Ukraine and Energy Community: It's high time? by Ukrainian Energy

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME? 1

ВСТуП

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

TABLE OF CONTENTS

Key findings

Recommendations

4 6

Implementation process

Gas

8 24 34 36 44 54 65 69 72 75 81

Electricity

Regulatory authority

Renewables

Environment

Energy efficiency

Oil

Statistics

Competition

Social issues

Reference to laws and regulations

KEY FINDINGS

Choice of a clear foreign policy course will facilitate integration of the Ukrainian energy market to the EU and contribute to introduction of European environmental standards. New national leadership attested to unchangeable European integration policy by signing the Association Agreement between Ukraine and the EU, thus ending discussions regarding possible withdrawal from the Energy Community and acknowledging obligations to implement the Third Energy Package. Availability of a clear political will is to improve coordination between state authorities and make the Ukraine-EU dialogue more substantive and efficient.

UKRAINE AND ENERGY COMMUNITY: ITâ&#x20AC;&#x2122;S HIGH TIME?

Nevertheless, political will itself is not enough to implement European law successfully. Notwithstanding significant number of the Ukraine-EU measures and public statements of the government, there are no changes on the practical level to witness approximation of the Ukrainian energy markets to European standards. Increasing of prices and tariffs is not supported by increasing of pricing transparency. Conditions able to increase competition on gas and electricity markets were not created. Until the European legislative provisions become rules in routine life, we can hardly say they are implemented successfully.

KEY FINDINGS

Main barrier to implementation is the government’s focus on the “process” but not on “result”. Significant number of legal acts were drafted but not adopted, or, in the case of their adoption, not implemented. Implementation of the Law on Mandatory Share of Biological Components in Fuels is not regulated, development of the legislation regarding minimum stocks of oil and oil products is postponed, and the legislation on implementation of the European procedure of environmental impact assessment is not adopted. The law on unbundling gas transmission system operator fulfils the requirements of the Third Energy Package only partially. The government work focusing on number of laws but not on ultimate market changes may significantly delay further reforms.

As a result, Ukraine goes behind initiatives put forward by the Energy Community Secretariat. Over previous six months, the Energy Community Secretariat drafted two key laws for Ukraine – on gas and electricity markets – compliant with the Third Energy Package requirements (Ukraine committed to implement it until 2015). Nevertheless, these documents are still not being discussed, considered or reviewed by the government.

One of the reasons for delays is absence of a clear mechanism for translation of decisions into real developments in the sector. Within the government, the procedure for adoption of decisions faces bureaucratic obstacles causing delays of adoption of a required decision for years (e.g. coordination procedure between ministries may be launched several times); powers and responsibilities between various authorities are not clearly determined (e.g. at least three central executive authorities are responsible for energy efficiency issues). There is no mechanism which allows assessing implementation efficiency of the document or feedback from market players even after adoption of the document. We may hardly state that the European legislation is completely implemented in Ukraine without understandable procedure of legislation implementation and control over its efficiency.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

RECOMMENDATIONS

In order to deliver results, there should be a clearly defined mechanism for translating Ukraine’s commitments into real market changes. It is necessary to optimize and speed up documents approval procedure within the government; clearly define responsibilities of various state authorities; define procedure for monitoring the results of already implemented legal acts. The Energy Community Secretariat and civil society have annual monitoring reports as to the progress of implementation of Ukraine’s commitments; similar assessment by the Ukrainian government itself, currently unavailable, will allow tracking the obligations more precisely. Greater degree of transparency of all authorities related to the EU directives implementation will contribute to better coordination and interaction with third parties. Establishment of a trilateral working group on implementation of Ukraine’s commitments in the Energy Community will facilitate information exchange between all stakeholders and unite the government, business and civil society efforts towards reforms. Additionally, it is necessary to run awareness raising campaign for large segments of population regarding the new rules to be introduced in the energy industry, benefits and risks arising in the course of reforms. Not only authorities but also general public has to understand course of changes and expected results.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

RECOMMENDATIONS

The updated action plan for implementation of directives, with measurable results and terms will make process less dependent on political issues. Update of the deadlines for implementation of directives mentioned in the Ordinance of the Cabinet of Ministers No. 733-r of August 3, 2011 appeared to be a complicated process, requiring, as the government says, amendments to legislation and some decisions of the Energy Community Ministerial Council. Nevertheless, such amendments should be introduced so that Ukrainian society gets clear timeframe for reforms and understands every step of changes. Moreover, new action plan should be developed more publicly allowing other stakeholders to participate in discussions. Training and motivation of those in charge of reforms implementation should become elements of such plan. Essence and reasoning of the directives to be implemented by Ukraine within the framework of the Energy Community should be understandable not only for the management of operating units, but also for broader circles – government employees, journalists, lawyers, economists – i.e. those engaged in the energy sector activity. For that matter, there should be public trainings, open lectures, etc. held. Government employees, who – even under the conditions of current crisis – should dedicate much time to reforms, should also get transparent and understandable motivation system for such work.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

2014 7 February – signing of the Memorandum of Understanding providing for partnership between the Ministry of Energy and Coal Industry and 1 April – the Energy Community Ukrtransnafta began Secretariat to withdraw process oil from certain mail oil 11 March – pipelines The Ministry of Energy and Coal Industry is8 April – sued the Order No. 237 The Energy Reforms coa“On Urgent Actions for lition was established, Stabilization of Finan- uniting experts from cial Situation of the leading think tanks and Sector and Corruption NGOs in energy and enPrevention” vironment sectors

18 June – The government adopted the Ordinance No. 589-r recommending the National Energy Regulatory Commission to decrease peak multipliers of feed-in tariffs for solar electric plants

1 July – The National Commission for State Regulation of Public Utility Services and local self-government authorities established economically sound tariffs for heating services

27 June – the economic part of the Association Agreement between Ukraine and the EU was signed in Brussels

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

15 April – Mr. J.Kopač, Director of the Energy Community Secretariat presented to Mr. V.Ulyda, Deputy Minister of Energy and Coal Industry, a draft gas market law harmonized with the Third Energy Package 28 April – gas transmission system operators from Ukraine and Slovakia signed a memorandum on reverse-flow gas supply

1 July – The government introduced reimbursement of additional expenses for payment for public utility services 8 July – The Ministry for Regional Development, Construction and Housing of Ukraine published Draft Law “On Energy Performance of Buildings”

1 May – The National Energy Regulatory Com7 May – mission approved Ukrinterenergo increasing of gas was appointed as tariffs a single supplier of electricity to Crimea 1 May – by the government The Decree of resolution the President No. 448/2014 en15 May – acted the Decision The Ukrainian of the National Security and Defense parliament ratified agreements beCouncil “On Situatween Ukraine, Eurtion on Providing atom and the EBRD with Energy Secuon granting 600 rity in Connection mln EUR loans for with the Status of Natural Gas Supply improving safety of NPP units to Ukraine”

9 July – The Cabinet of Ministers established the reduced tariff for non-household consumers for electricity used for heating and hot water supply where such energy substitutes natural gas

10 July – The Technical Regulation on Requirements to Motor Petrol, Diesel, Marine and Boiler Fuel entered into force 13 August – The government adopted a decision on introduction of emergency regime in electricity sector

IMPLEMENTATION PROCESS

IMPLEMENTATION PROCESS 21 May – new position – Deputy Minister for European Integration – was introduced in ministries according to the Ordinance of the Cabinet of Ministers No. 501-r 30 May – The draft law No. 4972 “On Environmental Impact Assessment” was registered in the parliament

13 August – The Cabinet of Ministers adopted a decision on establishment of the Government Office for European Integration

1 June – The National Energy Regulatory Commission approved increasing of tariffs for electricity 4 June – The Ministry of Energy and Coal Industry adopted the Order No. 409 recognizing connection of the Ukrainian United Power System to electricity grid of the EU member states until 2017 as the priority project

20 August – awareness raising campaign “Energy Independence of Ukraine” was launched 20 August – The Procedure for Selection of Laboratories for Testing Petrol and Fuels Quality was adopted

4 June – The Ministry of Energy and Coal Industry adopted the Order No. 413 enacting the Procedure for Defining Available Transmission Capacity of Interstate Electric Networks of the Ukrainian United Power System

21 August – The Ministry of Environment and Natural Resources presented the National Strategy of Approximation of Ukrainian Legislation to the EU law in the field of Environment

4 June – The Cabinet of Ministers adopted the Resolution No. 172 “On Urgent Actions for Reforming the Management System of Integrated Gas Transmission System”

27 August – The President liquidated the National Energy Regulatory Commission and the National Commission for State Regulation of Public Utility Services and established a single regulatory authority

17 June – The government established the Crisis Energy Office 18 June – The draft law No. 4117 “On Special Period in Fuel and Energy Sector” was registered in the parliament

2 September – Opening ceremony of the VoyanyUzhgorod gas pipeline was held under the aegis of prime ministers of Ukraine and Slovakia

2014

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Market reform Реформа ринку

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UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

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Market reform

Directive 2003/55/EC concerning common rules for the internal market in natural gas specifies the key principles of market liberalization, in particular regarding regulator independency, nondiscriminatory access of third parties to gas transportation and distribution systems, consumers’ freedom to select their suppliers, independence of system operators, legal separation of vertically integrated companies in order to avoid any discrimination, consumers protection standards. Directive 2009/73/ЕС (Third Energy Package) is aimed at establishing of a fully operational internal gas market in the EU. It envisions separation of vertically integrated companies by ownership rights (ownership unbundling). The national government shall independently determine model of market development aimed at either further liberalization (establishment of an independent system operator, or ISO) or stronger regulation (the owner company is different from the company that is the gas transmission system operator, or ITO). Nonetheless important changes concern further increase of national regulators’ independence, broader exchange of market information and establishment of the retail market.

According to the Protocol on the Accession of Ukraine to the Treaty establishing the Energy Community, the Directive 2003/55/EC had to be implemented by 1 January 2012 and the market will have been fully liberalized starting from 1 January 2015. According to the Decision of the Ministerial Council of the Energy Community D/2011/02/MC-EnC, Contracting Parties should implement in their respective legislations the provisions of Third Energy Package by 1 January 2015. Tense situation with energy security forced the government to reform domestic gas market. Namely, in the course of intensive talks with the EU representatives, the issue of GTS modernization was primarily discussed, and efforts to increase transparency of gas flows became first unconditional success On April 23, the Minister of Energy and Coal Industry Mr. Y. Prodan estimated first phase of GTS modernization in roughly 4 bln USD and stressed on the readiness to cooperate with Western investors1. At the end of April, the European Com1

rodan, Roughly USD 4 billion is Required just to Launch ModernizaP tion // Ukrainska energetyka [Ukrainian Energy], 23.04.2014 – http:// ua-energy.org/post/43284

mission representatives held negotiations with NJSC “Naftogaz of Ukraine”2 to discuss company reform plans, steps required for full-scale integration to European energy market and accumulation of gas in underground storage facilities for securing uninterrupted gas deliveries to Ukraine and EU Member States this winter. On May 6, NJSC “Naftogaz of Ukraine” acceded to AGSI+3 data display system according to the standards of European Association of Storage System Operators (GSE). On weekly basis, company provides information on available gas in underground storage facilities in terms of each individual facility. Additionally, PJSC “Ukrtransgaz” launched daily publishing of operational information on gas transportation via GTS4. At the same time, tariffs for injection and withdrawal into / from underground storage 2

elegation of the European Commission Visited Naftogaz of Ukraine: D Comments on Results of the Meeting // Ministry of Energy and Coal Industry, 08.05.2014. – http://mpe.kmu.gov.ua/minugol/control/uk/ publish/article?art_id=244933860&cat_id=244895184

JSC “Naftogaz of Ukraine” Acceded to European Underground StorN age Facilities Data Display System // Ministry of Energy and Coal Industry, 06.05.2014. – http://mpe.kmu.gov.ua/minugol/control/uk/ publish/article?art_id=244933540&cat_id=244895184

krtransgaz Launched Daily Publishing of Data on Transit via GTS U // Ukrainska energetyka [Ukrainian Energy], 26.05.2014. – http://uaenergy.org/post/44154

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Soon government moved to practical steps associated with preparation to unbundling of NJSC “Naftogaz of Ukraine” according to the requirements of EU Third Energy Package; nevertheless, Parliament acts as a brake on initiatives since the framework for independent operators lacks comprehensibility and due to weak information from the Cabinet of Ministers

facilities, increased by the NERC, entered into force on May 15. Joint meeting of Ukrainian government and European Commission Board was held on May 13 in Brussels. Within the framework of this action, Minister of Energy and Coal Industry of Ukraine Mr. Y.Prodan held a meeting with European Commissioner for Energy Mr. Günther Oettinger6, where parties discussed actual issues of bilateral cooperation in the context of enhancing energy security, modernization and joint management of Ukrainian GTS and reforming Ukrainian energy sector. On May 20, Ukrainian Prime-Minister A.Yatsenyuk approached European Commission management and leaders of EU Member States with the proposal to move the point of receipt of Russian gas to Russian border and sign new agreements7 allowing European companies to use free capacities of Ukrainian underground storage facilities. EU representatives supported this proposal8.

Market reform

At the end of April, Board Chairman of NJSC “Naftogaz of Ukraine” Mr. A. Kobolev proposed European companies to participate in GTS modernization9. In its turn, European Commission proposed major European consumers to employ Ukrainian underground storage facilities10 and promised to contribute to modernization.

ERC Increased Tariffs for Ukrtransgaz for Gas Injection and Take-off N into/from Underground Storage Facilities in 4.4 Times // Ukrainska energetyka [Ukrainian Energy], 06.05.2014. – http://ua-energy.org/ post/43558

eeting of the Minister of Energy and Coal Industry of Ukraine Mr. Y. M Prodan and European Commissioner for Energy Mr. Günther Oettinger was Held in Brussels on 13 May // Ministry of Energy and Coal Industry of Ukraine, 14.05.2014. – http://mpe.kmu.gov.ua/minugol/ control/uk/publish/article?art_id=244934969&cat_id=35109

rseniy Yatsenyuk Addressed European Commission Management A and Leaders of EU Member States regarding the Situation with Deliveries of Russian gas // Government Portal, 20.05.2014. – http://www. kmu.gov.ua/control/uk/publish/article?art_id=247317620&cat_ id=244276429

E uropean Commission likes Yatsenyuk Idea on Receipt of Gas on RF border // Ukrainska energetyka [Ukrainian Energy], 22.05.2014. – http://ua-energy.org/post/44085

aftogaz offers Europeans to Jointly Modernize GTS // Ukrainska N energetyka [Ukrainian Energy], 22.05.2014. – http://ua-energy.org/ post/44076

E uropean Commission Proposed Major European Gas Consumers to Fill in Ukrainian Underground Gas Facilities at their Own Expense // Ukrainska energetyka [Ukrainian Energy], 16.05.2014. – http://uaenergy.org/post/43872

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

In early June, Prime-Minister Mr. A.Yatsenyuk during his speech at the meeting of Ukrainian Parliament declared that the government would adopt a decision on reforming Naftogaz and establishing two additional operating companies on its basis11. He also pointed that this is required by the Third Energy Package, the Energy Charter and requirements of the Energy Community. On June 4, the Cabinet of Ministers adopted Resolution No. 17212 regarding establishment of two 100% state-owned joint stock companies on the basis of PJSC “Ukrtransgaz” – PJSC “Ukrainska GTS” (“Ukrainian GTS”) in charge of gas transportation only, and PJSC “Ukrainski gazovi skhovyscha” (“Ukrainian Underground Gas Storage Facilities”) in charge of gas storage in underground storage facilities. Government also ordered to draft charters of these companies and provide with the transfer of property which is not subject to privatization and is on the Ukrtransgaz books. Ministry of Energy and Coal Industry was requested to provide with ultimate transfer of GTS operator functions from NJSC “Naftogaz of Ukraine” to Ukrtransgaz. Additionally, draft law should be developed introducing amendments to legislation governing natural gas market operation aimed at implementation of commitments of Ukraine before Energy Community, and necessity of adoption of resolution is generally reasoned by “increasing the level of energy security of the state and bringing the operation of Ukrainian gas transportation 11

JSC “Ukrainska GTS” (“Ukrainian GTS”) and “Ukrainski gazovi skP hovyshcha” (“Ukrainian Gas Storage Facilities”) are to be Created on the Basis of NJSC “Naftogaz of Ukraine” // Government Portal, 03.06.2014. – http://www.kmu.gov.ua/control/uk/publish/ article?art_id=247359320&cat_id=244274130

esolution of the Cabinet of Ministers of Ukraine No. 172 of June 4, R 2014 “On Urgent Actions for Reforming Management System of Integrated Gas Transmission System of Ukraine” // Ukrainian Legislation. – http://zakon1.rada.gov.ua/laws/show/172-2014-%D0%BF

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system in line with the requirements of Directive 2009/73/EC (Third Energy Package)”. It is worthy of note that as early as on April 15, Mr. Janez Kopač, Director of the Energy Community Secretariat presented to the Deputy Minister of Energy and Coal Industry Mr. V.Ulyda draft law on gas market13 harmonized with the Third Energy Package, allowing, when adopted, harmonization of legislation in gas sector with the Third Energy Package. Currently, this document is under consideration and no decision thereon was taken. Wordings mentioned in government resolution are very close to model of completely independent system operator and storage facilities operator provided for in Directive 2009/73/EC. Government declares that these steps will allow keeping state control over property, creating truly independent system operator and open storage facilities for their use by European companies. Nevertheless, as mass-media believe14, Resolution No. 172 does not have a direct reply on what gas market model amongst three of them was selected. At the same time, mass-media published a letter of First Deputy Minister of Energy and Coal Industry Mr. Ihor Didenko of May 14, 201415 outlining main principles of unbundling of NJSC “Naftogaz of Ukraine” group of companies according to the Third Energy Package. It is pointed out that this unbundling will result in creation of operating assets in the following sectors: a) gas transportation and storage (GTS and underground storage facilities): b) gas production; c) wholesale trade in gas; d) gas distribution (via gas distribution networks); e) supply of gas (retail sale). Referring to draft governmental resolutions, journalists come to the conclusion that newly established operators will lease the property of state-owned company – owner, and with that PJSC “Ukrainian Underground Gas Storage Facilities” will include only facilities to which “strategically important” status will be assigned. 13

