering units is the Mykolayiv region (100%), while the worst indicators are shown by the Sumy region (43%), Zhytomyr region (50%) and Cherkasy region (69%).

In general, in Ukraine, 81% of residential buildings and 77% of non-residential buildings have been equipped with commercial heat energy metering units.

As regards the level of equipping buildings with hot water meters, the Donetsk region (71%) is the leader.

Other regions significantly fall behind. In the Zhytomyr, Zakarpattia, Kyiv, Kirovohrad, Odessa, Kherson and Chernivtsi regions, hot water supply services are not provided. Equipment with commercial metering devices in non-residential buildings is at the level 100% - Lviv region, 99% - Khmelnytskyi region, 98% Dnipropetrovsk region. Kyiv (10%), Sumy region (36%) and Luhansk region (10%) significantly fall behind.

In general, in Ukraine 27% of residential buildings and 54% of non-residential buildings are equipped with commercial hot water metering units.

Energy service market (Article 18) As a result of monitoring of the State Agency on Energy Efficiency and Energy Saving in implementing the ESCO-mechanism in the regions of the country, 184 ESCOs for the amount of more than UAH 200 million have already been concluded.

The leaders in the implementation of ESCO-mechanisms are Kyiv (64 signed contracts), Odessa region (31 contracts), Mykolayiv region (26 contracts). The most common energy efficiency measures implemented by investors are the installation of individual heating plants and the modernization of heating systems in budget institutions. At the same time, Cherkassy (4 contracts) and Vinnytsia region (2 contracts) are less active. Instead, no tenders were announced at all in Volynska, Zakarpattia, Zaporizhia, Dnipropetrovsk, Zhytomyr, Luhansk, Ternopil regions.

The energy service market continues is still developing. In particular, during October, the following contracts have been signed109: ✓ 4 ESCOs (for a total amount of more than UAH 1.5 million) were signed in Kropyvnytskyi, (Kirovohrad region). In the 2 kindergartens and 2 schools of the city, it is planned to install a system of automatic regulation of heat energy consumption;

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Energy Efficiency and Social Issues ✓ 3 ESCOs (for a total amount of more than UAH 1.6 million) were concluded for the implementation of energy-efficient measures at secondary schools in the town of Myrhorod, village of Kalashnyky and Ploske (Poltava region); ✓ 4 ESCOs (for a total amount of UAH 3.3 million) were concluded for implementation of a number of energy-efficient measures in 3 kindergartens and town gymnasium of the town Pokrovska (Donetsk region): modernization of heating systems, installation of an individual heating plants with weather regulation and dispatching control; ✓ 14 ESCOs in the Savransky district of the Odessa region, where, in 2016, the energy service was started for the first time in the country, the purchase of the energy service on the terms of deep partnership has been announced, which is the further development of this mechanism.

Comprehensive energy-efficient measures at the ESCO-facility will be held at the Kontseba secondary school110.

As of today, there are more than 17 thousand buildings in the base of potential ESCO facilities, of which: more than 13 thousand – facilities of local authorities; about 4 thousand – facilities of central authorities; more than 100 MBCAs111112.

In addition, the Memorandum of Cooperation signed with the State Agency on Energy Efficiency and Energy Saving and Ministry of Education and Science proves the productivity113. In particular, in PROZORRO Electronic Public Procurement System, the first ESCO-tenders for energy efficiency measures in 9 facilites of the Kyiv National University named after. T. Shevchenko have been announced. ESCO-services are provided for dormitories, educational buildings, a library and complex of buildings of the botanic garden of the University.

Within the framework of the Memorandum, the State Agency on Energy Efficiency and Energy Saving, among other things, summarized information on energy consumption of 150 universities and formed the basis of potential ESCO-facilities114.

National Energy Efficiency Fund, Financing and Technical Support (Article 20) The situation with the continuation of the “warm loans” program remained tense during October. Despite a series of statements from NGOs, MPs, representatives of MBCAs and local self-government authorities to the Government and Parliament in relation to the regulation of the financing of the program, the Government was in no hurry to make a decision.

At the Annul MBCA Forum in Lviv115, representatives of MBCAs once again appealed to the Prime Minister to fulfill his promise to provide additional UAH 100 million to finance energy efficiency measures116. As a result of the annual Forum, the participants formulated proposals to the authorities in the form of a relevant Resolution117, which identified the main issues of activities of MBCAs and probable ways of their solution. In addition, the OPORA Civic Network has repeatedly called on the Government to influence the financing of the program in 2018 and increase financing in 2019118.

In the end, on October 19, at its extraordinary meeting, the Government decided to continue financing the “warm loans” program in the amount of UAH 100 million119. In particular, it is a question of reducing the amount of funds under the budget program 2751290 “Functioning of the Energy Efficiency Fund” in the 110

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Energy Efficiency and Social Issues amount of UAH 100 million by increasing the volume under the budget program 2754060 “Implementation of the State Target Economic Program for Energy Efficiency” in the amount of UAH 100 million120.

However, since between the decision-making and the actual possibility of obtaining compensation, there are a number of such bureaucratic procedures such as official publication of the CMU resolution, submission for approval of the updated program passport, receipt of a positive decision of the VRU Committee on Budget Issues, and also conducting additional legal and banking operations by authorized banks, OPORA Civic Network stressed the need to accelerate this process121. In particular, during the public discussion on the theme: “2019 State Budget: Policy of Energy Efficiency and Energy Modernization or High Tariffs and Budget Subsidies”, which was held by the Committee on FEC together with the Committee on Industrial Policy and Entrepreneurship on October 29, the representatives of the organization urged not to delay necessary procedures122123. However, as of the end of October, the agreement on the reallocation of funds and the adoption by the Budget Committee of the necessary decision did not take place. At the end of October, the said resolution was only published on the website of the CMU124.

In parallel with the manual management of the “warm loans” program, the creation of the Energy Efficiency Fund is continuing. Within the framework of the conference of the Ukrainian National Platform of the Eastern Partnership Civil Society Forum, Ms. Yuliia Holovatiuk-Ungurianu, acting head of the institution, shared the details of bureaucratic processes. Thus, it became known that forming of the full Supervisory Board remains the main task at present. However, there is also a preliminary selection of line specialists of the Technical and Financial Offices of the Fund, the final appointment of which, however, will depend on the approval by the Directorate in the future. At the moment, the estimated time frame for finding the necessary human resources is the end of January 2019. The similar preparatory work is also carried out on the development of future financial products of the organization, and the basic models are package proposals, previously called a “complex” one (up to 70% of the cost of works and materials will be reimbursed) and a “light” one (up to 40% of reimbursement). An interesting feature of the institution’s work will be the simultaneous financing of each thermo-modernization project from two funds simultaneously - directly by the Energy Efficiency Fund and the Fund, which is fully administered by a team formed by international financial institutions.

Directive 2010/31/EC on the energy performance of buildings In compliance with the Law of Ukraine On Energy Efficiency of Buildings, three draft regulatory legal acts are being approved by the central executive authorities, in particular, the draft Orders On Approval of the Procedure for Independent Monitoring of Energy Certificates, On Approval of the Procedure for Reviewing the Reports on the Inspection of Engineering Systems, On Approval of the Procedure for Independent M Monitoring of Reports on the Results of Examination of Engineering Systems. According to the information received from the Ministry of Regional Development, all three documents were filed for registration with the Ministry of Justice, and are expected to enter into force soon.

As of the end of October, 32 higher education institutions, in cooperation with the State Agency on Energy Efficiency and Energy Saving, joined the work on the preparation and certification of energy auditors, in particular: 23 institutions have already set up commissions for certification of energy auditors, 13 institutions have already introduced training programs for the preparation of energy auditors. To date, 51

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Energy Efficiency and Social Issues certificates have been issued: 36 - for energy auditors for certification of energy efficiency of buildings; 15 for experts in the survey of engineering systems of buildings125.