E nergy Community Secretariat Offers Ukraine Draft Legislation in Gas Sector // Ukrainska energetyka [Ukrainian Energy], 17.04.2014. – http://ua-energy.org/post/43138

. Yeriomenko, Unbundling-2 // Dzerkalo tyzhnia, 13.06.2014. – A http://gazeta.dt.ua/energy_market/podil-2-_.html

. Yeriomenko, Unbundling // Dzerkalo tyzhnia, 06.06.2014. – http:// A gazeta.dt.ua/energy_market/unbundling-rozdiliti-nak-naftogazukrayini-mozhna-ale-hto-voloditime-yiyi-chastinami-ta-v-chiyihinteresah-_.html

Regarding other assets, it is expected that the state equity interest in JSC “Ukrnafta” will be disposed on open tender, while shares of PJSC “Ukrgazvydobuvannya” will be offered on an exchange and will be sold gradually. Orders of the Ministry of Energy and Coal Industry of Ukraine No. 565 and No. 568 adopted in August extend the period of liquidation of subsidiary undertakings “Budivelnyk” and “Naftogazbezpeka”. In furtherance of initiatives for reforming “Naftogaz”, on June 18, the Cabinet of Ministers submitted to the Parliament draft Law No. 4116a16 proposing, in order to fulfil GTS operator functions and / or operator of underground storage facilities, to cancel limitations on transfer to leasing, management or concession of main gas pipelines and underground storage facilities included into Ukrainian GTS on a paying basis for certain period without the right to dispose them. It is also provided for that the Ministry of Energy and Coal Industry will vest with the functions of the GTS operator and storage facilities operator(s) entities whose founders and owners may be exclusively the state (100%), or state (at least 51%) and company resident in the EU, the U.S. or the Energy Community (certified gas transportation system operator, member of European ENTSO-G network). Therefore, PJSCs incorporated under the Resolution No. 172 may be funded. Draft Law was accepted as a basis (in first reading) on June 4 after emotional speech of PrimeMinister A.Yatsenyuk. Members of the Parliament decided to complete the draft, which was discussed on the meeting of the Verkhovna Rada Committee on Fuel and Energy Sector, Nuclear Policy and Nuclear Safety on July 217 and on July 2318. In the course of development of the draft Law, it was decided to consider the amendment empowering the Verkhovna Rada (the Par16

raft Law “On Amendments to Certain Laws of Ukraine Regarding ReD forming of Management System of Integrated Gas Transmission System of Ukraine” No. 4116a of 18.6.2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=51386

inutes of the Meeting of the Verkhovna Rada Committee on Fuel M and Energy Sector, Nuclear Policy and Nuclear Safety No. 23 of July 2, 2014 // Verkhovna Rada of Ukraine. – http://kompek.rada.gov.ua/ kompek/control/uk/publish/article?art_id=48321&cat_id=48320

inutes of the Meeting of the Verkhovna Rada Committee on Fuel M and Energy Sector, Nuclear Policy and Nuclear Safety No. 24 of July 23, 2014 // Verkhovna Rada of Ukraine. – http://kompek.rada.gov.ua/ kompek/control/uk/publish/article?art_id=48361&cat_id=48360

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

liament) to adopt the terms and conditions of a tender for selecting the Western partner company in GTS operator capital. Nevertheless, on July 24, the Parliament failed to adopt this draft Law and thus actually triggered emotional decision of Prime-Minister A.Yatsenyuk to resign in connection with “dissolution of coalition and blocking of governmental initiatives”19. On July 31, the Parliament expressed its confidence to Prime-Minister A.Yatsenyuk and rejected his letter of resignation. Draft Law No. 4116a resubmitted for second reading again was not backed (only 205 members of the Parliament voted for it), and the document was forwarded for repeated second reading. Eventually, following repeated consideration in the relevant Parliament committee20, on August 13 the draft Law was finally adopted. In government memorandum to the draft Law, Mr. Yatsenyuk again stressed that “… GTS remains state-owned and only company with the state share of at least 51% with other 49% of shares owned exclusively by EU and U.S. companies having respective certificates and licenses may be GTS operator. Final list of members of such operating company shall be approved by the Verkhovna Rada”21.

Market reform

Minister of Energy and Coal Industry Mr. Y. Prodan voiced the same position during his interview with mass-media22, and company CEO A. Kobolev stated that establishment of GTS and underground storage facilities operators will allow attaining one more strategic goal – moving the point of receipt of gas by Europe to the Eastern Ukraine and thus offering transit services not to Gazprom but to Eu-

overnment Asks for Resignation // Ukrainska Pravda, 24.7.2014. – G http://www.pravda.com.ua/news/2014/07/24/7032895/

inutes of the Meeting of the Verkhovna Rada Committee on Fuel M and Energy Sector, Nuclear Policy and Nuclear Safety No. 25 of August 11, 2014 // Verkhovna Rada of Ukraine. – http://kompek.rada. gov.ua/kompek/control/uk/publish/article?art_id=48367&cat_ id=48366

Arseniy Yatsenyuk, Government Resubmits to the Parliament Draft Laws Required for the State // Government Portal, 28.07.2014. – http:// www.kmu.gov.ua/control/uk/publish/article?art_id=247486491

uriy Prodan, Russian position – not to negotiate gas issues. How can Y we find compromise here? // Glavkom, 25.07.2014. – http://glavcom. ua/articles/21110.html

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ropean consumers23. Actually, this perspective may be opened by implementation of the Law “On Sanctions”; in the case where sanctions would be introduced in respect of Russian suppliers (Gazprom) thus making it impossible for Naftogaz and Ukrtransgaz to render gas transportation services24; then European consumers should sign respective direct contracts with GTS operator25. Advisor to Naftogaz CEO Mr. Y. Vitrenko26 presented more detailed view in his interview to mass-media. According to him, newly incorporated PJSCs will only own assets leased to operators (joint companies with 51% owned by state). At the same time some storage facilities may be leased by GTS operator, others – by separately incorporated storage operator. Reasoning for incorporation of two individual operating companies is that the gas storage business is more attractive and profitable and thus should not be subject to profitability limitations imposed by the regulatory authority as it is the case with GTS operator (being natural monopolist). The latter, according to Y. Vitrenko, will additionally ensure balance of the system, including through gas injection and withdrawal into / from individual underground storage facilities. Additionally, incorporation of companies “from the scratch” is better option than reforming Naftogaz since Ukrtransgaz has still unsolved legal problems and there is possibility to promptly attract investors using “assetlight” model (foreign partner does not actually purchase assets and is in charge for customer relations; domestic partner is responsible for 23

ndriy Kobolyev: “Integration to the European Energy Market will A Ensure Smooth Functioning of Ukrainian Gas Transportation System” // NJSC “Naftogaz of Ukraine”, 04.07.2014. – http://naftogaz.com/ www/3/nakweb.nsf/0/0664DA5EF459FBFBC2257D0B0055301F?Op enDocument&year=2014&month=07&nt=%D0%9D%D0%BE%D0 %B2%D0%B8%D0%BD%D0%B8&

In the Case of Imposing Limitations on Transit of Resources, Companies not Subject to Sanctions may Transport Gas to Europe // Ministry of Energy and Coal Industry, 11.08.2014. – http://mpe.kmu.gov. ua/minugol/control/uk/publish/article?art_id=244952063&cat_ id=244895184

F or detailed Naftogaz Position Regarding Transfer to European Model of gas Transit please Refer to: http://www.naftogaz.com/www/3/ nakweb.nsf/0/2F2BB51B74E436F8C2257D47003778C0?OpenDocu ment&year=2014&month=09&nt=%D0%9D%D0%BE%D0%B2%D0 %B8%D0%BD%D0%B8&

Yuriy Vitrenko, If we Change Nothing, We Should Leave // LIGABusinessInform, 11.07.2014. – http://biz.liga.net/all/tek/intervyu/2788234yuriy-vitrenko-esli-my-nichego-ne-izmenim-rridetsya-uezzhat.htm

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smooth functioning of pipelines and / or storage facilities). Mr. Vitrenko also informed that value of Ukrainian GTS was estimated at about 30 bln USD, and the state could attract 15-18 bln USD in long-term loans for modernization and budget projects27. Lease payments to be paid by joint companies – operators shall be the source of state revenues. Naftogaz expects this amount to reach billions USD28. In this context, line authority conducts preparations for formal decision on property transfer to newly incorporated PJSCs. Order of the Ministry of Energy and Coal Industry No. 450 of June 1729 adopts Regulations and composition of Standing Commission on administration of state property included in administrative management domain of the Ministry of Energy and Coal Industry, and of property of business entities in respect of which the Ministry of Energy and Coal Industry provides management of equity rights of the state. As the authority further noticed in its reply to the request, the Concept for Reforming Gas Business of NJSC “Naftogaz of Ukraine” was sent to EBRD, World Bank, EIB representative offices and EU Delegation for review and discussion during the meeting of the Working Group on review of interim results of consultancy support in reforming Naftogaz. Pricing policy underwent some changes: gradual tariffs increase is accompanied by adaptation of consumers’ social security system Recommended pricing levels were set in the Resolution of the Cabinet of Ministers No. 81 of March 25, 2014 “On Improving State Regulation Policy of Natural Gas Prices and Heating Energy 27

Ibidem.

uriy Vitrenko, We Can Spend Winter Without Russian Gas // Y Ukrainska Pravda, 16.07.2014. – http://www.pravda.com.ua/articles/2014/07/16/7031924/

rder of the Ministry of Energy and Coal Industry No. 450 of June O 17, 2014 “On Adoption of Regulations for Standing Commission on Administration of State Property Included in Administrative Management Domain of the Ministry of Energy and Coal Industry, and of Property of Business Entities in Respect of Which the Ministry of Energy and Coal Industry Provides Management of Equity Rights of the State, and Composition of the Standing Commission” // Ministry of Energy and Coal Industry. – http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=244942593

Tariffs and on providing with Enhanced Social Security of Population when Paying for Housing and Public Utility Services”. On April 3, the NERC decided to increase retail gas prices for households by 56% (up to 108.9-401.1 kopecks for cubic meter)30. For state-financed entities marginal price increased for 64.2% (up to 4 020 UAH for thousand cubic meters)31; for industrial consumers – for 29.1% (up to 4 020 UAH for thousand cubic meters)32. As Minister of Finance Mr. O.Shlapak notices, government schedules annual increasing of gas prices for households three times more – until 201733 and heating tariffs for this period will increase by 120%34. During briefing, the Minister of Social Policy L. Denisova emphasized that two programs of social security35 will be introduced for compensation of tariffs; some of their elements the government outlined in presentation36. It is expected that 4.5 million of Ukrainian households will be in a position to receive subsidies for housing and public utility services. For more detailed information on tariff reform and social security reform please refer to section “Social Issues”. Instead, Naftogaz proposed to introduce single wholesale price for all categories of consumers – households, district heating utilities, statefinanced entities and industry. According to Naftogaz CEO A. Kobolev, such price should be equal to weighted average price of gas import to Ukraine plus regular margin of wholesale trader 30

ERC Resolution No. 420 of April 3, 2014 “On Setting Retail Prices for N Natural Gas Used for Households Needs” // NERC. – http://www.nerc. gov.ua/index.php?id=10635

ERC Resolution No. 352 of March 31, 2014 “On Setting Marginal N Price Level for Natural Gas for Entities and Organizations Financed by State and Local Budgets” // NERC. – http://www.nerc.gov. ua/?id=10410

ERC Resolution No. 353 of March 31, 2014 “On Setting Marginal N Price Level for Natural Gas for Industrial Consumers and Other Entities” // NERC. – http://www.nerc.gov.ua/index.php?id=10411

rice of Gas for Households will Increase in 3 Phases until 2017 // P Ministry of Finance, Ukrainska energetyka [Ukrainian Energy], 02.04.2014. – http://ua-energy.org/post/42760

overnment Expects to Increase Heating Tariffs More than Twofold G // Ukrainska energetyka [Ukrainian Energy], 31.03.2014. – http://uaenergy.org/post/42652

overnment will Introduce Two Social Security Programs against G New Tariffs // Ukrainska energetyka [Ukrainian Energy], 02.04.2014. – http://ua-energy.org/post/42759

overnment Explained How Compensations Following Gas and G Heating Tariffs Increase will be Calculated // Ukrainska energetyka [Ukrainian Energy], 03.04.2014. – http://ua-energy.org/post/42791

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

(approximately 10%)37. From the viewpoint of Naftogaz, tariff aligning will allow to develop domestic production, thus substituting import and increasing investment attractiveness of state companies (Ukrgazvydobuvannya and Ukrnafta), eliminate corruption on regional gas transportation and distribution enterprises (oblgases) level, get positive balance of State Budget revenues in the amount of 36 bln UAH annually. Nevertheless, despite all measures taken, stabilization of Naftogaz financial position remains the challenge still not solved by the government At the end of March, the Verkhovna Rada supported draft Law No. 4575 of March 27, 2014 regarding massive redistribution of the State Budget funds for 2014 presented by the government within “anti-crisis package”38. This Law increases in more than three times margin amount of issue of domestic government bonds intended to be purchased in state ownership in exchange of additionally issued Naftogaz shares – from 11.1 to 33.337 bln UAH. The Decision of the National Security and Defence Council “On the Situation on Providing With Energy Security in Connection with the Status of Natural Gas supply to Ukraine” requests the Cabinet of Ministers to introduce effective mechanisms for stabilization of Naftogaz financial position39, namely to explore the issue of moving to gas metering consumed by households in terms of quality indicators, and the issue of introduction the advance payments for gas.

reforms in energy sector. Namely, the issue of granting technical assistance for development of draft Law “On State Regulation of Energy Sector” and optimization of Naftogaz proceeds due to improvement of regulation mechanism of retail gas prices for households. According to the Resolution of the Cabinet of Ministers No. 151 of May 29, 201441, company’s equity capital was increased by record 22.271 bln UAH. Additionally, one can note decreasing of indebtedness of district heating utilities42, which ceased to receive transfers from budget due to introduction of economically justified heating supply tariffs (for more detailed information please refer to section “Social Issues”). Naftogaz itself decided to verify Ukrgazvydobuvannya performance43 and asked for audit of own indicators – cash flow and cash deficit44. On August 20, with its Ordinance No. 786 the government established Interagency Working Group on recovery of accounts receivable from natural gas consumers and improvement of Naftogaz financial situation. The Group chaired by the respective Minister should develop debts recovery plan starting from September 2014 through December 2015 with performance goals in terms of each consumers group45. Under Resolution of the Cabinet of Ministers No. 302 of August 4, 2014 Naftogaz equity capital was increased by 63.27 bln UAH through repurchase of domestic government bonds. The document also specifies that the company should use these funds for purchasing and reservation of 3.1 bln USD on the account with the National Bank

Market reform

ua/?news=3751

On 16 April, the NERC and World Bank representatives40 held the meeting to discuss further

esolution of the Cabinet of Ministers of Ukraine No. 151 of May 29, R 2014 “On Increasing the Equity Capital of the National Joint Stock Company “Naftogaz of Ukraine”” // Legislation of Ukraine. – http:// zakon4.rada.gov.ua/laws/show/151-2014-%D0%BF

. Kobolev, Price of Gas Independence // Dzerkalo tyzhnia, A 21.08.2014. – http://gazeta.dt.ua/energy_market/cina-gazovoyinezalezhnosti-_.html

aftogaz, Indebtedness of District Heating Utilities Decreased by N 10% // Ukrainska energetyka [Ukrainian Energy], 29.05.2014. – http://ua-energy.org/post/44306

raft Law “On Amendments to the Law of Ukraine On State D Budget of Ukraine for 2014” No. 4575 of March 27, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=50433

aftogaz Launched audit of Ukrgazvydobuvannya Performance // N Ukrainska energetyka [Ukrainian Energy], 28.05.2014. – http://uaenergy.org/post/44261

ecree of the President of Ukraine No. 448/2014 of May 1, 2014 “On D the Decision of the National Security and Defense Council of Ukraine of April 28, 2014 “On Situation on Providing with Energy Security in Connection with the Status of Natural Gas Supply to Ukraine” // President of Ukraine. – http://www.president.gov.ua/documents/17587. html

aftogaz will Audit Cash Flow and Cash Deficit Figures // Ukrainska N energetyka [Ukrainian Energy], 28.05.2014. – http://ua-energy.org/ post/44291

rdinance of the Cabinet of Ministers of Ukraine No. 786-r of AuO gust 20, 2014 “On Establishment of Interagency Working Group on Recovery of Accounts Receivable from Natural Gas Consumers and Improvement of Financial Situation of National Joint Stock Company “Naftogaz of Ukraine”” // Legislation of Ukraine. – http://zakon4.rada. gov.ua/laws/show/786-2014-%D1%80

Next Regular Meeting of NERC Members with World Bank Representatives was Held // NERC, 17.04.2014. – http://www.nerc.gov.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

GAS

of Ukraine; this reserve should be used following government decision. As Mr. A.Yatsenyuk stated, funds are reserved for paying for Russian gas46. Notably, in the course of discussions on financial rehabilitation of Naftogaz not only already declared intentions to privatize some of holding’s assets were discussed: at the beginning of May, the Ministry of Finance initiated granting Naftogaz the status of a single gas supplier47. Gas distribution market will be fully liberalized, and unbundling of natural gas distribution and supply functions will become the mandatory condition for business of regional gas transportation and distribution companies (oblgases) In March, regulatory authority obligated regional gas transportation and distribution companies (oblgases) to optimize expenses and respectively decrease burden on the tariffs on natural gas transportation via distribution pipelines and on its supply48. In the course of reforms related to Naftogaz assets, the Cabinet of Ministers adopted Ordinance No. 667-r49 approving the list of state property objects to be privatized in 2014. In particular, privatization list contains state equity interests in all regional gas transportation and distribution enterprises (oblgases). Thus, gas distribution market will be completely transferred to private companies.

visions are aligned with legislation, namely with the Law “On the Principles of the Natural Gas Market Operation”. Supporting documents indicate that new terms include mandatory requirement regarding licensee’s unbundling of functions of natural gas distribution and supply under regulated tariff and providing consumers with information on consumers’ rights, prices and tariffs, gas quality characteristics, and upon request – information on volumes of consumed gas in current and previous years.

Conclusion The new government demonstrated political commitment to reforms according to the EU Third Energy Package and willingness to implement its obligations until 2015. First significant steps were introduction of tariff reform and increasing information availability. Nevertheless, ambitious projects on GTS modernization and attraction of investments to the sector are impossible without systemic restructuring of NJSC “Naftogaz of Ukraine”. Functional unbundling model proposed by the government still seems not clear enough despite all clarifications. Similarly, still there is no significant response to the proposal of the Energy Community Secretariat regarding the update of the gas market law.

On July 30, regulatory authority published draft Resolution “On Approval of License Terms for Business Activities Related to Supply of Natural Gas, Gas (Methane) of Coal Deposits as per Regulated Tariff”50 according to which mentioned pro46

aftogaz Reserved USD 3.1 billion for Paying for Russian Gas // N Ekonomichna Pravda, 22.08.2014. – http://www.epravda.com.ua/ news/2014/08/22/485050/

aftogaz is Expected to be Granted the Status of a Single Supplier N // Ukrainska energetyka [Ukrainian Energy], 05.03.2014. – http://uaenergy.org/post/41942

ERC Letter No. 1563/17/47-14 of March 14, 2014 to Licensees PursuN ing Business of Natural Gas Distribution and Supply of Natural Gas as per Regulated Tariff // NERC. – http://www.nerc.gov.ua/?id=10314

rdinance of the Cabinet of Ministers of Ukraine No. 667-r of July 17, O 2014 “On Approval of the List of State Property Objects Subject to Privatization in 2014” // Legislation of Ukraine. – http://zakon4.rada. gov.ua/laws/show/667-2014-%D1%80

raft Resolution of NERC “On Approval of License Terms for Business D Activities Related to Supply of Natural Gas, Gas (Methane) of Coal

Deposits as per Regulated Tariff” // NERC, 20.07.2014. – http://www. nerc.gov.ua/?id=11546

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Access to networks Regulation 1775/2005 on conditions for access to the natural gas transmission networks sets forth principle service conditions for access to gas transmission networks – transparency of calculation and application of tariffs, free and non-discriminatory access of third parties, market rules of balancing and imposing of imbalance charges, fair capacity allocation and congestion management (including, but not limited to secondary market of capacity trading), obligations to publish information on services, tariffs, capacities, balances and other information required to provide with access, requirements to transparency. Regulation 715/2009 (Third Energy Package) establishes common mechanisms of rules of access to gas transmission networks, LNG terminals and storage facilities taking into account special features of the national and regional markets. The document spells out the procedure of transmission system operator certification as well as the one on development, agreement and implementation of network codes (with involvement of the ENTSOG). According to the Protocol, implementation of the Regulation 1775/2005 should have been completed before 1 January 2012. According to the Decision of the Ministerial Council of the Energy Community D/2011/02/MC-EnC, Contracting Parties should implement in their respective legislations the provisions of Third Energy Package (including Regulation 715/2009) by 1 January 2015.

Access to networks

Legal and regulatory frameworks regarding access to GTS recognized as sufficient, highquality implementation remains an open issue The NERC Resolution No. 420 “On the Approval of the Procedure of Access to the United Gas Transportation System of Ukraine (UGTSU)” adopted on April 19, 2012, was amended several times within previous year in response to the critics. the NERC Resolution No. 75 of January 31, 201351 approved amendments that accounted for proposals by the Energy Community Secretariat as well as for recommendations of the Cabinet of Ministers and Coordination Centre for Economic Reforms Implementation under the President of Ukraine. For instance, the requirement on binding preliminary inclusion into the list of UGTSU agents and facilities was excluded, new procedure for customer’s facilities connection to UGTSU was provided for. the NERC Resolution No. 172252 of December 26, 2013 approves further amendments to the docu51

ERC Resolution No. 75 of March 31, 2013 “On Amendments to N NERC Resolution No. 420 of April 19, 2012” // Legislation of Ukraine. – http://zakon1.rada.gov.ua/laws/show/z0296-13 ERC Resolution No. 1722 of 26.12.2013 “On Approval of AmendN ments to the Procedure of Access and Connection to the United Gas Transportation System of Ukraine” // Legislation of Ukraine. – http:// zakon3.rada.gov.ua/laws/show/z0068-14

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ment, in particular regarding clearer delimitation of internal and external supply. On 15 July 2014, the NERC published report on baseline monitoring of efficiency of a number of legal acts53, namely of Resolution No. 1722 and Resolutions No. 226-228 of March 7, 2013 approving standard agreements on the operational control, use and operation of the components of the United Gas Transportation System of Ukraine. Summary of the regulatory authority is positive, namely it is noted that amendments to the Procedure of access and connection to UGTSU allowed to introduce more transparent connection procedure, define terms of external and internal gas supply, set requirements regarding unconditional compliance with the legislation in the sphere of safe use of gas networks. Along with renewal of gas reverse flows from the EU, gradual liberalization of cross-border trade is under way, though state-owned NJSC “Naftogaz of Ukraine” received preferences for export and import operations In mid-April, German RWE became the first company that launched reverse gas supplies to Ukraine, in particular via Poland54. On April 14, Ukrainian and Polish gas transmission systems operators, Ukrtransgaz and Gaz-System SA

nnouncement on Publishing of Reports on Baseline and Repeated A Monitoring of Efficiency of Regulatory Acts // NERC, 15.07.2014. – http://www.nerc.gov.ua/index.php?news=3873

erman RWE Renewed Reverse Flows to Ukraine // Ukrainska enG ergetyka [Ukrainian Energy], 16.04.2014. – http://ua-energy.org/ post/43094

GAS

signed annex to operator agreement55 clarifying procedure of exchange of production and technical information between companies. On April 28, Ukrainian and Slovak gas transmission system operators signed a Memorandum on reverse flows of natural gas56. Direct involvement of the European Commission57 in the course of the meetings of special working group58 paved the way to success of negotiations. The parties agreed on “little” reverse – via the Voyany – Uzhgorod gas pipeline reaching maximum capacity (22 million cubic meters per day or 8 billion cubic meters per year) in October 2014. In order to launch “big” reverse (up to 30 billion cubic meters per year) signatories will hold dialogue with Gazprom. Additionally, Ukrtransgaz proposed Slovak Eustream to sign operator agreement59 regarding connection of adjacent gas transmission systems. Such agreement complies with all provisions of Energy Community, with both parties being its full-fledged members. For the time being, the parties signed operator agreement regarding the Voyany – Uzhgorod gas pipeline. In early July, NJSC “Naftogaz of Ukraine” repurchased major portion of output transmission capacities on the Voyany – Uzhgorod gas pipeline until 201960. Moreover, state holding announced tender for issuing bank settlement counterguarantees for 15 mln USD for gas supply from Europe61. In return, Slovak operator Eustream an55

everse Flows from Poland will be Simpler // Ukrainska energetyka R [Ukrainian Energy], 15.04.2014. – http://ua-energy.org/post/43091

S lovakia and Ukraine Signed Memorandum on Reverse Flows of Gas // Ukrainska energetyka [Ukrainian Energy], 28.04.2014. – http://uaenergy.org/post/43404

rodan held the Meeting with European Commission RepresentaP tives // Ukrainska energetyka [Ukrainian Energy], 26.03.2014. – http://ua-energy.org/post/42553

rodan, RF May Decrease the Volume of Gas Supplies to Ukraine // P Ukrainska energetyka [Ukrainian Energy], 20.03.2014. – http://uaenergy.org/post/42369

krtransgaz Offers Eustream to Sign Operator Agreement on ConU nection of Gas Transmission Systems // Ministry of Energy and Coal Industry, 28.04.2014. – http://mpe.kmu.gov.ua/minugol/control/uk/ publish/article?art_id=244931968&cat_id=244895184

aftogaz Repurchased Major Portion of Output Transmission CapaciN ties on “Voyany – Uzhgorod” Gas Transmission Line to Deliver Gas from Europe to Ukraine // Government Portal, 03.07.2014. – http:// www.kmu.gov.ua/control/uk/publish/article?art_id=247433130

aftogaz Announced Tender for Bank Settlement Counter-GuaranN tees for Gas Supply from Europe // Ukrainska energetyka [Ukrainian Energy], 23.07.2014. – http://ua-energy.org/post/45845

nounced successful completion of OpenSeason62 procedure, to which a score of European suppliers expressed interest. Major EU gas traders are amongst them. On August 7, Ukrtransgaz completed full set of works on gas compressor station “Uzhgorod” aimed at ensuring technical ability to accept natural gas from Slovak side63. On August 16, GTS operator jointly with Eustream launched test supplies64 and on September 2, opening ceremony of the Voyany – Uzhgorod gas pipeline was held and commercial supplies of gas were launched. The ceremony was attended by PrimeMinister of Ukraine Mr. A.Yatsenyuk and PrimeMinister of Slovakia Mr. R.Fico65. It is expected that maximum volume of reverse flow will reach 27 million cubic meters of gas per day. Meanwhile, since January through March the Verkhovna Rada discussed a range of draft laws (No. 385366, No. 3853-167, No. 3853-268, No. 402569, 62

eceipt of Applications for Reverse Supplies of Gas to Ukraine via R Slovak Territory Successfully Completed // Naftogaz, 02.07.2014. – http://naftogaz.com/www/3/nakweb.nsf/0/950078F0E2231EC9C22 57D09005F2EBF?OpenDocument&year=2014&month=07&nt=%D0 %9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8&

krtransgaz Completed Full Set of Works Aimed at Ensuring TechU nical Ability to Accept Natural Gas from Slovak side // Naftogaz, 13.08.2014. – http://www.naftogaz.com/www/3/nakweb.nsf/0/D8B A54BC1CAB9979C2257D33002E92D7?OpenDocument&year=2014 &month=08&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D 0%B8&

krtransgaz Launched Test Supplies of Natural Gas from Slovak Side U // Naftogaz, 16.08.2014. – http://www.naftogaz.com/www/3/nakweb.nsf/0/B827DE6B6BF77A28C2257D3600451B4F?OpenDocume nt&year=2014&month=08&nt=%D0%9D%D0%BE%D0%B2%D0%B 8%D0%BD%D0%B8&

pening Ceremony of Gas Transmission Line “Voyany – Uzhgorod” O will be Held on 2 September // Ministry of Energy and Coal Industry, 02.09.2014. – http://mpe.kmu.gov.ua/minugol/control/uk/publish/ article?art_id=244956426&cat_id=35109

raft Law “On Amendments to Article 197 of the Tax Code of Ukraine D (Regarding Taxation of Operations on Importation of Natural Gas into Ukrainian Customs Territory” No. 3853 of January 8, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=49451

raft Law “On Amendments to Article 197 of the Tax Code of Ukraine D (Regarding Taxation of Operations on Importation of Natural Gas into Ukrainian Customs Territory” No. 3853-1 of January 14, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=49489

raft Law “On Amendments to Article 197 of the Tax Code of Ukraine D (Regarding Taxation of Operations on Importation of Natural Gas into Ukrainian Customs Territory” No. 3853-2 of January 15, 2014 // Verkhovna Rada of Ukraine. -http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=49495

raft Law “On Repealing the Law of Ukraine “On Amendments to D Article 197 of the Tax Code of Ukraine Regarding Exemption of Operations on Importation of Natural Gas into Ukrainian Customs Territory from VAT Taxation” No. 4025 of January 27, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=49579

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

No. 403970, No. 439771, No. 4397-172) on amending or repealing of amendments to Article 197 of the Tax Code of Ukraine regarding exemption of natural gas imports from VAT taxation. It is worth mentioning that taxation issue influences gas market much more significantly than decisions of regulatory authority since taxation allows to adjust end gas tariffs upwards / downwards by 20%. Authors of the documents proposed to extend exemption or to renew VAT taxation in respect of Naftogaz or all companies.

capacities77. Advisor to Naftogaz CEO Mr. Y. Vitrenko confirmed existence of limitations78 clarifying that Naftogaz should cover needs of households and social sphere. According to him, Third Energy Package allows to have preferential access of “social suppliers” in crisis period. Along with this, Naftogaz announced tender for free capacities in Hungarian direction (from the Beregdaróc entry point)79 for companies able to supply gas to Ukraine.

Finally, the Cabinet of Ministers won this “war of drafts”. On April 7, the Verkhovna Rada of Ukraine registered draft Law No. 464573 by which the government proposed to renew the VAT on gas imports only for private companies since May 174. On April 10, the Parliament supported this draft Law, but decided to postpone VAT introduction to September 175. On June 5, the Verkhovna Rada cancelled charge on gas exports to the member states of the Energy Community by voting for draft Law No. 2471a76 in second reading.

Conclusion

Access to networks

Certain private companies (in particular, DTEK) complained that they are not allowed to purchase 70

raft Law “On Amendments to Article 197 of the Tax Code of Ukraine D Regarding Exemption of Operations on Importation of Natural Gas into Ukrainian Customs Territory from VAT Taxation” No. 4039 of January 28, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov. ua/pls/zweb2/webproc4_1?pf3511=49597

Draft Law “On Amendments to the Tax Code of Ukraine Regarding VAT Taxation of Natural Gas”, No. 4397 of March 11, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=50126

raft Law “On Amendments to Article 197 of the Tax Code of Ukraine D Regarding Exemption from VAT Taxation of Operations on Importation of Natural Gas into Ukrainian Customs Territory Imported by Entity of Creation of Natural Gas Resource for Ukrainian Households and Consumers Authorized by the Government” No. 4397-1 of March 17, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/ pls/zweb2/webproc4_1?pf3511=50281

raft Law “On Amendments to the Tax Code of Ukraine and CerD tain Other Legal Acts of Ukraine Regarding Elimination of Specific Discrepancies in Legal Provisions”, No. 4645 of April 7, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=50559

overnment Proposes Rada to Renew VAT on Gas Importation by PriG vate Companies from May Onwards // Ukrainska energetyka [Ukrainian Energy], 07.04.2014. – http://ua-energy.org/post/42875

AT on Gas Importation will be Introduced from 1 September onV wards // Ukrainska energetyka [Ukrainian Energy], 10.04.2014. – http://ua-energy.org/post/42996

TEK of Akhmetov is Ready to Renew Gas Import from Europe // D Ekonomichna Pravda, 07.04.2014. – http://www.epravda.com.ua/ news/2014/04/7/436288/

Yuriy Vitrenko, If We Change Nothing, We Should Leave // LIGABusinessInform, 11.07.2014. – http://biz.liga.net/all/tek/intervyu/2788234yuriy-vitrenko-esli-my-nichego-ne-izmenim-rridetsya-uezzhat.htm

“ Naftogaz of Ukraine” Announced Tender for Supply of Natural Gas to Ukraine // Naftogaz, 08.07.2014. – http://naftogaz.com/www/3/ nakweb.nsf/0/2EF6F1D26D7538A7C2257D0F0042B561?OpenDocu ment&year=2014&month=07&nt=%D0%9D%D0%BE%D0%B2%D0 %B8%D0%BD%D0%B8&

The Procedure of Access and Connection to the United Gas Transportation System of Ukraine and supporting documents regarding the operational control, use and operation of GTS components seem to be sufficient basis for free use of capacities. Measures for liberalization of trade in gas were significant. At the same time, Naftogaz preferential treatment (in particular, zero VAT for gas imports and priority in capacities repurchase) are the features of discrimination of other market players, therefore, they should be temporary and be cancelled after ending of crisis period.

raft Law “On Amendments to Point 9 of Section II “Final ProviD sions” of the Law of Ukraine “On Amendments to Certain Legal Acts of Ukraine” (Regarding Exportation of Energy Resources to Member States of the Energy Community)”, No. 2471a of July2, 2013 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=47700

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

GAS

Security of Supply Directive 2004/67/EC concerning measures to safeguard security of natural gas supply requires that common, transparent and non-discriminatory policy be determined for security of supply compatible with the competitive market requirements and that the roles and duties of the market participants to carry out the required procedures be specified. The nation shall set the minimum security standards of gas supply, which market players shall comply with, draft and update as needed an emergency action plan at the national level, determine “vulnerable consumers” category and provide the proper level of their protection, arrange cooperation with the European Commission and other stakeholders.

According to the Protocol, this Directive should have been implemented by 1 January 2012. Under the Action Plan on Implementation of Commitments within the Framework of the Treaty Establishing the Energy Community, the NERC, Naftogaz and Ministry of Energy and Coal Industry of Ukraine should have developed measures to provide security of natural gas supplies. Another round of gas dispute updated the issue of security of supplies, nevertheless, the government still has not demonstrated comprehensive policy, limiting itself to certain tactic decisions regarding enhancement of “manual” control and financial discipline On May 1, Presidential Decree No. 448/2014 enacted decision of the National Security and Defence Council (NSDC) of April 28 “On Situation on Providing with Energy Security in Connection with the Status of Natural Gas Supply to Ukraine”80. Measures envisaged by this decision include adoption of natural gas supply and distribution balance forecast, update of Ukrainian Energy Strategy by 2030, update of performance evaluations of energy security status, drafting laws regarding annual adoption by the government of energy resources production and consumption forecast balance, etc. In pursuance of the NSDC decision, government Resolution No. 138 of May 7, 2014 requests the Ministry of Energy and Coal Industry and Naf80

ecree of the President of Ukraine No.448/2014 of May 1, 2014 “On D the Decision of the National Security and Defense Council of Ukraine of April 28, 2014 “On Situation on Providing with Energy Security in Connection with the Status of Natural Gas Supply to Ukraine” // Legislation of Ukraine. – http://zakon1.rada.gov.ua/laws/show/448/2014

togaz to take measures to involve qualified and highly professional legal advisors to protect rights and interests of Ukraine in settlement of dispute with Gazprom81. On June 16, Naftogaz and Gazprom terminated negotiations and filed a suit to the Stockholm arbitration court against each other. Gazprom demands to collect from Naftogaz indebtedness in the amount of 4.5 bln USD as underpayment for supplied gas, while Naftogaz demands to collect from Gazprom 6 bln USD as overpayment for already supplied gas and exclude from the contract all other politically motivated provisions allowing Gazprom to abuse its monopolistic position. As early as on May 19, the NERC published draft Resolution “On Approval of Amendments to the Procedure for Distribution of Funds Received to the Current Accounts of Guaranteed Natural Gas Suppliers with Special Conditions of Use”82 suggesting more detailed requirements to opening of special accounts and cash flows on them. Instead, Resolution of the Cabinet of Ministers No. 217 of June 17, 2014 approved Procedure for Distribution of Funds Received to the Current Accounts with Special Conditions of Use for Settlements with Guaranteed Natural Gas Suppliers83. In pursuance 81

esolution of the Cabinet of Ministers of Ukraine No. 138 of May 7, R 2014 “Certain Issues of Performance of National Joint Stock Company “Naftogaz of Ukraine”” // Legislation of Ukraine. – http://zakon2. rada.gov.ua/laws/show/138-2014-%D0%BF

raft NERC Resolution “On Approval of Amendments to the ProceD dure for Distribution of Funds Received to the Current Accounts of Guaranteed Natural Gas Suppliers With Special Conditions of Use” // NERC, 19.05.2014. – http://www.nerc.gov.ua/?id=10967

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

of the provisions of the Law “On Heat Supply”, all heat supply and heat generating entities are obliged to open special accounts for automatic payment for supplied gas. In early September, the government approved the draft Law proposing to introduce criminal responsibility for theft of gas84, suggested sanctions – up to three years of deprivation of liberty. Same problem issue is addressed in government draft Law No. 4557a85. Document generated in the Ministry for Regional Development, Construction and Housing implements unified approach to introduction of current accounts with special conditions of use – in centralized water supply and sewerage and heat supply (in terms of possibility of funds appropriating for repayment of loans received from international finance organizations) sectors. On June 18, the government submitted to the Parliament draft Law No. 4117a86 proposing definition of term “special period” in fuel and energy sector as period of limitation and / or termination of energy resources supplies (energy supply) to the territory of Ukraine to be introduced and terminated by the decision of the Cabinet of Ministers of Ukraine. At the same time, there is a growing risk of “manual management” of the respective sector, corruption and other abuses due to vesting the Ministry of Energy and Coal Industry of Ukraine with exclusive powers.