The corresponding certificates were given by: Zaporizia State Engineering Academy, Odessa National Academy of Communications named after O.S. Popov, Kyiv National University of Construction and Architecture. It is planned that according to the results of the concluded agreements, training will be carred out in the universities: certification of energy efficiency of buildings - 250 people, inspection of engineering systems of buildings - 140 people.

Directive 2010/30/EC on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products On October 3, the Cabinet of Ministers approved a technical regulation on the establishment of a system for defining requirements for eco-design of energy-consuming products. The relevant resolution comes into force six months after its publication126. According to the indicated Directive, eco-design means integrating environmental aspects into product design in order to improve its environmental performance throughout its entire life cycle. The relevant Agency has developed auxiliary regulations for certain types of products, the first of which is to adopt a package of regulations for boilers, generators, and has already developed similar regulations for refrigerators, vacuum cleaners, washing machines, dishwashers and other large appliances. According to the information received, technical regulations for certain types of products are planned to be submitted for approval by the end of 2018.

Experts estimate that the implementation of the eco-design system in Ukraine will allow reducing the use of energy resources in the design, manufacture, use and disposal of energy-consuming products; increasing the number of energy-efficient products and preventing the introduction of into circulation of goods with inappropriate energy consumption and negative environmental impact.

Social issues Monetization of benefits and subsidies for housing and communal services is one of the issues that has been publicly discussed for a long time, but has no definitive and effective solution. The latest signal from the Government at the end of October was the information on the portal of the Cabinet of Ministers on the confirmation of the Prime Minister’s readiness to start the first phase of actual monetization from January 1, 2019127. According to him, the Government’s goal is to complete this process before the next heating season, and finally the system should provide for personal accounts, to which state aid will be creditied on a one-time basis. In addition, the Minister of Social Policy Andrii Reva assured that the Government does not plan to restrict consumers in order to spend money saved due to rational consumption, which was the subject of discussions earlier128.

The imperfection in identifying beneficiaries who really need help and those who can pay for their consumption at their own expense remains the essential deficiency of the state support system. In order to draw attention to this important issue of social protection of the population, as well as to explain the new rules that have changed this year, experts and representatives of the Ministry of Social Policy held a public event at the UCMC. The new system is designed to combat fraud and involves a more thorough study of applications. Experts from the authorities assured that checking the property status, giving more authority to local administrations and councils in verification and granting subsidies will help to establish more just rules: to protect those who need, but not to give benefits to those who abuse their rights129.

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Environment and Renewable Energy Sources The Verkhovna Rada of Ukraine adopted in first reading an updated Strategy for State Environmental Policy, which provides for the introduction of about 30 clear measurable indicators. In October, formation of basin councils continued. The government has considered and approved the draft law On the Basics of Monitoring, Reporting and Verification of Greenhouse Gas Emissions developed by the Ministry of Environment and Natural Resources. As of October 12, 2018, the Law On Strategic Environmental Assessment entered into force, and the corresponding procedures were started regarding two documents.

The players in the “green” energy market finally reached a full understanding and have a common vision for further development of the industry. This is evidenced by signing by 5 renewable energy associations of the memorandum, the main objective of which is to support a new model of RES support by holding auctions and not delaying the transition process.

Directive 2001/42/EC on the assessment of the effects on certain plans and programmes on the environment (Article 363 of the AA) On October 12, 2018, the Law of Ukraine On Strategic Environmental Assessment entered into force. Recall that on March 20, 2018, the Verkhovna Rada of Ukraine adopted the Law On Strategic Environmental Assessment (draft law No. 6106). The strategic environmental assessment (SEA) is a systematic process of identifying, analyzing and further taking into account environmental factors and possible environmental impacts when developing state, local or sectoral programs. For the implementation, the Ministry of Environment anf Natural Resources also approved and published Methodical Recommendations on the Implementation of Strategic Environmental Assessment of State Planning Socuments on its official page130.

The recommendations are developed in accordance with the provisions of the law itself and relate to the definition of the need for the SEA, the stages of the SEA, the scope of the SEA, the preparation of a SEA report, public discussion and consultations, cross-border consultations, taking into account SEA results and decision making. Additionally, SEA Analytical Tools, Current Status Analysis and Impact & Alternatives Analysis are added as annexes to the recommendations.

Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Article 338 of the Association Agreement) Five renewable energy associations representing more than 80% of the country’s renewable generation market have signed a joint memorandum131, which states that in the near future, the process of switching to auctions that is currently operating in most European countries can not be delayed.

DTEK RES and GE Renewable Energy have entered into an agreement on the construction of the second stage of the Prychornomorska WPP this month. The capacity of this stage will be 100 MW, and its cost – EUR 150 million. The total capacity of the wind power plant after the completion of construction will be 200 MW. The project of this level, implemented in cooperation with foreign business partners, indicates the attractiveness of the Ukrainian “green” market for foreign investors.

As for the main priorities for state authorities in the field of renewable energy, they determined the continuation of favorable conditions for investment and implementation of “green” projects; the gradual and timely introduction of the auction system, as well as the creation of a fully-fledged and competitive markets for solid and liquid biofuels.

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Oil In the reporting period, the Regulator established a three-year transitional period during which tariffs for transportation of oil and oil products by main pipelines will be calculated under simplified method. The government has approved the resolution that provides for electronic auctions for the sale of special permits for the use of subsoil. This step, aimed at implementation of the Directive 94/22/EC in Ukraine, should ensure the availability, transparency and publicity of granting permits for the exploration, development and production of hydrocarbons, eliminate subjective factors and reduce corruption risks.

Despite this positive news, the likelihood of non-compliance with the requirements of Directive 98/70/EC on the quality of petrol and Directive 94/63/EC on the control of VOC emmissions has increased. The work on the development and clarification of technical regulations on motor fuel requirements, introduction of which is provided for by Directive 99/32/EC has been delayed.

Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products (Article 338 of the Association Agreement) On October 3, 2018, the Committee of the Verkhovna Rada of Ukraine on Economic Policy recommended the Parliament to adopt the Draft Law On Strategic Reserves (registration number 7543) submitted by a group of MPs and included on the agenda of the Verkhovna Rada on September 18, 2018132. According to developers133, this document, if approved, will: -

substantially simplify the procedures and reduce the timing of the issue of material assets; deprive the State Agency of Reserve of interventional functions; enter funds into the list of strategic reserves; determine the algorithm of the formation of the nomenclature of storage, based on real needs; arrange the procedures for updating the reserves; introduce public and private partnership in the field of reserve storage.

However, according to the opinion of the Chief Scientific and Expert Department134, this document, which in many respects duplicates the one presented by the State Agency of Reserve on March 15, 2016 (containing “a large number of conceptual errors”135), requires substantial finalization and obtaining the expert opinion of the Government.

On October 4, 2018, the Prosecutor General of Ukraine Y. Lutsenko informed about serving suspicion of damage to the state for the amount of UAH 6 million to the head of the State Agency of Reserve V. Musiichuk136. The investigative actions associated with this may interfere with the further development by the State Agency of Reserve of the draft Law On Minimum Oil and Oil Products Reserves (Task 129 of the Plan137), the first wording of which was discussed on October 2, 2018138.

Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 93/12/EEC, as amended by Directives 2000/71/EC, 2003/17/EC and 2009/30/EC and Regulation (EC) 1882/2003 (Annex XXX, Articles 360-363, 365, 366 of the AA) As of November 5, 2018, there is no information in open sources on the state of development by the Ministry of Energy and Coal Industry of: -

132

unified legal, organizational, financial and economic principles of “the implementation of quality control of oil products in accordance with EU norms and rules” (task 1702 of the plan139);

http://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3511=63404&pf35401=465931 https://rezerv.gov.ua/news/zakonoproekt-7543-pros-strategichni-rezervi-rekomendovano-do 134 http://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3511=63404&pf35401=464624 135 http://agroportal.ua/publishing/lichnyi-vzglyad/mnimaya-borba-s-korruptsiei-otsutstvie-reform-pri-pustykh-skladakhgosrezerva/ 136 https://www.facebook.com/photo.php?fbid=1042483895950785&set=a.139021569630360&type=3 137 http://zakon5.rada.gov.ua/laws/show/497-2018-%D1%80 138 https://rezerv.gov.ua/announcement/pres-anons-samit 139 https://www.kmu.gov.ua/ua/npas/pro-vikonannya-ugodi-pro-asociaciyu-mizh-ukrayinoyu-z-odniyeyi-storoni-ta-yevropejskimsoyuzom-yevropejskim-spivtovaristvom-z-atomnoyi-energiyi-i-yihnimi-derzhavami-chlenami-z-inshoyi-storoni 133

Oil -

systems for monitoring the quality and safety of oil products; interlaboratory comparisons of test results to confirm their quality; collection of in-country data on the quality of motor fuel (task 1703.1, 2 and 3 of the plan140). In addition, March 20, 2018 was determined as the deadline for performance of the mentioned tasks.

Directive 99/32/EC141 relating to a reduction in the sulfur content of certain liquid fuels and amending Directive 93/12/EC, as amended by Regulation (EC) 1882/2003 and Directive 2005/33/EC As of November 5, 2018, there was no information available in open sources on the state of preparation by the responsible officers of the following draft Government resolutions: -

-

-

on approval of the Technical Regulation on Requirements for Aviation Gasoline and jet fuel (work on which was planned to be completed on January 1, 2018, task 32142), introduced into the plan143 (Annex 2, clause 6, deadline for implementation - December 2018); on amendments144 to the Technical Regulation concerning requirements for motor-car gasoline, diesel, ship and boiler fuels145 in order to bring it into line with the requirements of Directives 98/70/EC and 2016/802/EC (task 1702.4 of the action plan146); on approval of the Technical Regulation concerning requirements for the liquefied petroleum gas, developed by the interdepartmental working group established on March 12, 2018 by the order of the Ministry of Energy and Coal Industry No. 159147, and was to be submitted for approval by November 1, 2018.

Appendix 2 to the National Standardization Work Program for 2018148 provides for, by the end of the year, the adoption of the 53 standards required for harmonization of the requirements for the quality and safety of hydrocarbon fuels in Ukraine and the EU. On September 17, 2018, amendments to this program were made in connection with the termination of statutory activities of SE UkrNDINP MASMA149. However, as of November 5, 2018, the final wording was developed only for one of the standards scheduled for adoption in 2018, for five – the first ones, the 13 projects were returned for finalization, work on 34 standards has not been started150.

On October 02, 2018, it was announced that the first warding of the national standard “Oil Products.

Determination of Flash and Ignition Point”151.

The issue relating to the implementation of the requirements of Directive 99/32/EC in terms of the appointment of the authorized body has not yet been resolved. By the Government resolution152, State Ecological Inspection was determined as such (paragraph 21 of the approved list). However, in its structure, there is no unit that has to perform the relevant functions. In addition, by the end of 2019, the State Ecological Inspectorate will be liquidated with the creation of the State Environmental Protection Service (task 1.2 of the plan153). Thus, while determining the tasks and powers of the new authority (task 37 of the plan154, the Ministry of Environment and Natural Resources should refer to them, in particular, monitoring

140

https://www.kmu.gov.ua/ua/npas/pro-vikonannya-ugodi-pro-asociaciyu-mizh-ukrayinoyu-z-odniyeyi-storoni-ta-yevropejskimsoyuzom-yevropejskim-spivtovaristvom-z-atomnoyi-energiyi-i-yihnimi-derzhavami-chlenami-z-inshoyi-storoni 141 DIrective 99/32/EC (other designation – 1999/32/EC) is codified on May 11, 2016 (Directive 2016/802/EC).

142 http://www.me.gov.ua/Documents/Download?id=d8571d0b-53a6-4ade-88c1-75579be0cb39 143 http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=245282918 144 http://www.drs.gov.ua/wp-content/uploads/2018/05/6795-10.05.18.pdf 145 http://zakon.rada.gov.ua/go/927-2013-п 146 https://www.kmu.gov.ua/ua/npas/pro-vikonannya-ugodi-pro-asociaciyu-mizh-ukrayinoyu-z-odniyeyi-storoni-ta-yevropejskimsoyuzom-yevropejskim-spivtovaristvom-z-atomnoyi-energiyi-i-yihnimi-derzhavami-chlenami-z-inshoyi-storoni 147 http://www.mev.gov.ua/sites/default/files/docfiles/nakaz_no_159_vid_12.03.2018.pdf 148 http://uas.org.ua/ua/messages/dodatok-2-do-programi-robit-z-natsionalnoyi-standartizatsiyi-na-2018-rik/ 149 http://uas.org.ua/ua/messages/zmina-2-do-programi-robit-z-natsionalnoyi-standartizatsiyi-na-2018-rik/ 150 http://uas.org.ua/wp-content/uploads/2018/06/Zvit_vikon-cherven-15-06-2018_Rrogram-2018Dod_1Zmina_1.xlsx 151 http://uas.org.ua/ua/news/povidomlennya-pro-rozroblennya-pershoyi-redaktsiyi-proektu-natsionalnogo-standartu-137/ 152 http://zakon3.rada.gov.ua/laws/show/1069-2016-%D0%BF 153 https://www.kmu.gov.ua/ua/npas/pro-zatverd 154 https://www.kmu.gov.ua/storage/app/uploads/public/5bc/de8/62a/5bcde862a988c706756328.doc

Oil and quality control and safety of motor fuel, carrying out inspections of economic entities and imposing sanctions on them in case of non-compliance with established requirements.

Directive 94/63/EC on the control of volatile organic compound emissions resulting from the storage of patrol and its distribution from terminals to service stations, as amended by Regulation (EC) 1882/2003 (Annex XXX, Articles 360-363, 365, 366 of the AA) As of November 5, 2018, in open sources, there was no information on the status of the fulfillment of the task 1695 of the plan155, by which the Ministry of Environment and Natural Resources was entrusted till October 31, 2018: to develop a draft technical regulation establishing the requirements for storage, transportation and reload of fuel, relevant equipment and service stations; to conduct an inventory of “terminals for storage and loading of gasoline”; to develop recommendations for the control of the operation of petrol stations and "small oil producst storage tanks”.

Directive 94/22/EC on the conditions of granting and using authorizations for prospection, exploration and production of hydrocarbons (Annex XXVII, Articles 279, 280, 341 of the AA) On October 11, 2018, the State Regulatory Service adopted the decision No. 433156, which for the second time rejected the draft Resolution of the Government On Amendments to the Regulation on the Procedure for Providing Mining Allotments157 in terms of abolition of mining allotments for the oil and gas extraction industry (the deadline for implementation - the first quarter of 2017158) submitted to the Ministry of Social Policy.

On October 17, 2018, by its decree No. 754-p159, the Government included the document under the title “On Amendments to the Law of Ukraine On Local Self-Government in Ukraine concerning the approval of providing subsoil for use (paragraph 36) in the tentative plan of legislative work for 2018160 as an initiative proposal of the Ministry of Environment and Natural Resources and the State Service of Geology and Mineral Resources. This document, developed in September 2017161, but still not agreed upon and not submitted to the Parliament, provides for: − −

−

placing issues on the approval of providing for use the subsoil that contain minerals of local importance under the exclusive competence of a village (settlement, city) council; to add the approval of providing for use the subsoil containing minerals of national importance to the list of issues that are decided at plenary meetings of regional councils to the list of issues that are decided at plenary meetings of regional councils; at plenary sessions of district councils minerals of local importance,; convening a session of councils on the approval of providing subsoil for us at least once a month.