Security of Supply

In particular, this document contains controversial provision regarding mandatory sale of gas by private gas producer companies to Naftogaz to cover households and district heating utilities needs with the price set by the Cabinet of Ministers of Ukraine. Naftogaz CEO A. Kobolev,

overnment Proposes to Introduce Criminal Responsibility for Theft G of Gas // Government Portal, 03.09.2014. – http://www.kmu.gov.ua/ control/uk/publish/article;jsessionid=2143CCB6C4C5D729FE2C5F1 84AF8D053.vapp53?art_id=247575322&cat_id=244274160

raft Law “On Amendments to Certain Laws of Ukraine Regarding D Improvement of Settlements for Energy Resources and for Repayment of Loans Received from International Finance Organizations” No. 4557a of August 29, 2014 // Verkhovna Rada of Ukraine. – http:// w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=52060

raft Law “On Special Period in Fuel and Energy Sector” No. 4117a of D June 18, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov. ua/pls/zweb2/webproc4_1?pf3511=51387

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

in the course of negotiations already held with private gas producer companies87 discussed the “proposal” regarding pumping of 50% of extracted gas into underground gas storage facilities starting from August 2014 with the right to withdraw such gas starting from January 2015. Draft Law also suggests to prolong the validity of instruments of redemption of accounts payable and accounts receivable set by Law No. 2711-IV of June 23, 2005 “On Measures Aimed at Ensuring Sustained Performance of Fuel and Energy Sector Entities” for 2 years – until 1 January 2016. Other controversial provision presumes the possibility of the Cabinet of Ministers to adopt decisions regarding mandatory sale of gas by private gas producer companies to Naftogaz to cover households and district heating utilities needs with the price set by the Cabinet of Ministers of Ukraine. Draft Law was accepted as a basis on June 4 after emotional speech of Prime-Minister A.Yatsenyuk. Document was discussed on the meeting of the Verkhovna Rada Committee on Fuel and Energy Sector, Nuclear Policy and Nuclear Safety on July 288 (along with alternative drafts) and on July 2389. Draft Law was not further submitted for Parliamentary discussions. Additionally, on June 25, the Cabinet of Ministers adopted the Resolution No. 214 entrusting the State Financial Inspection with a duty to conduct continuous financial audit of business operations of a number of state companies, namely SE “Energorynok”, NJSC “Naftogaz of Ukraine”, PJSC 87

aftogaz Launched Negotiations with Private Gas Producer ComN panies on Pumping Gas to Underground Gas Storage Facilities // Naftogaz, 10.07.2014. – http://naftogaz.com/www/3/nakweb.nsf/0/ DA101D9A8254A526C2257D11005986DC?OpenDocument&year= 2014&month=07&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%B D%D0%B8&

GAS

“Ukrgazvydobuvannya”, PJSC “Ukrtransgaz”, PJSC “Ukrtransnafta”, NEC “Ukrenergo”, NNEGC “Energoatom”, PJSC “Ukrgidroenergo”90. On June 23, the Parliament voted for draft Resolution No. 4058a on establishment of provisional investigatory commission for verification of compliance with the legislation in the field of state regulation of natural monopolies and related markets in energy, heat and water supply sectors91. On July 24-25, the Minister of Energy and Coal Industry Mr. Y. Prodan visited Brussels where he held a meeting with European Commissioner for Energy Mr. G. Oettinger. The parties agreed to establish a working group with the purpose of operational coordination in gas issues, in particular regarding arrangement of reverse gas flows from EU Member States to Ukraine92. Also, according to the reply of the Ministry of Energy and Coal Industry to the request, this authority drafted and coordinated Security of Supply Statement in line with provisions of the Article 29 of the Treaty establishing Energy Community, which (as on August 2014) is submitted to the Energy Community Secretariat. In connection with possible gas shortage during heating season, government efforts for decreasing its consumption and substitution with other energy resources were more efficient

esolution of the Cabinet of Ministers of Ukraine No. 214 of June R 25, 2014 “On Certain Measures of Providing Financial Control Over Performance of Entities of Public Sector of Economy” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/214-2014-%D0%BF esolution No. 1610-VII of July 23, 2014 “On Establishment of ProviR sional Investigatory Commission of the Verkhovna Rada of Ukraine for Verification of Compliance with the Legislation in the Field of State Regulation of Natural Monopolies and Related Markets in Energy, Heat and Water Supply Sectors” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/1610-vii inister Yuriy Prodan and European Commissioner for Energy M Mr. Günther Oettinger in Brussels Discussed Wide Range of Issues on the Provision of Energy Security of Ukraine and EU // Ministry of Energy and Coal Industry of Ukraine, 29.07.2014. – http://mpe. kmu.gov.ua/minugol/control/uk/publish/article;jsessionid=FB5F4 864255DB12C88DE37A8FEFDBFEB.app1?art_id=244950341&cat_ id=35109

On June 17, the Cabinet of Ministers established a Crisis Energy Office93headed by the Vice-PrimeMinister – Minister of Regional Development, Construction and Housing Mr. V. Groysman, his deputy is the Minister of Energy and Coal Industry Mr. Y. Prodan. The mission of the Office is optimization of balance of energy resources consumption towards its decrease and energy efficiency measures. The Ministry for Regional Development, Construction and Housing initiated introduction of comprehensive action plan for gradual substitution of gas with other types of fuel. According to the announcement, this plan should contribute to significant decrease of Ukrainian dependency on imported gas and to reduction of gas consumption by gradual substitution of gas with other types of fuel94. Additionally, it is proposed to improve pricing system in terms of reducing the amount of compensation for differences in tariffs for heating energy generated using natural gas in favour of increasing such compensation for the value of heating energy generated using alternative types of fuel. On July 9, the Cabinet of Ministers adopted the Resolution No. 293 “On Encouraging the Replacement of Natural Gas in Heat Supply Sector”95 entering into force on 1 October 2014. The document envisages introduction of privilege tariff for electricity for non-domestic consumers (all consumers but households) who replaced natural gas with electricity used for heating and hot water supply subject to availability of separate commercial metering. The government also adjusted amount of compensation for differences in tariffs for generating heating energy using other sources than gas: 93

overnment established Crisis Office in Energy Sector // Ukrinform, G 17.06.2014. – http://www.ukrinform.ua/ukr/news/uryad_stvoriv_krizoviy_energetichniy_shtab_1947470

Volodymyr Groysman: Mechanisms for Encouraging Energy Saving and Substitution of Gas are Required // Government Portal, 12.06.2014. – http://www.kmu.gov.ua/control/publish/article?art_id=247383605

esolution of the Cabinet of Ministers of Ukraine No. 293 of July 9, R 2014 “On Encouraging the Replacement of Natural Gas in Heat Supply Sector” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/ laws/show/293-2014-%D0%BF

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

the NERC is recommended to determine average weighted tariff, the National Commission for State Regulation of Public Utility Services – to introduce privilege tariff for heat generating units at the level of 90% of average weighted tariff. Local government authorities are requested to contribute to implementation of investment projects in heat supply aimed at substitution of gas. The Ministry for Regional Development, Construction and Housing and the Ministry of Energy and Coal Industry should submit calculations of forecasted volume of natural gas substitution by other types of fuel and energy (disaggregated by entities) and respective tariff compensation to the Ministry of Finance.

Security of Supply

The Resolution of the Cabinet of Ministers No. 296 approved on the same date actually imposes “limits” of gas consumption96. Starting from August 1 until the end of heating season the mentioned consumers will receive 14.01 billion cubic meters of natural gas, in particular state-financed entities – 0.626 billion cubic meters, heat supply entities – 5.85 billion cubic meters, industry – 7.53 billion cubic meters. The document clarifies the procedure of adjustment of monthly gas distribution, procedure of adoption of decisions regarding beginning and ending of heating seasons, procedure of compensation of negative gas balances. Additionally, the government requested to establish anti-crisis energy offices in every administrative-territorial entity. The Ministry of Energy and Coal Industry, the Ministry of Justice and the Ministry of Internal Affairs are requested to submit proposals for introduction of responsibility (including criminal one) for violations of supply discipline by consumers and the management of gas sector enterprises. The Ministry of Health and the Ministry for Regional Development, Construction and Housing should decide upon expediency of reducing normative air tempera96

esolution of the Cabinet of Ministers of Ukraine No. 296 of July 9, R 2014 “Certain Issues of Providing Households, Enterprises, Entities and Organizations with Natural Gas Until the End of 2014/15 Heating Season” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/296-2014-%D0%BF

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ture of 2° C in residential buildings. the NERC is recommended to optimize the tariff structure of gas distribution and gas supply companies considering minimization of expenses, appropriation of investment programs’ funds for property depreciation and installation of gas meters for households. On the level of the Ministry of Energy and Coal Industry, under Order No. 481 of June 27, 2014, Interagency Working Group on Replacement of Natural Gas with Other Fuel Types97 was established headed by the Deputy Minister Y. Zyukov, whose mission is to analyse possibilities of introduction in Ukraine of modern technologies of using coal and other fuel types for substitution of gas used in industry and for generation of heat and electricity, and to draft respective proposals. In the course of the meeting of the Board of the Ministry of Energy and Coal Industry98 held on July 15, issues of preparation to 2014-2015 autumn and winter period under conditions of termination of Russian gas deliveries were discussed. A number of decisions were adopted following the meeting, amongst them – amending current legal acts on drafting and adoption of planned gas distribution and supply balance to internal consumers, standard gas consumption by households in the case of absence of gas meters and accounting procedure of imbalance of gas volumes in distribution networks. On July 16, the Ministry of Energy and Coal Industry requested to limit supplies of gas to heat generating units in Kyiv and Kharkiv “with the purpose of saving natural gas in order to provide stable performance over 2014-2015 heating

rder of the Ministry of Energy and Coal Industry of Ukraine No. 481 O of June 27, 2014 “On Establishment of Interagency Working Group on Replacement of Natural Gas with Other Fuel Types” // Ministry of Energy and Coal Industry of Ukraine. – http://mpe.kmu.gov.ua/ minugol/doccatalog/document?id=244949682

oard of the Ministry of Energy and Coal Industry discussed the StaB tus of Preparation for 2014-15 Heating Season // Ministry of Energy and Coal Industry of Ukraine, 15.07.2014. – http://mpe.kmu.gov.ua/ minugol/control/uk/publish/article;jsessionid=FB5F4864255DB12C 88DE37A8FEFDBFEB.app1?art_id=244948621&cat_id=35109

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season”99. Nevertheless it is acknowledged that limitations relate only to companies having indebtedness to Naftogaz for consumed gas and continue to accumulate such indebtedness.

Conclusion Establishment of the Crisis Energy Office, more proactive policy for reducing gas consumption, encouraging its substitution by other energy resources may be seen as “bricks” for construction of systemic gas security policy as required by Directive 2004/67/EC. Along with it, government decisions on enhancement of control over consumption and settlements may evolve into “manual” regulation and decreasing of investment attractiveness of the market – consequences contrary to aims of European approach.

inistry of Energy and Coal Industry Requested to Limit Natural Gas M Consumption to Heat Generating Units in Kyiv and Kharkiv // Ministry of Energy and Coal Industry of Ukraine, 16.07.2014. – http://mpe. kmu.gov.ua/minugol/control/uk/publish/article;jsessionid=FB5F4 864255DB12C88DE37A8FEFDBFEB.app1?art_id=244948843&cat_ id=35109

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Реформа ринку

ELECTRICITY

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ЕЛЕКТРОЕНЕРГЕТИКА

Directive 2003/54/EC concerning common rules for the internal market in electricity requires special attention in three areas: free access to networks, fair tariff setting and open market. Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC

According to the Protocol on the Accession of Ukraine to the Treaty establishing Energy Community, the implementation of the Directive should have taken place by January 1, 2012. The responsible parties for its implementation are the Ministry of Energy and Coal Industry and the NERC. Following adoption of the Law “On Principles of the Electricity Market Operation in Ukraine” in 2013, main target is to develop secondary legislation Working Group for the implementation of provisions of the Law was established under Order of the Ministry of Energy and Coal Industry No. 227 of February 26, 20141. Additionally, NNEGC “Energoatom” established the Centre for Introduction of New Model of Electricity Market2, which should develop required legal acts allowing nuclear power plants and other company’s production facilities be prepared to work under new market conditions. Besides, the company implements the program of adaptation to new market model, in particular, by delivering training for trainers of senior executives3. Furthermore, Working Group of the Council of Wholesale Electricity Market is established4.

rder of the Ministry of Energy and Coal Industry of Ukraine No. 227 O of February, 26 2014 “On Organization of Work of the Ministry of Energy and Coal Industry of Ukraine for the Implementation of the Law of Ukraine “On Principles of the Electricity Market Operation in Ukraine”” // Ministry of Energy and Coal Industry of Ukraine. – http://mpe.kmu. gov.ua/minugol/doccatalog/document?id=244927584

enter for Introduction of New Model of Electricity Market is EstabC lished in Energoatom // Government Portal, 21.05.2014. – http://www. kmu.gov.ua/control/uk/publish/article?art_id=247319326&cat_ id=244277212

E nergoatom Provides Adaptation to Liberalization of Electricity Market // UNIAN, 14.03.2014. – http://energy.unian.net/nuclear/896561energoatom-rrovodit-adaptatsiyu-k-liberalizatsii-ryinka-elektroenergii.html

orking Group of the Council of Wholesale Electricity Market for W Implementation of the Law “On Principles of the Electricity Market Operation in Ukraine” // SE “Energorynok”. – http://www.er.gov.ua/ doc.php?f=2954

Together with published Order No. 227, the Action Plan for Implementation of the Law was disseminated. According to the Plan, respective departments of the Ministry should have adopted Action Plan on implementation of transition period (by March 2014), Procedure for Defining Available Transfer Capacity of Interstate Electricity Networks (by May 2014), Procedure for Preparation of United Power System Development Plan for Next Ten Years by System Operator (by May 2014), should have submitted to the Parliament a draft Law “On Peculiarities of Repaying the Indebtedness for Electricity Accumulated on Wholesale Market in Electricity” (by May 2014), and should have developed a draft legal act regarding legal and organizational unbundling by local distribution companies of electricity distribution business from other business activity within vertically integrated business entity (by May 2014). Additionally, SE NPC “Ukrenergo” should have received funds for purchasing software required for balancing market operations by May 2014, while the Ministry of Energy and Coal Industry should have analysed in what way the new draft Law on electricity market should have been amended in accordance with the Third Energy Package. Regarding the Procedure for Defining Available Transfer Capacity of Interstate Electricity Networks, it was adopted by the Ministry of Energy and Coal Industry by the Order No. 413 of June 4, 2014.5 The Procedure for Preparation of United Power System Development Plan for the Next Ten Years is published as a draft on the web-site of the Ministry of Energy and Coal Industry6.

rder of the Ministry of Energy and Coal Industry of Ukraine No. 413 O of June 4, 2014 “On Approval of the Procedure for Defining Available Transfer Capacity of Interstate Electric Networks of United Power System (UES) of Ukraine” // Ministry of Energy and Coal Industry. – http:// mpe.kmu.gov.ua/minugol/doccatalog/document?id=244942592

raft Legal Acts // Ministry of Energy and Coal Industry. – http://mpe. D kmu.gov.ua/minugol/control/uk/doccatalog/list?currDir=49913

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

One more element of the Plan, draft Law “On Peculiarities of Repaying the Indebtedness for Electricity Accumulated on Wholesale Market in Electricity”, is already developed and published on the web-site of the Ministry of Energy and Coal Industry7. Another draft Law regarding amendments to the Tax Code clarifying repayment of such indebtedness in more details, is published together with it. Companies (in particular, Energoatom) which initially backed the idea of drafting the law on peculiarities of repayment of indebtedness8 opposed the published draft9. According to Energoatom position, proposed settlement mechanism using bills of exchange contains corruption aspects and proved to be inefficient way of indebtedness repayment. It is worth adding that draft Laws on debt repayment were also registered in the Parliament as early as in March 2014, namely: the draft Law “On Amendments to Certain Laws of Ukraine Regarding Arrangement of Determination and Repayment of Liabilities Arisen Due to Incomplete Payments for Energy Resources”10 No. 4566 of March 26, 2014 (M.Martynenko, “Batkivshchyna” faction) and the draft Law “On Preventing Bankruptcy and Stabilization of Work of Entities in Energy Sector”11 No. 4566-1 of March 26, 2014 (B.Bandurov, Party of Regions faction). Explanatory notes to both draft Laws stated that initiation of bankruptcy cases in respect of enterprises in energy sector would prevent them from participating in reform of wholesale electricity market. In April, both draft Laws were rejected and

Ibidem

E nergoatom Supports the Development of the Draft LAW on Peculiarities of Repaying the Indebtedness for Electricity // NNEGC “Energoatom”, 30.05.2014. – http://www.energoatom.kiev.ua/ua/press/ nngc/39782-energoatom_pdtrimu_rozrobku_zakonoproektu_schodo_osoblivosteyi_pogashennya_zaborgovanosti_za_elektroenergiyu/

excluded from consideration, however in July the same provisions were included into the draft Law No. 4117 “On Special Period in Fuel and Energy Sector”12 adopted by the Verkhovna Rada for the time being in first reading. It is unknown whether draft Law regarding legal and organizational unbundling by local electricity distribution companies was developed according to the Action Plan for the Implementation of the Law. In July, Energoatom approached the Ministry of Energy and Coal Industry with a request to address in such draft Law the issue of joint and several responsibilities of entities doing business related to electricity distribution and supply for wholesale electricity suppliers13. Additionally, the NERC scheduled to submit a number of issues, including this one, to round-table discussions in Q3-4 of 201414. Neither it is known whether Ukrenergo has already received funds for purchasing software required for balancing market operation according to the Plan; neither has the Ministry of Energy and Coal Industry published yet the analysis on how the new draft Law on electricity market should have been changed according to Third Energy Package. Meanwhile, comments appeared regarding amendments to be introduced into the newly adopted Law “On Principles of the Electricity Market Operation in Ukraine” itself, in particular, aimed at prevention of discrimination of stateowned energy-generating companies. Namely, the Order of the Ministry of Energy and Coal Industry No. 237 of March 11, 201415 and Energoatom announcements cover this issue – according to Energoatom, the Law creates conditions under 12

raft Law of Ukraine “On Special Period in Fuel and Energy Sector” D No. 4117a of June 18, 2014 // Verkhovna Rada of Ukraine. – http:// w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=51387

E nergoatom Voiced its Position Regarding Draft LAW on Peculiarities of Repaying the Indebtedness for Electricity // NNEGC “Energoatom”, 29.07.2014. – – http://www.energoatom.kiev.ua/ua/press/ nngc/40063-energoatom_visloviv_svoyu_pozitcyu_schodo_zakonoproektu_pro_osoblivost_pogashennya_zaborgovanost_za_ elektroenergyu_/?print

E nergoatom Voiced its Position regarding Draft LAW on Peculiarities of Repaying the Indebtedness for Electricity // NNEGC “Energoatom”, 29.07.2014. – – http://www.energoatom.kiev.ua/ua/press/ nngc/40063-energoatom_visloviv_svoyu_pozitcyu_schodo_zakonoproektu_pro_osoblivost_pogashennya_zaborgovanost_za_ elektroenergyu_/?print

raft Law of Ukraine “On Amendments to Certain Laws of Ukraine D Regarding Arrangement of Determination and Repayment of Liabilities Arisen Due to Incomplete Payments for Energy Resources”, No. 4566 of March 26, 2014 // Verkhovna Rada of Ukraine. – http:// w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=50416

rder of the NERC No. 683 of December 31, 2013 “On Adoption of the O Tentative Plan of Holding Consultations with Public In the National Commission Providing With the State Regulation in Energy Sector, for 2014” // NERC. – http://www.nerc.gov.ua/?id=9070

raft Law of Ukraine “On Preventing Bankruptcy and Stabilization D of Work of Entities in Energy Sector” No. 4566-1 of March 26, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=50421

Order of the Ministry of Energy and Coal Industry No. 237 of March 11, 2014 “On Urgent Actions for Stabilization of Financial Situation of the Sector and Corruption Prevention” // Ministry of Energy and Coal Industry. – http://mpe.kmu.gov.ua/minugol/control/uk/publish/ article?art_id=244919959&cat_id=35109

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ELECTRICITY

which Energoatom and Ukrgidroenergo will be forced to cover cross-subsidizing between electricity customers16, and offer to eliminate nonmarket mechanisms in operation of the new market. Under conditions of Crimea annexation, the issue of electricity supply to the peninsula has arisen in a new context. The Cabinet of Ministers adopted Resolution No. 14817 appointing Ukrinterenergo as a single supplier of electricity to Crimea, and companies supplying electricity to Crimea should purchase it from Ukrinterenergo under sale contracts. According to the representatives of unrecognized Crimean authorities, Ukrainian electricity is sold to the peninsula with below-market prices18. Regulatory authority reviews pricing system According to the NERC letter issued upon journalists’ request19, curbing of electricity tariffs level for households led to the situation where presently households reimburse roughly 24% of economically justified tariff. Cross-subsidizing of households at the expense of other consumers is growing, thus under unchanged electricity tariff for households, tariffs for industry, state-financed entities and public utility companies grow. In pursuance of the Resolution of the Cabinet of Ministers No. 149 of May 21, 2014 “On Improvement of the State Policy in Regulation of Tariffs for Electricity Sold to Households and Other Consumers to Which Such Tariffs Apply”20, the NERC approved increasing of electricity tariff for 16

E nergoatom Offers to Eliminate Non-Market Mechanisms in New Electricity Market Model // UNIAN, 21.07.2014. – http://economics.unian.ua/energetics/942492-energoatom-rroponue-usunutinerinkovi-mehanizmi-v-noviy-modeli-rinku-elektroenergiji.html

esolution of the Cabinet of Ministers of Ukraine No. 148 of May 7, R 2014 “On Peculiarities of Regulation in Energy Sector on Temporary Occupied Territory of Autonomous Republic of Crimea and City of Sevastopol” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/ laws/show/148-2014-%D0%BF

households with an amplitude of 10-40%21 by adopting the Resolution No. 749 of May 23, 2014 “On Amendments to Tariffs for Electricity Sold to Households”22. Additionally, the NERC adopted Resolution No. 757 of May 27, 2014 “On Establishment of Retail Electricity Tariffs for June 2014 Considering Marginal Tariff Levels in Gradual Transition to Setting Single Retail Tariffs for Consumers on Ukrainian Territory”23 defining new tariffs for 1 and 2 voltage types. In July, the NERC approved and published for public discussions a draft Resolution “On Amendments to the Procedure of Application of Electricity Tariffs”24 which allows regulating establishment of electricity tariffs for citizens living in nonresidential premises on semi-basement floors of residential houses. The government and the Parliament search for new mechanisms of interaction between market players to improve transparency of cash flows Significant indebtedness of market players, in particular, of heat and water supply companies, to energy generating companies remains a problem. According to the government, consumers’ indebtedness for electricity in June exceeds 15 bln UAH, therefore contributing to accumulation of indebtedness of energy-generating companies to suppliers (coal and gas). Members of the Parliament developed and submitted for discussion a number of draft laws intended to improve payments between market players, primarily between energy suppliers and heat and water supply companies. The draft Law 21

Crimea Pays Non-Market Price for Ukrainian Electricity // Ukraina communalna, 06.08.2014. – http://jkg-rortal.com.ua/ua/publication/one/ krim-rlatit-ukrajin-za-jelektrojenergju-za-nerinkovimi-cnami-38543

ERC Increased Electricity Tariffs for Households by 10-40% // N Ukrainska energetyka [Ukrainian Energy], 29.05.2014. – http://uaenergy.org/post/44319

ERC letter No. 4426/27/47-14 of July 23, 2014 to Mr. S. Lyamets, N Editor-in-Chief of “Ekonomichna Pravda” // Center of Computer Technologies. – http://cct.com.ua/2014/23.07.2014_4426_27_47-14.htm

ERC Resolution No. 749 of May 23, 2014 “On Amendments to Tariffs N for Electricity Sold to Households” // NERC. – http://www.nerc.gov. ua/?id=11057

esolution of the Cabinet of Ministers of Ukraine No. 149 of May 21, R 2014 “On Improvement of the State Policy in Regulation of Tariffs for Electricity Sold to Households and Other Consumers to Which Such Tariffs Apply” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/ laws/show/149-2014-%D0%BF

ERC Resolution No. 757 of May 27, 2014 “On Establishment of Retail N Electricity Tariffs for June 2014 Considering Marginal Tariff Levels in Gradual Transition to Setting Single Retail Tariffs for Consumers on Ukrainian Territory” // NERC. – http://www.nerc.gov.ua/?id=11050

raft NERC Resolution “On Amendments to the Procedure of AppliD cation of Electricity Tariffs” // NERC. – http://www.nerc.gov.ua/index. php?news=3867

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

No. 4671 of April 9, 2014 “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources”25 (Mr. P.Korzh, Party of Regions faction) was one of them and suggested opening special accounts by heat and water supply companies to be used for settlements with energy suppliers, however the draft was rejected. Instead, the Law No. 1198-VII of April 10, 2014 “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources”26 submitted by Mr. M.Martynenko, was adopted, also providing for opening of special accounts and clarifying relations between heat, hot and cold water suppliers and consumers. Soon the Cabinet of Ministers with its Resolution No. 217 of June 18, 201427 assigned Oschadbank as a bank where the above-mentioned accounts should be opened, and approved the Procedure for distribution of funds received to such accounts. At the end of July, the NERC published a draft Resolution “On Approval of Amendments to the NERC Reporting Forms in Electricity and Heat Supply Sectors and Instructions for Their Filling In”28, whose entering into force will allow the NERC to better estimate market players’ performance, improve procedure of business setting up, etc. Encouraging use of electricity instead of gas is not expedient considering status of networks, absence of required energy resources and unused energy efficiency potential Trying to solve the problem of reducing gas supplies to energy market, the government seeks op25

raft Law No. 4671 of April 9, 2014 “On Amendments to Certain Laws D of Ukraine Regarding Improvement of Settlements for Energy Resources” // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/ pls/zweb2/webproc4_1?id=&pf3511=50595

L aw of Ukraine No. 1198-VII of April 10, 2014 “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources” // Legislation of Ukraine. – http://zakon4.rada. gov.ua/laws/show/1198-18

esolution of the Cabinet of Ministers of Ukraine No. 217 of June R 18,2014 “On Approval of the Procedure for Distribution of Funds Received to the Current Accounts With Special Conditions of Use for Settlements With Guaranteed Natural Gas Suppliers” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/217-2014-%D0%BF Draft NERC Resolution “On Approval of Amendments to NERC Reporting Forms in Electricity and Heat Supply Sectors and Instructions for Their Filling In” // NERC, 29.07.2014. – http://www.nerc.gov.ua/index.php?news=3896

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

portunities to replace it with other energy sources. This resulted in the adoption of the Resolution of the Cabinet of Ministers on encouraging natural gas and heating energy consumers to convert to electric-based heating and hot water supply29, providing for setting of privilege electricity tariff for non-household consumers who replaced natural gas with electricity used for heating and hot water supply, subject to availability of separate fiscal metering. Additionally, a decision was taken to increase the volume of electricity consumed by households without changing tariffs in building with electrical heating installations – from 1 October to April 30, the limit of monthly consumed electricity volume increases from 3600 kWh to 5000 kWh. Nevertheless, networks status still remains a problem – they may fail due to overvoltage. As early as in August, under the conditions of summer months, some regional power distribution companies (Volynoblenergo30, Kirovogradoblenergo31) asked consumers to limit electricity use in peak hours and not to overcharge networks. Experts also alert on threat of networks overvoltage and massive shutdown of electrical heating32. Under the conditions of military activity in Eastern Ukraine, where coal extraction for electricity companies is concentrated, the problem of shortage of resources for electricity generation is arising. In August, a number of regional power distribution companies (Chernivtsioblenergo, Sumyoblenergo, Zhytomyroblenergo, Vinnytsyaoblenergo) limited electricity supplies to certain customers33, meanwhile on 13 August, the Cabinet of Ministers adopted a decision on introduction of emergency state on the market. According 29

abinet of Ministers of Ukraine Recommends NERC to Take Measures C to Encourage Natural Gas and Heating Energy Consumers to Shift to Electric Heating and Hot Water Supply // NERC, 10.07.2014. – http:// www.nerc.gov.ua/index.php?news=3870

olyn People are Asked to Limit Electricity Consumption // Volyn InV formation Portal, 12.08.2014. – http://vip.volyn.ua/articles/volynyanzaklykayut-obmezhyty-vykorystannya-elektroenergiyi

Kirovohradoblenergo Urges not to Overcharge the Network // Grechka, 13.08.2014. – http://gre4ka.info/suspilstvo/12401-kirovohradoblenerho-zaklykaie-ne-rerevantazhuvaty-merezhu

E xpert Mentioned the Actual Reason for Hot Water Outage in the Capital // Forum UA, 05.08.2014. – http://from-ua.com/news/317627ekspert-nazval-istinnuyu-rrichinu-otklyucheniya-goryachei-vodi-vstolice.html

egional Power Distribution Companies Limit Electricity Supplies R to Industrial Consumers // Energetyka Ukrainy [Energy of Ukraine], 13.08.2014. – http://uaenergy.com.ua/post/19569

ELECTRICITY

to the Minister Y. Prodan34, main justification of this decision is namely limitation of coal supplies to energy-generating companies. Introduction of emergency state on the market implies that the state will dictate terms of electricity sale and purchase, limit electricity price and tariffs on its generation.

Conclusion Despite certain measures in secondary legislation development for the implementation of the Law on electricity market, the government should place a priority on problems dictated by the present situation with limited supply of energy resources to Ukraine. That is why the government is rather solving urgent problems than developing new policy for market management. Meanwhile, even measures taken to solve urgent problems advance Ukraine to European standards, in particular, in terms of cash flows transparency or harmonization of electricity tariffs on the market.

abinet of Ministers Adopted Resolution on Introduction of EmerC gency State on Electricity Market // Livyi Bereh, 13.08.2014. – http:// ukr.lb.ua/news/2014/08/13/276064_kabmin_prinyal_postanovlenie_vvode.html

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Regulation 1228/2003 on the conditions of access to the network for cross-border exchanges in electricity considering amendments introduced by Commission Decision 2006/770/EC provides for the compensation of operators’ losses, transparent tariffs and creation of competitive market. According to the Protocol on the Accession, the Regulation should have been implemented by 1 January, 2012.

pants to such auctions by means of online auctions, electronic documents management and digital signature procedures.

The Ministry of Energy and Coal Industry of Ukraine placed a priority on the connection of Ukrainian electricity network to European one: the Ministry of Energy and Coal Industry35 adopted the Order No. 409 of June 4, 2014, recognizing connection of Ukrainian United Power System to electricity interconnections of the EU Member States by 2017 as the priority project. Ukrenergo should have drafted the Plan of Priority Managerial and Engineering Actions for preparation of Ukrainian United Power System to function with EU electricity grid within two weeks.

On 24 June 2014, during the meeting of the Council of Wholesale Electricity Market, the draft Agreement on Access to Transmission Capacities of Interstate Electricity Networks was approved and submitted to the NERC38 for revision. The draft was open for public discussions until the end of July 2014.

On the same day, the Ministry of Energy and Coal Industry also adopted the Order No. 41336 approving the Procedure for Defining Available Transmission Capacity of Interstate Electricity Networks of United Power System (UPS) of Ukraine. According to the adopted Order, starting from 1 December 2014, Ukrenergo will calculate the transmission capacity of interstate electricity networks of Ukrainian UPS in accordance with the Procedure. On 19 May, the NERC published a draft Resolution “On Approval of the Procedure of Holding Online Auctions on Distribution of Transmission Capacities of Interstate Electricity Networks”37 aimed at providing more independent access of partici35

Order of the Ministry of Energy and Coal Industry of Ukraine No. 409 of June 4, 2014 “On Providing With the Implementation of the Project of Connection of United Power System of Ukraine to Electricity Interconnections of EU Member States” // Ministry of Energy and Coal Industry of Ukraine. – http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=244940610

Order of the Ministry of Energy and Coal Industry of Ukraine No. 413 of June 4, 2014 “On Approval of the Procedure for Defining Available Transfer Capacity of Interstate Electric Networks of United Power System (UES) of Ukraine” // Ministry of Energy and Coal Industry. – http:// mpe.kmu.gov.ua/minugol/doccatalog/document?id=244942592

raft NERC Resolution “On Approval of the Procedure of Holding OnD line Auctions on Distribution of Transmission Capacities of Interstate Electric Networks” // NERC. – http://www.nerc.gov.ua/?news=3790

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

In the meantime, according to the Action Plan on Implementation of National Program of Approximation of Ukrainian Legislation to that of the European Union in 201139, the Law aimed at implementation of Regulation 1228/2003 introducing amendments to the Law “On Electricity” should have been drafted back in 2011, determining guidelines of network operation in the course of interconnection with networks of other countries, rules for performance adjustment of new junction points in cross-border electricity transmission networks, procedures for information disclosure on capacities of interstate electricity networks, etc. It is still unknown whether such draft is submitted to the Parliament for consideration. Conditions of participation in the export auctions became more competitive, however both political and technical problems in this area still persist The auction held as early as in December proved monopolistic position of one player for electricity export. Following the auction, DTEK remained exclusive seller of electricity to Slovakia, Hungary, Romania, Poland and Belarus. Though currently it 38

Work on Reforming Energy Sector is in Progress // Ukrainian Bar Association, 04.07.2014. – http://uba.ua/ukr/news/3179/

Ordinance of the Cabinet of Ministers of Ukraine No. 790-r of August 17, 2011 “On Approval of the Action Plan on Implementation of National Program of Approximation of Ukrainian Legislation to that of the European Union in 2011” // Ministry of Justice of Ukraine. – http://www.minjust.gov.ua/40160

ELECTRICITY

remains the leader in electricity export, new players entered the market. In particular, after two-years pause Ukrinterenergo40 resumed electricity export to Slovakia, Hungary and Romania, and in April, it purchased a part of lots on the auction. On 25 June, in the course of unscheduled auction held by Ukrenergo, Zakarpattyaoblenergo purchased the right to export electricity to Slovakia via the Uzhgorod-2 – Sobrance power line41. Donbasenergo participates in the auctions with increasing frequency. Mass media state that the number of auctions participants is growing, though in the result of embittered relations between market players42, and the Energy Community Secretariat hopes for even greater degree of transparency and efficiency43 of electricity export auctions in the future. Along with this, already in June, Ukrenergo failed to sell44 650 MW of export capacities: according to companies45, the main reason for this is the exhaustion of engineering capabilities of interstate capacities. According to the government46, in the first half of 2014, Ukrainian electricity export decreased by 5.9%. Additionally, under emergency state in electricity sector, the government may decide to further limit electricity export.