The importance of this draft law is confirmed by repeated appeals of the Acting Head of the State Serviev of Geology and Mineral Resources O. Kyryliuk to deputies of Ivano-Frankivsk, Lviv, Chernihiv and Sumy regional councils, sent on October 24, 2018162. They contain a request to aprove providing for use of 13 oil and gas subsoil sites, special permits for the development of which are planned to be auctioned before December 1, 2019, at the next sessions.

On October 17, 2018, the Government approved a resolution No. 848 On the Sale of an Experimental Project on the Implementation of Auctions for the Sale of Special Permits for the Use of Subsoil Using

155

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Oil Electronic Auctions163 (the work plan of the Ministry of Environment and Natural Resources164, section 1, task 3, priorities of the Government, the deadline - August 2018) . This document approved the interim procedure for the organization of electronic tenders, which will be valid till December 1, 2019. Developers believe that this will ensure “a fundamentally new level of quality of service of business entities” due to: − − − − −

guaranteeing the availability, transparency, publicity of the sale of special permits; reduction of the time for registration and participation in tenders; attracting more participants; elimination of subjective factors; minimizing the contacts of applicants with employees of the State Service of Geology and Mineral Resources, which will reduce corruption risks.

By December 1, 2019, it was also ensured that business entities may submit documents for obtaining/extending special permits in an electronic form using an electronic digital signature, as well as the ability to track the status of the submitted documents using their accounts (section 1, task 2, priorities of the Government plan165, the deadline - October 2018).

According to independent experts166, the main advantages of the approved procedure are: − − − − − − −

the anonymity of tenders and a simple approval procedure that excludes abusive use of selecting out participants at the qualification stage as well as imaginary trades between applicants; the receipt of the maximum bonus by the state due to three rounds of tenders, in which each participant has one vote, and the highest priority in the queue of proposals will be taken by the one who has offered the highest price in the previous round; the possibility of an independent choice by applicants of the trading platform from the list of platforms registered on ProZorro, which forms the interest of the latter in the promotion of lots and the involvement of as many participants as possible; three months to review the published proposal and file an electronic application; the reduction of the risks of cancellation of auction results due to the fact that in case of failure of the winner to make a payment, the special permit will be received by the second successive bidder; impossibility of obtaining special permits by business entities that fall within the scope of the Law of Ukraine On Sanctions167; giving 6 ... 12 months to the winner for the implementation of the procedures provided for by the Law of Ukraine On Environmental Impact Assessment168.

At the time of implementation of the pilot project, the resolution of the Cabinet of Ministers of Ukraine No. 594 of May 30, 2011 On Approval of the Procedure for Conducting Auctions for the Sale of Special Permits for the Use of Subsoil was suspended169.

Despite the adoption of the decree on the introduction of electronic auctions, other documents of the socalled “Roadmap for Conducting International Oil and Gas Auctions170, the approval of which was reported on July 26171 were not published. This refers to draft Government resolution published by the State Service of Geology and Mineral Resources on July 9, 2018: −

163

On Amendments to the Methodology for Determining the Value of Reserves and Mineral Resources of the Deposit or Subsoil Plot Provided for Use172 (the deadline is postponed to October173 and

https://www.kmu.gov.ua/storage/app/uploads/public/5bc/e01/b98/5bce01b982138521614714.doc https://menr.gov.ua/news/32415.html 165 https://menr.gov.ua/news/32415.html 166 https://www.facebook.com/permalink.php?story_fbid=1099968460178938&id=100004973836647 167 http://zakon.rada.gov.ua/laws/show/1644-18 168 http://zakon.rada.gov.ua/laws/show/2059-19 169 http://zakon.rada.gov.ua/laws/show/594-2011-%D0%BF 170 http://www.geo.gov.ua/wp-content/uploads/2018/07/roadmap_auct-1.pdf 171 https://www.kmu.gov.ua/ua/news/volodimir-kistion-uryad-vidkrivaye-shlyah-dlya-prihodu-v-ukrayinu-novitnih-svitovihtehnologij-gazovidobutku 172 http://www.geo.gov.ua/wp-content/uploads/2018/05/zmpostkmu1117_2017_ok_0.doc 173 https://menr.gov.ua/news/32415.html 164

Oil −

December 2018174175), rejected by the State Regulatory Service (decision No. 202 of May 7, 2018176 ) through the non-compliance by the developers with key principles of the state regulatory policy and reissued on July 17, 2018177; On Approval of the Procedure for Disposing Geological Information, Amending Certain Resolutions of the Cabinet of Ministers of Ukraine and Invalidating the Resolution of the Cabinet of Ministers of Ukraine No. 423 of June 13, 1995178 submitted to the State Regulatory Service on July 10, 2018179.

As of November 5, 2018, there were no these documents among the documents approved by the Cabinet of Ministers180, while in the letter from the State Regulatory Service to the Ministry of Environmental Protection of Ukraine No. 8185/0/20-18 of August 13, 2018181, it was stated that they had been submitted for consideration to the Government without following the agreement procedure and contrary to the results of public discussion.

Submission by the Ministry of Environment and Natural Resources for consideration by the Government of the draft resolution On Amendments to the Methodology for Determining the Initial Sales Price at the Auction for a Special Permit for the Use of Subsoil182, which should introduce a differentiated approach to the evaluation depending on the intended purpose of the works (exploration or extraction), the degree of reliability of geological materials (resources or reserves) and the type of deposits depending on the complexity of extraction (traditional or non-traditional methods) was postponed to November 2018183.

The situation around the new wording of the Subsoil Code of Ukraine, which should have been adopted in 2016, has not changed184. On October 24, 2018, it was announced that its development was “expected”185.

According to the plan186 of the Ministry of Environment and Natural Resources, the State Service of Geology and Mineral Resources, the Ministry of Energy and Coal Industry and the Ministry of Economic Development and Trade are only instructed to “continue work in the area of drafting a new wording of the Code” (task 99, the deadline – the fourth quarter 2018), while the plan187 provides for the approval by the end of 2018 of the “terms of reference for the UE project on the development of the new Subsoil Code of Ukraine”(task 9, priorities of the Ministry). Thus, the task 1 of the plan188 and 64 of the plan189 were canceled without any justification.

Article 276 of the Association Agreement as regards the prevention of disruptions in the transit and transportation of oil and petroleum products In pursuance of clause (a) of Article 276 concerning minimization of the risks of accidental interruption, reduction or stopping of transit and transportation on October 4, 2018, the Ministry of Energy and Coal Industry submitted for the approval of the State Regulatory Service of Ukraine190 the draft Order On Approval of the Regulation on the Commission on the Decommissioning of Main Pipelines for Oil and Gas and Products of Their Processing191. This document, developed in pursuance of the Government resolution192, defines the main tasks of the Commission, its rights, powers of the chairman of the Commission, the rights and obligations of its members, the sequence of actions of the Commission for 174

https://menr.gov.ua/files/docs/nakazy/nakaz_475.pdf http://geo.gov.ua/sites/default/files/imce/nakaz_no_557.pdf 176 http://www.drs.gov.ua/wp-content/uploads/2018/04/4384-vid-07.05.18.pdf 177 http://www.drs.gov.ua/wp-content/uploads/2018/07/10137_19-18.pdf 178 https://menr.gov.ua/news/32210.html 179 http://www.drs.gov.ua/wp-content/uploads/2018/07/9835-11.07.18.pdf 180 https://www.kmu.gov.ua/ua/npasearch 181 http://www.drs.gov.ua/wp-content/uploads/2018/07/8185-13.08.18.pdf 182 http://zakon0.rada.gov.ua/laws/show/1374-2004-%D0%BF 183https://menr.gov.ua/news/32415.html 184 http://www.kmu.gov.ua/document/248102926/Dir_94_22.pdf 185 https://www.kmu.gov.ua/ua/news/uryad-aktualizuvav-plan-zahodiv-shchodo-realizaciyi-koncepciyi-rozvitku-gazovidobuvnoyigaluzi-ukrayini-do-2020-roku?fbclid=IwAR2AqufeCBGq1wE1lxT_uqCmc0QPFwcDxmv-8yamQk3w-S_P6lzLA5ak49Y 186 http://zakon5.rada.gov.ua/laws/show/497-2018-%D1%80 187 https://menr.gov.ua/news/32415.html 188 http://geo.gov.ua/sites/default/files/imce/nakaz_no_557.pdf 189 http://www.drs.gov.ua/deregulation/plan-deregulyatsiyi-2016-2017-rr/ 190 http://www.drs.gov.ua/wp-content/uploads/2018/10/13549-04.10.18.pdf 191 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245306373&cat_id=35082 192 http://zakon.rada.gov.ua/laws/show/209-2018-%D0%BF 175

Oil consideration of the documents prepared by a business entity, drawing up minutes and preparation of proposals for decommissioning main pipeline or refusal in this.