Ukrainian Companies Launch Electricity Export to Europe // Ukrainska energetyka [Ukrainian Energy], 09.04.2014. – http://ua-energy. org/post/42952

Zakarpattyaoblenergo Prevented State Company from Electricity Export to Europe through the Court Action // Zakarpattya Online, 07.07.2014. – http://zakarpattya.net.ua/News/125985-Zakarpattiaoblenerho-cherez-sud-ne-dopustylo-derzhkompaniiu-do-rostachannia-elektroenerhii-do-IEvropy

Press Akhmetov: Ministry of Energy and Coal Industry vs. DTEK // LigaBusinessInform, 16.05.2014. – http://biz.liga.net/all/tek/ stati/2748218-rotesnit-akhmetova-minenergo-rrotiv-dtek-.htm

European Energy Community Hopes for Cancellation of DTEK Monopoly in Electricity Export // Finansova Zashchita (Financial Protection), 29.05.2014. – http://finzah.com.ua/100/news14625

Ukrenergo failed to sell 650 MW of Export Capacities // Ukrainska energetyka [Ukrainian Energy], 27.06.2014. – http://ua-energy.org/ post/45263

DTEK: In terms of Electricity, we Exported from the Country Everything we could // Ukrainska energetyka [Ukrainian Energy], 26.06.2014. – http://ua-energy.org/post/45198

In First Half 2014, Ukrainian Electricity Export Decreased on 5.9% // Delo, 16.07.2014. – http://delo.ua/business/ukraina-v-i-rolugodiisnizila-eksport-elektroenergii-na-59-241689/

Conclusion The government sets a goal to integrate the Ukrainian UPS to the European energy network as soon as possible, and seeks to speed up adoption of all required legal acts. Nevertheless, such legal acts are being drafted only within the government, while no significant changes for systems integration are being proposed on legislative level. Additionally, competition in electricity export between market players is enhancing, though against the background of conflicts and engineering difficulties. Export may be compromised under the emergency state introduced by the government in August 2014.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Directive 2005/89/EC concerning the measures for security of electricity supply and infrastructure investment requires from the government to set unified rules of operation of the networks and transparency of reporting.

All measures required for providing with security of electricity supply and infrastructure investment according to the requirements of the Directive should have been developed by January 1, 2012. According to the Action Plan on Implementation of National Program of Approximation of Ukrainian Legislation to that of the European Union, requirements of the Directive along with those of the Regulation 1228/2003 should have been taken into account in amendments to the Law “On Electricity”. Under new challenges to energy security, improvement of security of electricity supply is a top priority The government launched a number of projects for modernization of existing and construction of new networks involving own and investors’ funds. Namely, on August 13, the Cabinet of Ministers approved rehabilitation projects of 750 kW outdoor switchgears in Zaporizhzhia and Rivne nuclear power plants. Energoatom is to finance rehabilitation at the expense of funds allocated for these projects in the company’s electricity tariff. Projects are constituent parts of wider projects for construction of new HV power lines in Rivne, Zaporizhzhia and Kyiv regions47. Additionally, on September 13, the Cabinet of Ministers approved allocation of funds for construction of new HV power lines “ZAES-Kakhovska” (200 km) and “RAES-Kyivska” (350 km). The main reason of rehabilitating the 750 kW outdoor switchgears at the Zaporizhzhia NPP and construction of “ZAES-Kakhovska” 750 kW power line is increasing reliability of operation of the Southern part of the UPS due to increased generation ratio of the Zaporizhzhia NPP and voltage stabilization in the Southern energy system.

Government Approved 750 kW Outdoor Switchgears Rehabilitation Projects in Zaporizhzhia and Rivne Nuclear Power Plants // RBCUkraine, 14.08.2014. – http://tek.rbc.ua/rus/kabmin-utverdil-rroektyrekonstruktsii-oru-750-zaporozhskoy-14082014223300

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

With the purpose of enhancing the safety of electricity generation, on May 15, 2014 the Parliament ratified Guarantee Agreements between Ukraine, Euratom48 and the EBRD49 on granting 600 mln EUR loans for implementation of Comprehensive (General) Program of Improving the Safety of Power-Generating Units at Nuclear Power Plants. In order to receive this loan, the government and Energoatom should fulfil a number of requirements, in particular, assign national authority in charge of decommissioning, provide with operation and proper financing of the Decommissioning Fund and the Fund of Management of Spent Nuclear Fuel, and include funds required for repaying interests and principal amount of the loan into the tariff for electricity sold by Energoatom. Moreover, regulatory authority proceeds with the development of secondary legislation for better network operation. At the end of April, the NERC published a draft Resolution on Amendments to the Procedure for Electric Facilities Connection to Electricity Networks50, enlarging number of connection options (standard connection, offstandard connection, connection of electricitygenerating electric facilities, etc.) and clarifying requirements for concluding the agreement on electricity supply. On June 18, the NERC published a draft Resolution “On Amendments to the Resolution of the 48

Law of Ukraine No. 1258-VII of May 15, 2014 “On Ratification of Guarantee Agreement Between Ukraine, as a Guarantor, and the European Atomic Energy Community, as a Loaner, on the Agreement of Mechanism of Granting a Loan in the Amount of EUR 300 million (Three Hundred Million), Dated August 7, 2013, Between the National Nuclear Energy Generating Company “Energoatom” and the European Atomic Energy Community for Implementation of the Comprehensive (General) Program of Improving the Safety of Power-Generating Units at Nuclear Power Plants” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/1268-18

Law of Ukraine No. 1267-VII of May 15, 2014 “On Ratification of Guarantee Agreement (Ukraine: Comprehensive (General) Program of Improving the Safety of Power-Generating Units at Nuclear Power Plants) Between Ukraine and the European Bank for Reconstruction and Development” // Legislation of Ukraine. – http://zakon2.rada. gov.ua/laws/show/1267-18

Draft NERC Resolution “On Approval of Amendments to the Procedure for Electric Facilities Connection to Electricity Networks” // NERC. – http://www.nerc.gov.ua/?id=10688

ELECTRICITY

National Energy Regulatory Commission No. 15 of June 13, 1996”51, according to which procedures for doing business in electricity transmission by local networks in transitional period should be brought in line with the provisions of the Laws of Ukraine “On Principles of the Electricity Market Operation in Ukraine” and “On Natural Monopolies”. On June 20, the NERC again published a draft Resolution “On Amendments to the NERC Resolution No. 1665 of December 20, 2012”52 aimed at preventing increase of tariffs for electricity transmission by local electricity networks, for electricity supply at regulated tariff and for single retail electricity tariffs for Ukrainian consumers. In particular, having received comments and proposals from market operators, the NERC amended the document, now providing for setting a profit margin of energy supplying companies on basic 11% from August 1, 2014.

Conclusion There is an understanding of the necessity to improve safety and quality of electricity transmission in Ukraine, in particular under current conditions. A range of market players – investors, the government, customers – are trying to upgrade safety of electricity transmission and invest in infrastructure, nevertheless, this work is not comprehensive and is not coordinated by the government.

There are some attempts on legislative level to regulate relations between market players under the conditions of complicated situation in electricity supply. Namely, the draft Law No. 4106 of February 6, 2014 was registered53 (O.Myrnyi and I.Miroshnychenko, Svoboda faction) proposing amendments to the Law “On Electricity” and providing for the responsibility of electricity suppliers before the customers only in the case of electricity supply interruption due to the fault of electricity supply company. Presently, this draft Law is pending consideration.

Draft NERC Resolution “On Amendments to the Resolution of the National Energy regulatory Commission No. 15 of June 13, 1996” // NERC. – http://www.nerc.gov.ua/index.php?news=3832

Draft NERC Resolution “On Amendments to NERC Resolution No. 1665 of December 20, 2012” (repeated) // NERC. – http://www. nerc.gov.ua/index.php?news=3838

Draft Law of Ukraine No. 4106 of February 6, 2014 “On Amendments to the Law of Ukraine “On Electricity” (Regarding Improvement of Electricity Consumers’ and Suppliers’ Situation”. – http://w1.c1.rada. gov.ua/pls/zweb2/webproc4_1?pf3511=49712

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

REGULATORY AUTHORITY Though EU Member States independently determine functions, competencies and administrative powers of regulatory authorities, provisions of the Second and the Third Energy Packages establish minimum set of competencies for regulatory authorities to be taken into account on national level. According to Article 23 of Directive 2003/54/EC and Article 25 of Directive 2003/55/EC, national regulatory authorities should be “completely independent from the interests” of electricity and gas industry. The Third Energy Package provides for strengthening of regulators’ independence, in particular, by granting them individual legal status, guaranteeing functional independence from any public or private company, individual allocation of budget resources and their standalone use in order to perform their duties.

Key draft Law regarding the NERC requires improvement, though it has not still been considered in the Parliament; meanwhile, Decrees of the President united two regulatory authorities The Verkhovna Rada Committee on Fuel and Energy Sector, Nuclear Policy and Nuclear Safety still has under consideration the draft Law “On State Regulation in Energy Sector” registered under No. 3095 of August 16, 2013. The draft Law was developed by the government with direct involvement of the NERC. Explanatory note to this draft states that it defines clear limits of the NERC competence and powers required to fulfil assigned duties, including providing with efficient state influence on performance of natural monopoly entities and entities on related markets. However, according to the Conclusion of the Central Scientific Experts Office of the Verkhovna Rada of Ukraine, draft Law does not solve the problem of clear distribution of powers of state regulation entities in energy sector. The document was recommended by energy committee, but was not considered by the Parliament. In its

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

reply to request for information, the NERC indicated that it continues to develop a draft Law “On State Regulation in Energy Sector” which would ensure compliance of the NERC status, duties and powers with the EU Third Energy Package. On August 27, the President of Ukraine adopted Decrees No. 692 and No. 693 liquidating the National Commission for State Regulation of Public Utility Services and the National Energy Regulatory Commission respectively. Instead, Decree No. 694 established a new united regulatory authority – the National Energy and Public Utilities Regulatory Commission (NEPURC). Meanwhile, new composition of the Commission is appointed1, adoption of other legal acts is expected. The head of the new Commission Mr. V.Demchyshyn is requested to submit the draft NEPURC Statute within two weeks, and the Cabinet of Ministers is requested to provide the NEPURC with funds and office within two months.

Decree of the President of Ukraine No. 695/2014 of August 27, 2014 “On Appointment of Members of the National Commission of Ukraine for State Energy and Public Utilities Regulation” // President of Ukraine. – http://president.gov.ua/documents/18032.html

REGULATORY AUTHORITY РЕГУЛЯТОР

Having numerous contacts with foreign partners, experience and information sharing, the regulatory authority proceeded with the discussion of legal changes aimed at improvement of energy sector regulation system In May, the NERC top-management held a meeting with the representative of the Technical Mission of the IMF Fiscal Affairs department Mr. R. Gillingham2. The parties discussed reduction of subsidies to Ukrainian energy sector, establishment of economically justified prices on natural gas for households, heat generating entities, industrial consumers, state-financed entities and other entities, and impact of the NERC decisions on budget expenditures.

Conclusion The NERC is ready to implement the provisions of the Third Energy Package in terms of status of regulatory authority and proactively employs international assistance and cooperation opportunities for this matter. However, it is still unknown when new version of the draft Law will be developed, coordinated, approved by the government and submitted to replace the old one. The President’s decision regarding structural and functional merger of two regulatory authorities appeared to be unexpected and presently it is not clear whether this decision will be an impetus for enhancement of independence of regulatory authority.

On May 15 and on May 30, within the framework of implementation of the project of technical assistance to the NERC for the development of the draft Law on regulation in energy sector according to the EU Third Energy Package3, implemented with the support of the World Bank, the NERC members held a meeting with I.Lewington, Principal Consultant at DNV KEMA Energy & Sustainability – KEMA Consulting GmbH4. In the course of the meetings, experience of the EU and Energy Community member states in legislation approximation to the Third Energy Package was discussed, in terms of status, organization and independence of regulatory authority. In June, a group of the NERC experts studied the experience of U.S. regulatory authorities within the framework of the Energy Regulatory Partnership Program. Moreover, a number of meetings were held, where results and achievements of cooperation with the National Association of Regulatory Utility Commissioners (NARUC) and the United States Agency for International Development (USAID)5 were discussed. 2

NERC and IMF Work Jointly to Improve the Financial Situation in Ukrainian Energy Sector // NERC, 08.05.2014. – http://www.nerc.gov. ua/index.php?news=3776

World Bank Project on Technical Assistance to the Commission was Discussed in NERC // NERC, 16.05.2014. – http://www.nerc.gov.ua/ index.php?news=3786

NERC: Approximation of Ukrainian Legislation to the Third Energy Package is Launched // NERC, 30.05.2014. – http://www.nerc.gov.ua/ index.php?news=3808

NERC Experts Studied Operation of Information Systems for Market Support in US // Ukrainska energetyka [Ukrainian Energy], 23.06.2014. – http://ua-energy.org/post/45020

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

National targets Реформа ринку

RENEWABLES ГАЗ

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

RENEWABLES

National targets Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC provides for setting of mandatory national indicative targets for renewable energy generation based on adequate evaluation of the country’s starting opportunities and its potential and precise statistics data. These national targets shall ensure 20% share of energy from renewable sources in the total end-use energy consumption of the Community by 2020, as well as reaching 10% share of this type of energy in the transportation sector for each Member State. For this purpose, every Member State should adopt national action plan in renewable energy sector.

According to the Decision of the Ministerial Council of the Energy Community D/2012/03/MC-EnC of October 18, 2012, deadline for the implementation of the Directive 2009/28/EC to Ukrainian national legislation is January 1, 2014. Moreover, Ukraine is obliged to adopt and submit the National Renewable Energy Action Plan to the Energy Community Secretariat for discussion by June 30, 2013. Government ignores the requirement to adopt the National Renewable Energy Action Plan by 2020 and update Energy Strategy by 2030 in terms of renewables development The National Renewable Energy Action Plan presented by the State Agency on Energy Efficiency and Energy Saving of Ukraine in November 2013 is still pending government approval. Additionally, in accordance with the Decision of the National Security and Defence Council “On the Situation on Providing with Energy Security in Connection with the Status of Natural Gas Supply to Ukraine”1, for the purpose of fulfilling international obligations of Ukraine in renewable energy sector, by June 20, 2014 the government should have updated the Energy Strategy by 2030. Therefore, targets in renewable energy sector remain uncoordinated. The draft NREAP stipulates mandatory national target to achieve 11% share of renewable energy sources in end-use energy demand by 2020, which complies with the decision of the 10th Ministerial Council. Meanwhile, on February 4, 2014, the Ministry of Energy and Coal Industry published the text of the updated En1

Decree of the President of Ukraine No. 448/2014 of May 1, 2014 “On the Decision of the National Security and Defense Council of Ukraine of April 28, 2014 “On Situation on Providing with Energy Security in Connection with the Status of Natural Gas Supply to Ukraine” // President of Ukraine. – http://www.president.gov.ua/documents/17587. html

ergy Strategy of Ukraine by 20302 as adopted by the Ordinance of the Cabinet of Ministers of July 24, 2013, which was published only on January 29, 2014. The Action Plan for implementation of Directive 2009/28/EC was approved by government Ordinance on September 3, 20143, thus conclusions of its implementation would be premature. National indicative targets of biofuel consumption were set by the law; however it was not put into effect The Law No. 4970-VI adopted in June 2012, provides for step-by-step increase of the share of production and use of biofuel and composite motor fuel4. This Law stipulates the requirements to bio-ethanol content in motor petroleum produced or sold on Ukrainian territory: as of January 1, 2013 – recommended content is at least 5%; as of January 1, 2014 – mandatory content is at least 5%, as of January 1, 2016 – mandatory content is at least 7%. In reality, general transition to bio-fuel has not taken place due to gaps in legal regulation of production, storing and selling of alternative fuel.

Energy Strategy of Ukraine by 2030 // Ministry of Energy and Coal Industry, 04.02.2014. – http://mpe.kmu.gov.ua/minugol/doccatalog/ document?id=260994

Ordinance of the Cabinet of Ministers of Ukraine No. 791-r of September 3, 2014 “On Approval of Action Plan for Implementation of Directive 2009/28/EC of the European Parliament and of the Council” // Government Portal. – http://www.kmu.gov.ua/control/uk/cardnpd

L aw of Ukraine No. 4970-VI of June 19, 2012 “On Amendments to Certain Laws of Ukraine Regarding Production and Use of Motor Fuels Containing Bio-components” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/4970-17

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Creation of favourable conditions and elimination of barriers Directive 2009/28/EC provides for reduction of administrative and regulatory barriers in the renewable energy generation sector. Governments shall control the objectiveness, transparency, non-discrimination and proportionality of rules and authorization procedures, certification and licensing, which are applied to generating units and electricity transportation and distribution infrastructure, generation of energy from renewable sources used for heating or cooling and biomass treatment for receiving biofuel or other energy products.

Creation of favourable conditions and elimination of barriers

Ukrainian government insists on reducing the feed-in tariffs for solar generation despite proactive opposition of market players, financial institutions and respective associations; regulatory authority remains neutral On March 27, the draft Law No. 45965 by Y.Moskalenko (group “Sovereign European Ukraine”) and V.Polochaninov (“Batkivshchyna” faction) was registered in the Verkhovna Rada. The document proposed to keep existing multipliers of the feed-in tariff only for solar power plants with the capacity up to 10 MW, while solar power plants with the capacity over 10 MW will enjoy twice as little multipliers, including retrospective application of such reduction. On April 7, the government submitted to the Parliament the draft Law No. 4644 “On Amendments to Certain Laws of Ukraine (Regarding Improvement of Settlements for Energy Resources)”6. According to the Minister of the Cabinet of Ministers Mr. O.Semerak, the draft was developed with the purpose of eliminating monopolistic position of certain companies by reducing feed-in tariffs for solar generation to the level of tariffs for window power stations7. Additionally to this provision, the government proposed to secure the purchasing price of electricity for electricity producing companies to be used for internal or economic needs on the level of feed-in tariff set for them. The draft Law also provided for cancellation of privileged 5

Draft Law of Ukraine No. 4596 of March 27, 2014 “On Amendments to the Law of Ukraine “On Electricity” (Regarding Encouragement of Production of Electricity Using Alternative Sources of Energy)” // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=50461 Draft Law of Ukraine No. 4644 of April 7, 2014 “On Amendments to Certain Laws of Ukraine (Regarding Improvement of Settlements for Energy Resources)” // Verkhovna Rada of Ukraine. – http://w1.c1.rada. gov.ua/pls/zweb2/webproc4_1?pf3511=50556 Cabinet of Ministers agreed to reduce feed-in tariff for solar energy // Ukrainska energetyka [Ukrainian Energy], 19.03.2014. – http://uaenergy.org/post/42344

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

connection of renewable energy facilities (including development of project documentation). The mentioned initiatives faced criticism and opposition from market players, investors and experts. Chinese CNBM approached then Acting President O.Turchynov asking to save Ukrainian solar energy sector from liquidation and to protect company’s assets with the total capacity of 1000 MW8. One of the major national equipment manufacturers, PrJSC “Kvasar” announced the decision of a number of investors to freeze all solar energy projects in Ukraine until final decision on the feed-in tariff is taken9. The EBRD also warned on possible reduction of investment attractiveness due to tariff amendments10. The NERC replied to the government tariff initiatives by indicating expediency to keep existing multipliers for big solar electric plants: 2.0 through 3.6 (in draft Law No. 4596: 1.22-2.4, in draft Law No. 4644: 1.47-4.8) referring to information of international consulting company AFMercados EMI11. The governmental draft Law No. 4644 was put to the vote in the Parliament in three days following its submission and was rejected. The draft Law No. 4596 is under consideration in Parliamentary Committees. Following the failure of the government initiative, on May 12, the NERC published a draft Resolution “On Adoption of Amendments to the Procedure for Setting, Review and Suspension of Feed-in 8

The Chinese ask Turchynov to keep feed-in tariff for solar energy generation // Ukrainska energetyka [Ukrainian Energy], 01.04.2014. – http://ua-energy.org/post/42708

Investors Freeze Solar Projects until Solving Tariff Issue – Quasar // Ukrainska energetyka [Ukrainian Energy], 01.04.2014. – http://uaenergy.org/post/42694

E BRD Asks the Government to Wait Reducing Feed-in Tariff // Ukrainska energetyka [Ukrainian Energy], 27.06.2014. – http://ua-energy. org/post/45264

Establishment of Feed-in Tariff for Electricity Generated from On Alternative Energy Sources // NERC, 18.04.2014. – http://www.nerc. gov.ua/index.php?news=3752

RENEWABLES

Tariff for Entities”12. The document introduces additional condition for renewable energy facilities with the capacity of over 5 MW as “correspondence of such construction to the Ukrainian UPS development plan for the next ten years”. Such coordination is expected to enter into force on January 1, 2015. The regulatory authority has not published any announcements on approval of the resolution after expiry of the period of review. The period for submitting comments to the draft Procedure for Calculation of Payment for Connection of Electric Facilities to Electricity Networks13 also expired. According to the final wording of this document, the NERC expects to reduce tariff subsidies for construction and installation works and putting newly constructed “green” energy facilities into operation. It is expected that customer will pay for the development of feasibility study for connection of the facility. In June, the government proceeded with the pressure: on June 18, it issued the Ordinance No, 589-r14 recommending the NERC to decrease the peak multiplier used for calculation of feedin tariffs for solar power plants: from 1,8 to 1,01 with the purpose of reducing tariff burden on end user. This recommendation does not cover micro-, mini- or small hydro power plants whose calculation of feed-in tariff also takes into account peak tariff multiplier. Initially, the regulatory authority ignored recommendations and adopted the Resolution No. 931 of June 27, 201415 establishing tariffs for solar electric plants to be applied from 1 July without consideration of the governmental Ordinance on reducing the peak multiplier. However, on 18 July, the NERC published a draft Resolution16 12

Draft NERC Resolution “On Adoption of Amendments to the Procedure for Setting, Review and Suspension of Feed-in Tariff for Entities” // NERC, 12.05.2014. – http://www.nerc.gov.ua/index. php?news=3781

Draft NERC Resolution “On Amendments to the Procedure for Calculation of Payment for Connection of Electric Facilities to Electricity Networks” // NERC, 30.04.2014. – http://www.nerc.gov.ua/?id=10741

rdinance of the Cabinet of Ministers of Ukraine No. 589-r of June 18, O 2014 “On Improvement of System of Settlements for Electricity Generated from Alternative Energy Sources” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/589-2014-%D1%80

ERC Resolution No. 931 of June 27, 2014 “On Establishment of FeedN in Tariffs for Electricity” // NERC. – www.nerc.gov.ua/?id=11333

Draft NERC Resolution “On Adoption of Amendments to the Pro-

providing for reducing of peak multiplier for solar electric plants from 1.8 to 1.01. In response, certain market players filed a complaint against the government; according to Mr. V.Daviy, the president of the Association of Alternative Fuels and Renewable Energy of Ukraine (APEU), other companies as well are supposedly preparing for court proceedings if the draft NERC Resolution is adopted17. According to Association of Renewable Energy “Alternatyva”, the NERC scheduled to hold a number of meetings on implementation of the governmental Ordinance No. 589-r involving alternative energy market participants18. The Verkhovna Rada cancelled corporate profit tax exemptions for producers of electricity using renewable sources and established a temporary excise on alternative motor fuels On July 31, 2014, in the course of a closed meeting, the Members of the Parliament approved the draft Law No. 4309a19. This document cancels exemption from corporate profit tax for companies producing electricity using exclusively renewable energy sources. Additionally, it provides for temporary, until January 1, 2015, establishment of excise duty on alternative types of motor fuel in the amount of 99 EUR/t. Respective associations – the APEU, the Ukrainian Wind Energy Association (UWEA) and the Bioenergy Association of Ukraine (BAU) – approached with an open letter to the President P.Poroshenko asking to veto the draft Law20; however, the document was signed and it became a Law No. 1621-VII of July 31, 2014. Nevertheless, in preparation for voting the anticrisis draft Law No. 4576 “On Prevention of Financedure for Setting, Review and Suspension of Feed-in Tariff for Entities” // NERC, 18.07.2014. – http://www.nerc.gov.ua/index. php?news=3879 17

S olar Power Plants complaint against Government // Delovaya Stolitsa, 28.07.2014. – http://www.dsnews.ua/economics/solnechnye-elektrostantsii-roshli-sudom-na-kabmin-28072014135100

Expert, Government actions will negatively influence development of alternative energy // Ukrainska energetyka [Ukrainian Energy], 01.08.2014. – http://ua-energy.org/post/46093

Draft Law of Ukraine No. 4309a of July 21, 2014 “On Amendments to the Tax Code of Ukraine and Certain Other Legal Acts of Ukraine (Regarding Improvement of Certain Provisions” // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=51735

Respective Associations Approached the President Asking to Veto Cancelling Tax Exempts for Feed-in Energy // Ukrainska energetyka [Ukrainian Energy], 01.08.2014. – http://ua-energy.org/post/46088

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Creation of favourable conditions and elimination of barriers

cial Meltdown and Creation of Conditions for Economic Growth in Ukraine”21, provisions regarding introduction of excise duty in the amount of 139 EUR/t were excluded. This concerned taxation of petroleum analogues with “non-oil” components (alcohol, bio-ethanol) content exceeding 30%. Mass-media indicate22 that the draft Law was sent for review not to the Committee for Tax and Customs Policy, but to the Economic Policy Committee. There the draft Law was reviewed by MPs being lobbyists of alcohol industry and Ukrnafta, which launched sales of its own alternative fuel in 2013. Administrative barrier in the form of local content is still valid in Ukraine against the background of attempts of the government and market players to adjust its share The governmental draft Law No. 4644, defeated in the Parliament, provided for decreasing of local content requirement by 30% for wind and solar power plants and bio-fuel stations, construction of which was launched after January 1, 2012 and which were commissioned after July 1, 2013. Similar level should have been introduced for facilities producing electricity using biogas, construction of which was launched after January 1, 2012 and which were commissioned after January 1, 2014. On May 13, the draft Law No. 485623 (O.Myrnyi and I.Miroshnychenko, “Svoboda” faction) was submitted to the Parliament proposing to cancel local content in production of wind energy blades, production (casting) and assembly of rotors, and to increase it twofold for production of towers, head frames and head axles. According to the Conclusion of the Central Scientific Experts Office of the Verkhovna Rada24, proposed amendments 21

raft Law of Ukraine No. 4576 of March 27, 2014 “On Prevention of FiD nancial Meltdown and Creation of Conditions for Economic Growth in Ukraine” // Verkhovna Rada of Ukraine – http://w1.c1.rada.gov.ua/ pls/zweb2/webproc4_1?pf3511=50437

The One that is Beaten Carries the One that is not once Again // OilNews, 07.04.2014. – http://oilnews.com.ua/a/publications/Bitiy_snova_povezet_nebitogo/212288

Draft Law of Ukraine No. 4856 of May 13, 2014 “On Amendments to Article 17-3 of the Law “On Electricity” Regarding Improvement of Conditions for Electricity Production Using Wind” // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_1?pf3511=50881

Conclusion to the draft Law of Ukraine “On Amendments to Article 17-3 of the Law “On Electricity” Regarding Improvement of Conditions for Electricity Production Using Wind” // Verkhovna Rada of

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

violate General Agreement of Tariff and Trade of 1994, according to which WTO members shall not apply internal quantitative regulations in such a manner as to allocate any specified amount or portion of the product among national sources. Meanwhile, Wind Parks of Ukraine LLC together with the Ukrainian Wind Energy Association (UWEA) insist that Ukraine should encourage and develop domestic production of nacelles and towers for wind generators, since local production of blades and rotors is unprofitable25. Certain measures for encouraging and elimination of barriers in bioenergy and alternative heat supply, as well as in “green” energy generation for internal needs have been taken On July 1, 2014, amendments to the State Standard of Ukraine DSTU B V.1.2-16:2013 “Establishment of Class of Consequences (Responsibility) and Category of Difficulty of Construction Object”26 came into force. Respective amendments cancel the requirement regarding automatic attribution of facilities constituting increased environmental hazard to V category of difficulty. For boiler houses, heat generating units using biomass and biogas installations this means elimination of additional requirements to location, project documents and construction works. According to the governmental Resolution No. 293 “On Encouraging the Replacement of Natural Gas in Heat Supply Sector”, tariff compensation for heat generating entities using renewable sources is introduced27. Difference between Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3 511=50881&pf35401=305944 25

Experts and Market Players Stand for Redistribution of Local Component for Wind Energy // Ukrainska energetyka [Ukrainian Energy], 13.06.2014. – http://ua-energy.org/post/44732

Order of the Ministry for Regional Development, Building and Housing of Ukraine No. 135 of May 12, 2014 “On Adoption of Amendment No. 1 to the State Standard of Ukraine ДСТУ-H Б В.1.2-16:2013 “Establishment of Class of Consequences (Responsibility) and Category of Difficulty of Construction Object” // Ministry for Regional Development, Building and Housing of Ukraine, 13.06.2014. – http:// www.minregion.gov.ua/building/tehnichne-regulyuvannya-tanaukovo-tehnichniy-rozvitok/standartizaczija/nakazi-rro-rriynyattya-ta-skasuvannya-nacionalnih-standartiv-u-sferi-budivnictva--vidomosti-dp-ukrarhbudinform-schodo-vidannya-n-11099/ nakaz-minregionu-ukrayini-vid-12-05-2014-n-135-rro-rriynyattya-zmini-n-1-dstu-n-b-v-1-2-16-2013-viznachennya-klasu-naslidkiv-vid-64872/

Resolution of the Cabinet of Ministers of Ukraine No. 293 of July 9, 2014 “On Encouraging the Replacement of Natural Gas in Heat Sup-

RENEWABLES

tariff for households and for other customer types shall be compensated at the expense of the state budget. At the same time, the amount of compensation may not exceed the difference between actually established heating energy tariff for households and its production costs with marginal profitability of 21%. The NERC Resolution No. 28 of January 16, 201428 introduces feed-in tariffs for private households generating electricity using solar panels installed on the roofs and/or on facades of houses, buildings and constructions, with total capacity not exceeding 10 kW. Moreover, on June 10, the Procedure for Selling, Metering and Settlements for Electricity generated in this manner, adopted by the NERC Resolution No. 170 of February 27, 201429, entered into force. Customer’s right to install generating unit with the capacity not exceeding 10 kW in private households was secured.

On 24 April, the NERC published a draft Resolution on approval of amendments to the Procedure for Electric Facilities Connection to Electricity Networks30 in order to receive comments. The regulatory authority intends to reduce tariff subsidies for construction and installation works and commissioning works in respect of “green” energy facilities. It is planned that the customer will bear all costs related to the development of feasibility study for connection of an electricity facility.

ply Sector” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/ laws/show/293-2014-%D0%BF 28

NERC Resolution No. 28 of January 16, 2014 “On Introduction of Feed-in Tariff for Private Households” // NERC. – http://www.nerc. gov.ua/?id=9612

NERC Resolution No. 170 of February 27, 2014 “Procedure for Selling, Metering and Settlements for Electricity Generated with the use of Solar Energy by Electricity Facilities (Generating Units) in Private Households” // NERC. – http://www.nerc.gov.ua/index.php?id=11123

Draft NERC Resolution “On Approval of Amendments to the Procedure for Electric Facilities Connection to Electricity Networks” // NERC, 24.04.2014. – http://www.nerc.gov.ua/?id=10688

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Renewable fuels for transport purposes Directive 2009/28/EC provides that national targets shall ensure reaching 10% share of energy from renewable sources in the transportation sector for each Member State.

Renewable fuels for transport purposes

The share of biofuel production and use set in the legislation, is not adjusted; despite provisions of the new Technical Regulation, customers already feel the lack of monitoring As it was already mentioned, the acting Law No. 4970-VII regarding the increase in share of bio-fuel and composite motor fuel production and use has not been implemented. Nor there is any progress in the revision of draft Laws proposing to cancel or adjust current shares. On 16 January 2014, the Ministry of Energy and Coal Industry published the draft Law “On Amendments to Article 2 of the Law of Ukraine “On Alternative Fuels””31 proposing to amend the schedule of introduction of renewable fuel on the market and allowing to add not only bioethanol, but also other bio-components. The document also proposed to establish share of bioethanol and/or bio-components content in petroleum sold on Ukrainian territory: until July 1, 2014 – recommended content is at least 5% (in terms of volume); as of July 1, 2014 – mandatory content is at least 3% but not exceeding 5% (in terms of volume), as of January 1, 2016 – mandatory content is at least 5% but not exceeding 10% (in terms of volume).

According to the document, the Ministry of Energy and Coal Industry has the task to continuously develop and update national standards on fuel and fuel testing methods, including harmonized with international and European ones. Tasks related to the development and approval of the Procedure for Selection of Testing Laboratories is also delegated to this Ministry (for more information, please refer to the section “Environment” as to implementation of the Directive 1999/23/EC). Meanwhile, in the course of journalistic investigation it was detected that addition of methanol to petroleum in the BRSM-Nafta fuel stations’ network exceeds critical permissible levels by a factor of hundreds33. Findings of investigation were sent to law enforcement authorities.

On 10 July, the Technical Regulation on Requirements to Motor Petroleum, Diesel, Marine and Boiler Fuel entered into force32, allowing to add additives (agents), bioethanol, ethyl tertiary butyl ether to motor petroleum in case they “do not deteriorate operational characteristics of fuel, do not negatively influence environment, energy or economic performance of engines, as confirmed by test results, and admitted to use according to the set procedure”.

Draft Law “On Amendments to Article 2 of the Law of Ukraine “On Alternative Fuels”” // Ministry of Energy and Coal Industry of Ukraine, 16.01.2014. – http://mpe.kmu.gov.ua/minugol/control/uk/publish/ article?art_id=244905953&cat_id=35082

Resolution of the Cabinet of Ministers of Ukraine No. 927 of August 1, 2013 “On Approval of Technical Regulation on Requirements to Car Petrol, Diesel, Marine and Boiler Fuel” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/927-2013-%D0%BF

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Azarov’s Fuel stations Poison Drivers? Video // Ukrinform, 25.07.2014. – http://www.ukrinform.ua/ukr/news/avtozapravki_yanukovicheva_ ministra_otruyuyut_vodiiiv_video_1958211

RENEWABLES

Conclusion The government adopted the Action Plan for Implementation of Directive 2009/28/EC, however with delay, and the National Renewable Energy Action Plan until 2020 is still not validated. Delays in coordination and approval of the NREAP do not contribute to the development of renewable energy and alternative fuel markets, thus its proper implementation should become a priority. Despite experts, companies and international finance organizations criticism, there are continuous attempts to change framework conditions of solar energy market. Barriers to renewable energy projects in the form of local content and legal obstacles for biomass use are still present.

UKRAINE AND ENERGY COMMUNITY: ITâ&#x20AC;&#x2122;S HIGH TIME?

ГАЗ ENVIRONMENT

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ENVIRONMENT

Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment as amended by directives 97/11/EC, 2003/35/EC and 2009/31/EC requires that projects which are likely to have significant adverse impact on the environment should be subject to development consent procedures and assessment of their environmental impact. The environmental impact assessment shall identify, describe and assess of direct and indirect effects of such projects on human beings, fauna and flora, soil, water, air, climate and the landscape, material assets and the cultural heritage; as well as take into account the inter-action between the mentioned factors. The Directive requires that access to information be provided for the public (including by the project developer) and that specific conditions for public information and consultations be defined; the competent authorities in charge for the decision must take it into account.