On October 4, 2018, the National Energy and Public Utilities Regulatory Commission adopted Resolution No. 1150 On Approval of the Amendment to the Procedure for the Formation of Tariffs for Oil and Oil Products Transportation by Main Pipelines193. The document introduces a three-year transitional period, during which tariffs for oil transportation by main pipelines for consumers of Ukraine are calculated on a simplified basis, using the annual growth rate. According to the developers, this will avoid the reduction of oil transportation volumes as a result of tariff increases provided for by the Procedure194.

Article 279 of the Association Agreement as regards ensuring equity of access and exercising of the activities of prospecting, exploring and producing hydrocarbons On October 25, the first auction for the sale of special permits for the use of oil and gas fields (Lviv region), as a result of which PJSC Ukrgazvydobuvannya obtained the rigts to geological study (with experimental and industrial development) of the Lipovetska Square, LLC Stryinaftogaz – of the Chernytska Square195.

On October 18, 2018, the temporary acting head of the State Service of Geology and Mineral Resources O. Kyryliuk notified about the intentions to hold auctions for the sale of special permits for the use of subsoil “monthly”. It is planned to put up “up to ten lots”196. However, as of November 5, 2018, it is only known about two oil and gas plots to be auctioned on January 30197 (Kadobnianska, Ivano-Frankivsk region) and February 12, 2019 (Surmachivska, Sumy region)198. Thus, no “first international auction”, which should have covered 44 oil and gas fields199, in January-February 2019, most likely, will not happen.

According to private companies200, exploration and production of hydrocarbons in Ukraine are slowed down: − − − − −

unstable legislation (the procedure for the issuance of special permits for the use of subsoil since 2011 has been changed 13 times, the fiscal regime since 2014 - three times); absence of auctions for the sale of special permits for the use of subsoil (during 2017 and nine months of 2018, the State Service of Geology and Mineral Resources did not hold any trades); lack of qualitative geological information (there is no single open register, information is not digitized, its acquisition is possible only with the permission of the State Service of Geology and Mineral Resources); availability of liquidated or mothballed wells of state-owned companies on licensed areas of private entities; lack of the possibility of joint development of complex areas that are on the balance sheet of stateowned companies.

Article 280 of the Association Agreement as regards ensuring transparency in granting licenses for prospecting or exploring hydrocarbons According to the task 206 of the plan201 and task 7 of the plan202, the Ministry of Environment and Natural Resources had, in the first quarter of 2017, to introduce a simplified digital access to real-time secondary geological information. However, the draft resolution203, sent to the Cabinet of Ministers by the letter No. 193http://www.nerc.gov.ua/index.php?id=35017 194http://zakon.rada.gov.ua/laws/show/v0690874-17/stru 195

http://www.geo.gov.ua/ukrgazvidobuvannya-pridbalo-lot-naftogazovogo-rodovishha-pidnyavshi-cinu-v-5-raziv-do-15-mln-grn/ http://www.geo.gov.ua/derzhgeonadra-planuye-u-2019-roci-shhomisyachno-provoditi-aukcioni/ 197 http://www.geo.gov.ua/organizator-aukcionu-derzhavna-sluzhba-geologi%D1%97-ta-nadr-ukra%D1%97ni-ogoloshuye-proprovedennya-i-aukcionu-2019-roku-z-prodazhu-specialnix-dozvoliv-na-koristuvannya-nadrami/ 198 http://www.geo.gov.ua/organizator-aukcionu-derzhavna-sluzhba-geologi%D1%97-ta-nadr-ukra%D1%97ni-ogoloshuye-proprovedennya-ii-aukcionu-2019-roku-z-prodazhu-specialnix-dozvoliv-na-koristuvannya-nadrami/ 199 http://www.geo.gov.ua/kabmin-zatverdiv-proekt-vprovadzhennya-elektronnix-torgiv-z-prodazhu-specdozvoliv-nakoristuvannya-nadrami/ 200 https://mind.ua/openmind/20187492-privablivij-gazovidobutok-5-krokiv-nazustrich-investoram 201 http://www.kmu.gov.ua/document/249935381/R0275.doc 202http://zakon2.rada.gov.ua/laws/show/1079-2016-%D1%80/paran146#n146 203 https://menr.gov.ua/news/32210.html 196

Oil 5/4-11/4838-18 of May 15, 2018 (paragraph 63 of the plan measures execution status204), has not received any support from the Government. Since the Ministry of Environment and Natural Resources repeatedly tried to submit this document for review, bypassing the procedures established by the Regulation205, on August 13, 2018, the State Regulatory Service appealed to it with a request to submit a finalized draft for approval “as soon as possible� (letter No. 8185/0/20-18206), but did not receive a response as of November 05, 2018.

Article 337 of the Association Agreement in terms of informing and protecting customers from unfair selling practices, and access to oil products, including liquefied petroleum gas, for consumers, including for the most vulnerable citizens On November 01, 2018, the Government resolution, which regulated the issue of determining the starting price for liquefied natural gas sold at specialized auctions for the needs of the population (paragraph ninth of clause 19 of the procedure207) once again, came into force. It will be determined at the price of natural gas for the needs of the population (adjusted for different combustion heat), which is calculated on the basis of the provision208.

204

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Business Climate In October, in the context of the business climate, significant steps were taken to increase the efficiency of economic activity, primarily due to the approved Bankruptcy Code. The Code reduces the terms of bankruptcy proceedings and increases the debt repayment rate. At the same time, an interactive business portal was launched, where companies have the opportunity to preview the schedule of inspections and plan time for it accordingly. This will enhance the openness, accountability and predictability of the activities of all controlling authorities.

A comprehensive automated checking mechanism was scaled for all purchases through ProZorro electronic system. As a result, the effectiveness of the audit service will increase significantly. The opportunity to conduct auctions for the sale of special permits for the use of subsoil was also introduced on ProZorro. The Antimonopoly Committee, in conjunction with the Ministry of Economic Development and Trade, in turn, began to work on the issue of financial guarantees of the customer for tender documentation.

Meanwhile, the Antimonopoly Committee continues to work on harmonizing the Ukrainian legislation with the legislation on state aid, and also develops a framework for granting aid in various areas, in particular in coal mining. At the same time, through lawsuits for the fifth consecutive month, the competition for 2 vacant positions of the NEURC members remains blocked.

Article 378-379 as regards creating favorable conditions for business The Bankruptcy Code of Ukraine, which aims to solve three key problems of the previously valid procedure, namely, a too long bankruptcy procedure for almost 3 years, high cost and low efficiency of bankruptcy procedures, was adopted. From now on, the stages of the bankruptcy procedure have been improved, in particular, the world agreement and reorganization have been united into a single procedure, the terms for considering cases were shortened by reducing the number of appeals. The sale of the property in bankcruptcy will take place exclusively at an electronic auction through a single system that meets the principles of transparency, similar to those introduced in the public procurement system209.

Deutsche Bรถrse Group and the National Bank of Ukraine together with Clearstream International Central Securities Depository opened access to Ukrainian government securities for foreign investors. Setting up an appropriate information system with access to information will begin in the first quarter of 2019. Such information availability on the international market of government securities will potentially expand the range of sources of long-term financing and reduce the cost of debt210.

The NEURC has introduced an opportunity for companies, the activities of which are regulated by the authority, to submit their reports electronically by putting an electronic digital signature through the Unified State Administration Services Portal211. Corresponding changes are provided for by the NEURC Resolution No. 1233212, which amends a number of other resolutions of the Regulator in the context of reporting on the results of economic activity. A total of 43 forms of reporting can be submitted through the Unified Portal.

The BRDO Office of Effective Regulation has launched and presented inspections.gov.ua integrated portal for the stipulated interaction between the business and the authorities that carry out the inspections. As of the end of the month, 80% of all inspection authorities have already joined and opened information about their inspections. Almost 250 thousand plans for inspections and about 48 thousand results of already conducted inspections have been published213.

209

http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=63518 https://bank.gov.ua/control/uk/publish/article?art_id=78773620&cat_id=55838 211 https://poslugy.gov.ua/info/services/bylifesituation/182/2 212 http://www.nerc.gov.ua/?id=35285 213 https://www.kmu.gov.ua/ua/news/perevirki-biznesu-v-2019-roci-stanut-bilsh-prozorimi-ta-rizikooriyentovanimi 210

Business Climate Articles 262-264, 267 on providing state aid The AMCU has developed and published the draft Laws of Ukraine, which amend the Customs214, Tax215 Codes to bring them in line with the Law of Ukraine On State Aid to Business Entities. The draft laws provide for that the decision on − − − − −

determining tariff preferences; exemption from customs duties; exemption from payment of import duties; installments and deferrals of monetary obligations; or tax debt

which by definition are examples of state aid, should be carried out with the approval of the AMCU. The AMCU has also published the Draft Resolution of the Cabinet of Ministers of Ukraine On Approval of Criteria for Assessing the Validity of State Aid to Business Entities in the Coal Industry. It provides for the introduction of legal regulation of relations between the Antimonopoly Committee of Ukraine, as the Authorized Agency on State Aid, the providers and recipients of state aid for: − − − − −

closing down production coal mining enterprises or production units; coverage of exceptional expenses; ensuring access to coal reserves; initial investment; coverage of current production costs216.

The Typical Requirements for Coordinated Actions of Business Entities in the Field of Technology Transfer, the observance of which allows for the implementation of these concerted actions without the permission of the Antimonopoly Committee of Ukraine, regarding which the AMCU has published the Draft Decree217 have to become an additional regulatory act for the effective functioning of the state aid mechanism.

Articles 150, 153 on public procurement (as regards the implementation of certain provisions of Directives 2014/24/EC, 2014/25/EC, 89/665/EEC and 92/13/EEC) The Antimonopoly Committee develops the issue of the need for the customer, in addition to financial guarantees, to add an opinion on the compliance of the financial guarantee provided by it to the package of tender documentation. This opinion shall be issued by the Ukrainian National Committee of the International Chamber of Commerce. On this occasion, a meeting with the Ministry of Economic Development and Trade was held at AMCU218.

Auctions for the sale of special permits for the use of subsoil will now take place through electronic tenders. The State Service for Geology and Mineral Resources of Ukraine will put up perfmits for the use of subsoil for electronic auctions in ProZorro219.

The system of automatic search of suspicious purchases by 35 standard rating criteria was launched in ProZorro. The identified tenders will be verified by specialists of the State Audit Office. This tool will allow auditors to detect unscrupulous government purchasers in the early stages of procurement and to combat tender offenses220.

214

http://www.amc.gov.ua/amku/control/main/uk/publish/article/145130 http://www.amc.gov.ua/amku/control/main/uk/publish/article/145120 216 http://www.amc.gov.ua/amku/control/main/uk/publish/article/145071 217 http://www.amc.gov.ua/amku/control/main/uk/publish/article/144597 218 http://www.amc.gov.ua/amku/control/main/uk/publish/article/144722 219 http://www.me.gov.ua/News/Detail?lang=uk-UA&id=8ffe8085-8b65-4da0-98e7-0752722baf82&title=NaProzorroprodazhiTeperProdavatimutDozvoliNaKoristuvanniaNadrami 220 https://prozorro.gov.ua/news/v-prozorro-startuvav-avtomatichnij-poshuk-pidozrilih-tenderiv 215

Business Climate Articles 351, 352 on the taxation of energy and electricity products (as part of the implementation of certain provisions of Directives 92/83/EEC, 2008/118/EC and 2011/64/EC) The “single window” mechanism and optimization of control procedures during the movement of goods through the customs border of Ukraine came into force on October 4. Within this framework, the SFS has to create a single state-owned information portal “Single Window for International Trade”, which will facilitate the submission of permits during customs clearance221.

Articles 381, 382 regarding transperancy of the extractive sector The President P.Poroshenko signed a law on ensuring transparency in extractive industries, and it will enter into force on November 16, 2018222. Information about the details provided for by the law can be found in previous monitoring reports223.

Article 277 on the Regulator (provisions of Directives 2009/72/EC and 2009/73/EC in terms of the regulatory body) For the fifth month, the competition for two vacant posts of the NEURC members has been blocked through the lawsuits of D. Vovk and A. Hudachenko concerning the decision of the Competition Commission not to allow them to participate in the selection, which is caused by the fact that the candidates do not have 5 years of experience in the field of energy. Accordingly, the current composition of the 5 members of the Regulator continues to divide the functions of 7 members among themselves, which creates risks in the context of the quality of work of the department.

221

http://sfs.gov.ua/media-tsentr/novini/354076.html http://zakon.rada.gov.ua/laws/show/2545-19 223 http://enref.org/books/?analysts-type=monitorynhy 222

Methodology ANNEX 1.

List of Articles of the Association Agreement and Acquis Subject to Monitoring The group Electricity and Nuclear Security conducts monitoring and assessment of issues relating to electricity, nuclear energy, coal and elimination of consequences of the Chornobyl accident. Acquis concerned: Article 269, Chapter 11, Title IV, Directive 2009/72/EC (market-related provisions) Article 270, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 271, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 273, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 274, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 305, Chapter 14, Title IV, Directive 2009/72/EC, Directive 2005/89/EC Article 338, Chapter 1, Title V Article 338, Chapter 1, Title V, Cooperation Agreements with IFIs Article 339, Chapter 1, Title V, coal market Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector, Council Directive 2014/87/Euratom, Council Directive 2013/59/Euratom, Council Directive 2006/117/Euratom Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector The group Gas conducts monitoring and assessment of issues relating to gas, in particular, the implementation of the following acquis: Articles 338, 341, Directive 2009/73/EC (market-related provisions) Articles 338, 341, Regulation (EC) 715/2009 Articles 338, 341, Directive 2004/67/EC + Annex XXVI (Early Warning Mechanism), Articles 275 (Unauthorised taking of energy goods), 276 (Interruption), 309 and 314 (resolution of disputes) of the Association Agreement Chapter 11 Trade-related energy, in particular Articles 269 (Domestic regulated prices), 270 (Prohibition of dual pricing), 271 (Customs duties and quantitative restrictions), 272 (Transit) and 273–274 (Transport, cooperation on infrastructure) Annex XXVII to Chapter 1 Energy cooperation, including nuclear issues — Directive 94/22/EC + Articles 279– 280 (Access to and exercise of the activities of prospecting, exploring for and producing hydrocarbons, and licensing conditions) The group Energy Efficiency and Social Issues conducts monitoring and assessment of the implementation of the following acquis: Directive 2010/30/EU Directive 2010/31/EU Directive 2006/32/EU Directive 2012/27/EU Directive 2009/72/EC (social issues) Articles 338, 341 of the Association Agreement Directive 2009/73/EC (social issues) Articles 338, 341 of the Association Agreement

Methodology The group Environment and Renewable Energy Sources conducts monitoring and assessment of the implementation of the following acquis: Article 363, Directive 2011/92/EU Article 363, Directive 2001/42/EC Article 363, Directive 2003/42/EC Article 363, Directive 2003/35/EC Directives 85/337/EEC and 96/61/EC Article 363, Directive 2008/50/EC Article 363, Directive 1999/32/EC Article 363, Directive 94/63/EC Article 363, Directive 2009/147/EC Article 363, Directive 2010/75/EU Article 338, Directive 2009/28/EC The group Oil conducts monitoring and assessment of the implementation of the following acquis: Directive 2009/119/EC Directive 94/22/EC Directive 98/70/EC Articles 274, Chapter 11 of the Association Agreement (Trade-related energy) Articles 275, Chapter 11 of the Association Agreement (Trade-related energy) Articles 276, Chapter 11 of the Association Agreement (Trade-related energy) Articles 279, Chapter 11 of the Association Agreement (Trade-related energy) Articles 280, Chapter 11 of the Association Agreement (Trade-related energy) Article 337 of the Association Agreement Article 338 of the Association Agreement Article 339 of the Association Agreement The group Business Climate conducts monitoring and assessment of the implementation of the following acquis: Article 27, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 28, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 29, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 88, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 93, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 97-102, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 104, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 105, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 107, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 144-147, Chapter 7 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Chapter 8 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and the Directive 2014/25/EU Article 255, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 256, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 258, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement

Methodology Article 263, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 267, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 277, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and Directives 2003/54/EC and 2003/55/EC (as regards the regulatory authority) Articles 355-359, Chapter 5, (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement and Directive 2008/92/EC Article 379, Chapter 10 (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement

Glossary ANNEX 2.

Glossary (Short Description) of EU Acquis Subject to Implementation Monitoring

Gas Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive establishes common rules for the transmission, distribution, supply and storage of natural gas. The rules established by this Directive apply to natural gas, liquefied natural gas (LNG), biogas and gas from biomass. They aim to achieve a competitive, secure and environmentally sustainable market. This Directive provides for compulsory functional unbinding (supply) of transmission system operators (TSO) in vertically integrated undertakings. EU Member States must ensure that all customers are entitled to freely choose natural gas supplier and can easily change supplier within three weeks. At the same time, Member States may impose on suppliers selling gas to household customers obligations which may relate to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency.

Regulation (EU) No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005 This Regulation sets common rules for access to gas transmission systems, LNG terminals and storage facilities taking into account the special characteristics of national and regional markets. The document establishes the procedures of certification of transmission system operators, as well as development, elaboration and implementation of network codes (with the participation of the European Network of Transmission System Operators — ENTSO — for Gas). The key objective of this Regulation is to ensure that all market participants have free and non-discriminatory access to relevant infrastructure and capacities.

Directive 2004/67/EC concerning measures to safeguard security of natural gas supply This Directive establishes a common framework within which Member States must define general, transparent and non-discriminatory security of supply policies compatible with the requirements of a competitive market, and clarify the roles and responsibilities of market players (including in case of emergency). The government must specify minimum security of supply standards to be complied with by the market players, prepare and update national emergency measures, identify “vulnerable” customers and ensure adequate security for them, establish cooperation with the European Commission and other stakeholders.

Electricity and Nuclear Security Council Directive 2014/87/Euratom of 8 July 2014 amending Directive 2009/71/Euratom establishing a Community framework for the nuclear safety of nuclear installations The Directive establishes a European framework for maintaining and promoting consistent improvement of nuclear safety and its regulation. It sets an ambitious safety goal across the EU in order to prevent accidents and avoid radioactive waste from nuclear installations. The directive applies to any nuclear installation subject to licensing.

Council Directive 2013/59/Euratom laying down basic safety standards for protection against the dangers arising from exposure to ionising radiation The Directive establishes basic safety standards to protect the health of employees, the general public, patients and others from the dangers of exposure to ionising radiation. The Directive applies to any planned, existing or emergency situation which involves a risk to ionising radiation. In particular, it applies to: the manufacture, production, processing, handling, disposal, use, storage, holding, transport, import to and export from the EU of radioactive material; the manufacture and operation of electrical equipment emitting ionising radiation; human activities withnatural radiation sources that could lead to a significant

Glossary increase in the exposure of employees or the public, such as the exposure of space crew to cosmic radiation; domestic exposure to radon gas in indoor air and external exposure to gamma radiation from building materials; managing emergency exposure situations that require measures to protect the public and workers.

Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive establishes common rules for the generation, transmission, distribution and supply of electricity. It also lays down universal service obligations and the rights of electricity consumers and clarifies competition requirements. Open internal market enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers (free movement of goods, the freedom of establishment and the freedom to provide services). At the same time, this Directive sets stricter requirements to unbundling of transmission system operators (TSO) in vertically integrated undertakings. It also contains consumer rights provisions, reinforces and clarifies the functions and powers of regulatory authorities.

Regulation (EC) No. 714/2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No. 1228/2003 This Regulation establishes the rules for cross-border exchanges of electricity with the view to enhancing competition and achieving harmonization within the internal market in electricity. Comparing to the previous Regulation No. 1228/2003, this Regulation contains additional provisions on certification of transmission system operators (TSO), introduction of network codes and publication of information by system operators. It also clarifies that the European Network of Transmission System Operators for Electricity (the ENTSO for Electricity) is responsible for the management of electricity transmission networks to allow trading and supplying electricity across borders within the EU. Directive 2005/89/EC concerning measures to safeguard security of electricity supply and infrastructure investment This Directive establishes measures aimed at safeguarding security of electricity supply so as to ensure the proper functioning of the internal market for electricity, an appropriate level of interconnection between Member States, an adequate level of generation capacity and an adequate balance between supply and demand. It establishes a framework within which Member States are to define general transparent and non-discriminatory policies on security of electricity supply compatible with the requirements of a competitive market for electricity. They must define and publish roles and responsibilities of competent authorities and all relevant market actors. In implementing these measures, Member States are supposed to guarantee continuity of electricity supplies, explore possibilities for cross-border cooperation in relation to security of electricity supply, reduce the long-term effects of the growth of electricity demand, ensure diversity in electricity generation, encourage energy efficiency and the adoption of new technologies, ensure regular renewal of networks.

Council Directive 2006/117/Euratom on the supervision and control of shipments of radioactive waste and spent fuel This Directive authorizes transboundary shipments of spent fuel between Member States for processing, requires prior authorization for transboundary shipments of radioactive waste and spent fuel where such fuel is moved from, through the territory of or to a Member State. This Directive also requires return of radioactive waste to its country of origin.

Energy Efficiency and Social Issues Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products This Directive regulates labelling of energy-related products and provision of information to consumers relating to their consumption of electric energy. It applies to products which have a direct or indirect impact on the consumption of energy and on other resources during use. Suppliers placing products on the market must ensure that such products are labelled with the information about their consumption of

Glossary energy and other resources. Suppliers must also produce technical documentation to include: a general description of the product; the results of design calculations carried out; test reports; the references allowing identification of similar models. The technical documentation must be available for inspection purposes for a period ending five years. Suppliers must provide the labels and product-related information free of charge to dealers, and the latter must display labels properly, in a visible and legible manner.

Directive 2010/31/EU on the energy performance of buildings This Directive promotes the improvement of the energy performance of buildings within the Union, taking into account outdoor climatic and local conditions. It lays down minimum requirements, common general framework for a methodology and covers energy used for heating, hot water, cooling, ventilation and lighting. National authorities must establish reasonable minimum requirements to energy efficiency to be reviewed every five years. They also establish a system of certification of the energy efficiency. Such certificates provide information to prospective buyers or tenants on the energy performance of buildings, and advice on enhancing it.

Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC This Directive establishes a common framework of measures for the promotion of energy efficiency within the Union in order to ensure the achievement of the Union’s 2020 20% headline target on energy efficiency. Such measures include: • annual 1.5% energy savings resulting from implementing energy efficiency measures by distribution network operators and suppliers; • enhancing energy performance of heating systems, installation of double-glazed windows and roof insulation; • purchase of buildings, products and services with high energy-efficiency performance by public bodies; • annual energy modernization of at least 3% of the total floor area of buildings owned and occupied by public bodies; • expanding rights and possibilities of consumers in the area of energy management which includes easy and free access to the metering data on the actual consumption; • national incentives for small and medium-sized enterprises to conduct energy audit that should be mandatory for all large enterprises; • monitoring of the energy performance of new energy generating capacities.

Environment and Renewable Energy Sources Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (codification) This Directive introduces an important instrument of the environmental policy — environmental impact assessment. Member States must ensure, first of all, that projects likely to have significant effects on the environment (by virtue, inter alia, of their nature, size or location) are made subject to a requirement for development consent and an assessment with regard to their effects. This Directive contains two lists of projects subject to environmental impact assessment (from nuclear power stations, gas pipelines, etc., to large pig farms). An important element is stricter publicity requirements, including to the public participation in the environmental impact assessment.

Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment This Directive introduces an important instrument of environmental policy — strategic environmental assessment. An environmental assessment must be carried out of certain plans and programmes during their preparation. Such assessment includes preparation of the environmental report (that must contain detail information on the likely significant environmental effects and reasonable alternatives) and consultations with the relevant authorities and the public. Where a transboundary effect is possible, an assessment and consultations in a transboundary context must be carried out.

Glossary Directive 2003/4/EC on public access to environmental information and repealing Council Directive 90/313/EEC This Directive implements the provisions of the Aarhus Conventions relating to public access to environmental information. It aims to guarantee public access to environmental information owned by public authorities — both upon request and through active dissemination thereof. Environmental information must be made available to an applicant within one month after the receipt by the public authority of the applicant’s request. A request for environmental information may be refused if the request is manifestly unreasonable, or formulated in too general a manner, concerns an unfinished document or internal communications.

Directive 2003/35/EC providing for public participation in respect of the drawing up of certain plans and programmes relating to the environment and amending with regard to public participation and access to justice Council Directives 85/337/EEC and 96/61/EC This Directive addresses the implementation of the Aarhus Convention in respect of public participation and access to justice. It sets the requirements to the introduction of mechanisms of informing the public, holding consultations with the public and taking account of comments and proposals of the public in decision-making. Member States must ensure that the public is given early and effective opportunities to participate in the preparation and modification or review of the plans or programmes required to be drawn up under the provisions listed in Annex I of the Directive.

Directive 2008/50/EC on ambient air quality and cleaner air for Europe This Directive establishes ambient air quality and ambient air quality management standards. For this purpose, it establishes upper and lower assessment thresholds, target and threshold values, sets objectives for the reduction of the effect of particulate matters, defines and classifies zones and agglomerations, introduces the systems of informing the public and ambient air quality assessment with respect to various pollutants. Where, in a given zone or agglomeration, there is a risk that the levels of pollutants will exceed the alert thresholds, short-term action plans must be drawn up.

Directive 1999/32/ЕС relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC, as amended by the Regulation (EC) No. 1882/2003 and Directive 2005/33/EC The purpose of this Directive is to reduce the emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels and thereby to reduce the harmful effects of such emissions on man and the environment. It sets the maximum sulphur content in heavy fuel oil, gas oil and marine gas oils. It also specifies methods of sampling and analysis of sulphur content in fuel to check compliance with the requirements.

Directive 2009/147/EC on the conservation of wild birds (Article 4.2) This Directive relates to the conservation of all species of naturally occurring birds in the wild state in the European territory of the Member States. The mechanism of conservation of wild birds provides for the protection of their habitats; protection and use of birds; prevention of harm that can be caused by invasive species; research and reporting. According to Article 4.2, special protection areas need to be established based on ornitological criteria. Special measures also need to be taken to protect migratory species naturally occurring in the territory of a particular state, especially in wetlands.

Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) This Directive lays down rules on integrated prevention and control of pollution arising from industrial activities. It requires using the integrated approach to activities referred to in Annex I thereto. All installations covered by this Directive must prevent or reduce pollution due to using best available techniques, efficient energy use, prevention and control of emissions. Transparency of the integrated approach is ensured by the public participation.

Glossary 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 This Directive provides for setting mandatory national targets for the overall share of energy from renewable sources in the overall energy balance to take account of statistics and potential of each particular country. These targets include the achievement of a 20% share of energy from renewable sources in overall Energy Community energy consumption by 2020 and a 10% target to be achieved for the share of RES in the transport sector. This Directive, among other, establishes rules for joint green energy projects between Member States and third countries and access to the grid-system of electricity produced from renewable energy sources.

Oil Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products This Directive lays down rules aimed at ensuring a high level of security of oil supply in the Community through reliable and transparent mechanisms based on solidarity amongst Member States. It provides for the adoption of such laws, regulations or administrative provisions as may be appropriate in order to ensure that the total oil stocks maintained at all times within the Community for their benefit correspond, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater.

Directive 98/70/EC relating to the quality of petrol and diesel fuels The EU introduced rules prohibiting leaded petrol and limiting the permitted sulphur content in diesel fuel with the view to improving air quality and reducing greenhouse gas emissions. This Directive sets technical specifications applicable to petrol, diesel fuels and biofuels used in vehicles, as well as to gas oils used in non-road mobile machinery. Apart from the prohibition of marketing leaded petrol, Member States must conduct assessment of national consumption of fuel, adopt laws and identify the authorized body (bodies) to introduce the fuel quality monitoring system.

Directive 94/63/EC on the control of volatile organic compound (VOC) emissions resulting from the storage of petrol and its distribution from terminals to service stations, as amended by Regulation No. 1882/2003 224 This Directive provides for the registration of all terminals used for storage, loading and unloading of oil products, installation of technical means allowing reduction of VOC emissions from mobile containers with oil products, bringing all stationary tanks, rail, marine and motor vehicle tanks and loading installations in compliance with the established requirements.

Directive 94/22/EC on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons This Directive establishes common rules to ensure the non-discriminatory access to and pursuit of activities relating to the prospection, exploration and production of hydrocarbons. These objective and transparent rules reinforce integration of the internal energy market, encourage greater competition and improve security of supply. The document provides for the implementation of measures to ensure: • equal access to all organizations possessing necessary resources for prospecting, exploring for and producing hydrocarbons; • granting authorizations on the basis of objective, published criteria; • communication of all necessary information to all organizations participating in the established procedures.

224

The official translation has a lot of mistakes resulting from inaccurate translation

Glossary Business Climate Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC This Directive aims to ensure market openness, as well as fair procurements, in particular in the energy sector: extraction (production), transmission and distribution of gas, heat, electricity.

Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive provides for the implementation of laws on the electricity market which defines electricity as an energy-related product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures nondiscriminatory access to the existing infrastructure, creates favourable conditions for electricity producers to invest in new forms of energy (wind, solar, etc.).

Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive provides for the implementation of laws on the gas market which defines gas as an energyrelated product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures that companies have non-discriminatory access to distribution networks, gas storage facilities and cross-border gas pipelines.

Directive 2008/92/Eะก concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users Pursuant to that Directive, open, generally accessible mechanisms of providing information on the prices of energy resources for customers must be introduced. A particular methodology of collection of respective information about gas and electricity prices is to be drawn up and the respective mechanism to that effect is to be introduced.