In accordance with the Protocol on the Accession of Ukraine to the Treaty establishing the Energy Community, the Directive should have been implemented by 1 January 2013. In accordance with the Action Plan on Implementation of Commitments within the Framework of the Treaty Establishing the Energy Community, the legal framework for the environmental impact assessment was to be brought into compliance with the requirements of this Directive by 1 January 2013. The authorities in charge are the Ministry of Environment and Natural Resources and the Ministry of Energy and Coal Industry. The requirement as to the implementation of the Directive is also contained in the Basic Plan of Adaptation of Ukrainian Environmental Law to the EU law (Baseline Approximation Plan), as approved by Order of the Ministry of Environment and Natural Resources No. 659 of December 17, 2012. The recommended measures to implement the Directive shall include, inter alia, the following: introducing amendments to the Law of Ukraine “On Environmental Protection” and to the Law of Ukraine “On Regulating Urban Construction Activities” on the environmental impact assessment procedure; adoption of a legal act establishing clear requirements for environmental impact assessment procedure, including cases of transboundary impact; coordination of the environmental impact assessment procedure with the procedure of construction permits, being mandatory for certain objects, providing for the specific role of the competent authorities in the field of environmental protection procedures and providing for the procedure for public infor-

mation and participation; making amendments to the list of activities and objects, which have increased environmental risks or adopt a new list in accordance with Annexes I-III to the Directive.1 After signing the economic part of the Association Agreement between Ukraine and the EU on June 27, 2014, Ukraine’s obligation to adapt its legislation to the Directive is also required by the latter document. The Agreement states that “gradual approximation of Ukrainian legislation to EU law and policy on environment shall proceed in accordance with Annex XXX to this Agreement”. The Directive 85/337/EEC is included to the abovementioned Annex. After the Law of Ukraine No. 3038-VI “On Regulating Urban Construction Activities”2 effectively cancelled the institution of environmental impact assessment, Ukraine has had no effective environmental impact assessment of projects which might have adverse effects on the environment. On March 26, 2014, there was an attempt to bring back the state environmental expert review of construction projects; however, the Verkhovna Rada rejected the draft Law “On Amendments to Certain Laws of Ukraine on Implementation of Provisions of the Convention on Environmental Impact Assessment in a Transboundary Context”3 1

Base Plan of Adaptation of Ukrainian Environmental Law to the EU Law (Baseline Approximation Plan) – Ministry of Environment and Natural Resources. – http://www.menr.gov.ua/docs/normakty/Bazovyy%20plan%20adaptatsiyi%20(Bazovyy%20plan%20 aprksymatsii%CC%88).pdf

Law of Ukraine No. 3038-VI of February 17, 2011 “On Regulating Urban Construction Activities” // Legislation of Ukraine. – http://zakon0. rada.gov.ua/laws/show/3038-17

Draft Law “On Amendments to Certain Laws of Ukraine on Imple-

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

as registered on May 23, 2013. The main reason for the lack of support was the corruption component of the proposed system. The attempt to formalize the procedures for strategic environmental assessment in Ukrainian legislation also failed. The draft Law of Ukraine “On Strategic Environmental Assessment”4, as registered on December 16, 2013, failed to receive support. The Committee for Environmental Policy, Use of Natural Resources and Mitigation of the Consequences of Chernobyl Disaster proposed to reject the draft Law as early as in the first reading. In its opinion, the Committee stated that its provisions in terms of implementing the principles of Directive 2001/42/EC on the assessment of the effects of certain plans and programs on the environment, as well as of the Protocol on Strategic Environmental Assessment are of a “selective and formalistic” nature5. On May 30, the Verkhovna Rada registered the draft Law “On Environmental Impact Assessment”6. The draft Law was developed within the first environmental initiative of the Reanimation Package of Reforms. The draft Law provides for a new European procedure for environmental impact assessment, integrated into the existing licensing procedures in the sphere of construction. The new procedure involves a public process of environmental impact assessment of environmentally hazardous industrial facilities before their construction, enables the relevant authority in the environmental sector to express its opinion, and ensures that public opinion is considered, as well as evaluates the likely transboundary impact. The adoption of the draft mentation of Provisions of the Convention on Environmental Impact Assessment in a Transboundary Context” as registered on May 23, // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/ webproc4_2?pf3516=2109%E0&skl=8

Draft Law of Ukraine “On the Strategic Environmental Assessment”, registration No. 3758 of December 16, 2013 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=49321

Decision of the Committee on the draft Law of Ukraine “On strategic Environmental Assessment” (registration No. 3758 of December 16, 2013), submitted by the Member of the Parliament M. Opanashchenko // Committee for Environmental Policy, use of Natural Resources and Mitigation of the Consequences of Chernobyl Disaster of the Verkhovna Rada of Ukraine, April 4, 2014. – http://komekolog.rada. gov.ua/komekolog/control/uk/publish/article?art_id=52881&cat_ id=47174

Draft Law of Ukraine “On Environmental Impact Assessment”, No. 4972 of May 30, 2014 // Verkhovna Rada of Ukraine. – http:// w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=51152

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Law will ensure the implementation of Directive 85/337/EEC, the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (Aarhus Convention) and the Convention on Environmental Impact Assessment in а Transboundary Context (Espoo Convention). The implementation of such a model of environmental impact assessment meets the political, program and legal commitments in the field of integration into the European Union and the relevant program documents in the field of environmental protection; it will ensure the use of environmental impact assessment procedures without permitting component; provide for Ukraine’s meeting its international legal commitments in the areas of environmental impact assessment and public participation; create a positive climate to attract funding from international financial institutions and foreign capital. Currently, the draft Law “On Environmental Impact Assessment” is under consideration of the relevant parliamentary committees. In accordance with the Opinion of the Committee on Fighting Organized Crime and Corruption of July 2, 2014, following the results of anti-corruption expert review, the draft Law contains no corruption factors and meets the requirements of anticorruption legislation7. As a result of the consideration of the draft Law by the Energy Community Secretariat, held at the request of the Energy Reforms coalition, the document was found “a good basis for the transposition of Directive 85/337/ EEC” (given the expressed recommendations are taken into account). In May-June 2014, there were some attempts to amend the existing legislation related to the procedures of environmental impact assessment. Namely, on May 15, the Verkhovna Rada registered the draft Resolution “On Approving the draft Law of Ukraine “On Amendments to the Law of Ukraine “On Regulating Urban Construction Activities” to improve the Institution of Public Hearings”. On May 16, the Committee on Construction, Urban Development, Housing, Utilities and Regional Policy recommended the Verkhovna Rada to approve the draft Law in prin7

Ibidem

The lack of the effective model of environmental impact assessment in Ukraine is one of the reasons of Ukraine’s violations of its commitments under the Espoo Convention and the Aarhus Convention. Thus, VI Meeting of the Parties to the Espoo Convention, which took place on June 2-5, 2014 in Geneva (Switzerland), has taken a decision that Ukraine had breached the Espoo Convention, in particular by having decided to extend the lifetime of the Rivne NPP Units 1 and 2. One of the violations, according to the opinion of the Committee for the implementation of the Espoo Convention, was the lack of environmental impact assessment in the process of deciding to extend the lifetime of nuclear reactors8. On June 30 – July 2, 2014, V session of the Meeting of the Parties to the Aarhus Convention was held in Maastricht (Netherlands). Among other issues, it has taken a decision that Ukraine had violated its obligations under the Convention and called for immediate action to remedy the situation. In accordance with the Decision V/9n, Ukraine has to “implement the measures […] to bring its legislation and practice into compliance with the provisions of the Convention, and in particular […] to address the lack of clarity with regard to public participation requirements in environmental

impact assessment and environmental decisionmaking procedures for projects, such as time frames and modalities of a public consultation process, requirements to take its outcome into account and obligations with regard to making information available in the context of Article 6”9.

Conclusion Currently, Ukraine still lacks an efficient procedure for environmental impact assessment. In Ukraine, the main prerequisite for the implementation of Directive 85/337/EEC is the development and adoption of the new legislation on EIA or amending the existing one. The draft Law No. 4972 “On Environmental Impact Assessment”, if adopted, will ensure compliance with the basic requirements of the Directive. The adoption of the relevant regulations (regarding public consultations, register on environmental impact assessment, etc.) will provide an effective EIA system of industrial projects. In addition, the adoption of an effective model of environmental impact assessment will help Ukraine to solve the problem of systematic violation of two international legal instruments – the Espoo Convention and the Aarhus Convention. Currently, Ukraine has sufficient legal grounds for the immediate implementation of the Directive; in particular, such requirement is contained in the Association Agreement between Ukraine and the EU, and in the Basic Plan of Adaptation of Ukrainian Environmental Law to the EU Law (Baseline Approximation Plan).

9 8

Meeting of the Parties to the Convention on Environmental Impact Assessment in a Transboundary Context, Sixth session (Geneva, 2–5 June 2014). Decision on the Review of Compliance with the Convention // UN Economic and Social Council

ENVIRONMENT

ciple. The draft Law expands the scope of public hearings, having supplemented the list of objects, in respect of which they are held, with planning schemes at the regional level, site planning schemes; recognizes materials of public hearings to be integral part of planning documentation, local construction rules; provides for a repeated state expert review provided that the documentation was amended as required in accordance with the results of public hearings. On June 20, 2014, the Ministry of Environment and Natural Resources made public its draft Resolution of the Cabinet of Ministers “On Approval of the List of Activities and Objects, which Pose Increased Environmental Danger” with the aim of holding public consultations. The new version of the List arranges in the order and clarifies the list of economic and other activities and objects, which pose increased environmental threat.

Meeting of the Parties to the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, Fifth session (Maastricht, 30 June and 1 July 2014). Decision V/9n Concerning Compliance by Ukraine with its Obligations under the Convention // UN Economic and Social Council

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

As regards to the Directive 79/409/EЕC on the conservation of wild birds, only Article 4 (2) shall be applied, which requires taking the measures to preserve normal species of migratory birds paying special attention to protection of water and marsh areas, including areas of international importance.

In accordance with the Protocol on the Accession of Ukraine to the Treaty establishing the Energy Community, the Directive should be implemented by 1 January 2015. In accordance with the Action Plan on Implementation of Commitments within the Framework of the Treaty Establishing the Energy Community, the legal framework for the protection of wild birds should be brought into compliance with paragraph 2 of Article 4 of this Directive by 1 January 2015. The authority in charge is the Ministry of Environment and Natural Resources. The requirement as to the implementation of the Directive is contained in the Basic Plan of Adaptation of Ukrainian Environmental Law to the EU Law10 (Baseline Approximation Plan), as approved by the Order of the Ministry of Environment and Natural Resources No. 659 of December 17, 2012. Among the recommended measures, the document provides for the following: amendments to the Law of Ukraine “On Fauna” related to establishing clear provisions on the principle of conservation of populations of wild birds; introduction of the requirement to prohibit the sale, transportation or maintenance for further sale or offering for sale of live or dead birds; the list of bird species requires in-depth expert analysis and comparison with the list of species listed in the Endangered Species List (“Red Book”) of Ukraine. After signing the economic part of the Association Agreement between Ukraine and the EU on June 27, 2014, Ukraine’s obligation to adapt its legislation to the Directive is also required by the latter document (in accordance with the Annex XXX to this Agreement).

requirements of the EU law in the field of environmental protection, as made public on the website of the Ministry of Environment and Natural Resources, the Ukrainian legislation fully complies with the requirements of Article 4 (2) of the Directive on the Conservation of Wild Birds11. However, taking into account the problems of practical implementation of Ukrainian legislation on birds’ protection, including those referred to in Article 4 (2) of the Directive, the work on improvement and amendment of the Ukrainian legislation, directly or indirectly related to the issue of birds’ protection, is underway. On March 26, 2014, the Verkhovna Rada of Ukraine registered the draft Law “On Amendments to the Forest Code and Land Code of Ukraine (on Strengthening Measures to Protect Forests)” In particular, the draft Law suggests that logging is prohibited in a radius of 100 meters around the trees with nests of birds listed in the Red Book of Ukraine. On May 6, the Parliament registered the draft Law “On Amendments to Certain Legal Acts of Ukraine (Regarding Protection of Fauna, Flora and on Stepping up the Fight against Poaching)”12. The draft Law suggests amending 9 laws and codes of Ukraine, including “On Fauna”, the Forest Code, “On Game Management and Hunting”, “On Protection of Animals from Cruel Treatment”, “On Flora”, “On the Nature Reserve Fund of Ukraine” and others. The amendments should improve the protection of flora and fauna, step up the fight against poaching, bring the national environmental legislation in line with that of European, as well as implement 11

Skrylnikov. Information on the State of Compliance of Ukrainian D. Legislation with Council Directive 79/409/EEC of April 2, 1979 on the conservation of wild birds (Table of Concordance) // Ministry of Environment and Natural Resources of Ukraine, November 21, 2011. – http://www.menr.gov.ua/docs/activity-adaptation/Table%20of%20 Concordance%20Wild%20Birds_final.pdf

raft Law “On Amendments to Certain Legal Acts of Ukraine (RegardD ing Protection of Fauna, Flora and on Stepping up the Fight Against Poaching)” No. 4823 of May 6, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=50843

According to the information on the state of compliance of the Ukrainian legislation with the 10

Base Plan of Adaptation of Ukrainian Environmental Law to the EU Law (Baseline Approximation Plan) – Ministry of Environment and Natural Resources. –http://www.menr.gov.ua/docs/normakty/Bazovyy%20plan%20adaptatsiyi%20(Bazovyy%20plan%20 aprksymatsii%CC%88).pdf

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

On 18 June, the Verkhovna Rada approved in principle the draft Law “On Amendments to Certain Legal Acts of Ukraine” (Concerning the Protection of Biodiversity)13, and the draft Law “On Amendments to Certain Legal Acts of Ukraine” (Concerning the Protection of Wildlife)14. The first one increases the requirements for the protection of birds listed in Annex 2 to the Berne Convention, prohibits the destruction of the habitat of rare species of animals and plants in the biosphere reserves and national parks, and prohibits the use of airguns in unadjusted places. The second document introduces the so-called “season of silence”, announced by local self-government authorities in areas of mass breeding and rearing of animals from May to June; provides for enhanced protection of animal habitats in the facilities of nature reserve fund and prohibits the use of electrocuting devices, snares, self-activating traps, self-harm weapons with the aim of animal capture. Meanwhile, on April 9, 2014, the Verkhovna Rada adopted the Law “On Amendments to Certain Legal Acts of Ukraine Regarding the Reduction of Quantity of Permits”15. The document amends a number of legal acts of Ukraine, which reduced the number of permits in specific legal acts and included in the List of permits approved by the Law No. 3392-VI of May 19, 2011, as well as of permits not included to the mentioned List, but which need to be obtained in accordance with the relevant legal acts. According to environmentalists, reduction of the number of permits may have a negative impact on forests, nature reserves and biodiversity16. 13

Resolution No. 1516-VII of June 18, 2014 “On Approval in Principle of the draft Law of Ukraine on Amendments to Certain Legal Acts of Ukraine Concerning the Protection of Biodiversity” // Legislation of Ukraine. – http://zakon0.rada.gov.ua/laws/show/1516-18

Draft Law “On Amendments to Certain Legal Acts of Ukraine Concerning the Protection of Wildlife”, registration No. 4004 of January 21, 2014 // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/ pls/zweb2/webproc4_2?pf3516=4004&skl=8

Law of Ukraine No. 1193-VII of April 9, 2014 “On Amendments to Certain Legal Acts of Ukraine Regarding the Quantity Reduction of Permits” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/1193-18

I mprovement of improvements, or is it all the good that seeks publicity? // Ecology. Law. People, April 9, 2014. – http://epl.org.ua/novini/

ENVIRONMENT

the Agreement on the Conservation of AfricanEurasian Migratory Waterbirds, the Berne Convention.

In May 2014, the Ministry of Environment and Natural Resources made public for consultations the following draft legal acts related to the environmental component of the implementation of the Energy Community obligations for the protection of birds: 1) draft Law “On Amendments to the Law of Ukraine “On Natural Reserve Fund of Ukraine” regarding its bringing into compliance with the Law of Ukraine “On Administrative Services” and “On Permitting Activities in the Sphere of Business Activity” (the document aims to harmonize laws on assigning quotas on the use of natural resources within the territories and facilities of the natural reserve fund and issuing special use permits therefore), 2) draft Ordinance of the Cabinet of Ministers “On Approval of the Concept of Fighting with Land Degradation and Desertification”, which is suggested to be implemented in stages in 2014-2017.

Conclusion Ukraine has sufficient legal grounds for compliance with the Directive 79/409/EEC. However, experts point out practical problems of implementing such legislation. The work on its improvement, which has direct or indirect relation to the birds’ protection issues, is currently in progress. The Verkhovna Rada approved in principle the draft laws on enhancing measures for biodiversity and wildlife protection; in the case of its final approval, the documents should positively influence the development of legislation on birds’ protection.

anons/browse/1/backPid/393/article/6710/

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Directive 2001/80/EC on the limitation of emissions of certain pollutants into the air from large combustion plants provides that the government shall develop the relevant programs for gradual reduction in total annual emissions from plants for combustion of fuels, the rated efficient heat capacity of which is at least 50 MW and comply with the emission limit values (through license requirements and penalties). There shall be developed the National Emission Reduction Plan, which would specify reduction in total yearly emissions of nitrogen oxide, sulphur dioxide and dust from the existing plants. It is recommended that the operator should monitor the emission and its reduction at their own expense with the obligation to inform the competent authorities on compliance with the requirements.

In accordance with the Protocol on the Accession of Ukraine to the Treaty establishing the Energy Community, the Directive should be implemented by 1 January 2018. In accordance with the Action Plan on Implementation of Commitments within the Framework of the Treaty Establishing the Energy Community, measures and methodology on the limitation of emissions of certain pollutants into the air from large combustion plants should be developed by 1 January 2018. The authorities in charge are the Ministry of Environment and Natural Resources, the Ministry of Economic Development and Trade, and NJSC “Energy Company of Ukraine”. The requirement as to the implementation of the Directive is also contained in the Basic Plan of Adaptation of Ukrainian Environmental Law to the EU Law (Baseline Approximation Plan). The recommended measures shall include the following:

• •

• • • • 52

adoption of legal acts regulating the procedure for operation of combustion plants; establishment of the legal procedure for granting permissions for the operation of combustion plants which involves the study of technical and economic capacity, total heat and energy generation; establishment of the procedures for limiting the operation of combustion plants in the event of malfunctions or breakdowns; establishment of emission standards for multi-fuel units; establishment of limit values for sulphur dioxide emissions, establishment of standards in case of the alternative use of two or more fuels; establishment of the procedures for grant-

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

• • •

•

• •

ing permissions for the operation of combustion plants located in areas with underground storage of carbon dioxide; establishment of emission standards in case of extension of combustion plants; development of the system for monitoring emissions from combustion plants; establishment of the procedure for the provision of information by the operator of the combustion plant to the state authority on the results of continuous measurements, verification of measuring equipment, individual measurements and all other measurements needed to meet the requirements of pollutant emissions from combustion plants; establishment of the procedure for calculating the limit values of pollutant emissions from combustion plants; study for further improvement of the existing standards of limit values of pollutant emissions from waste burning plants; development of the plan to reduce emissions of pollutants into the air for existing sources of pollution; definition of the total annual emissions of pollutants under paragraph “C” of Annex VIII to the Directive 2001/80/EC17.

After signing the economic part of the Association Agreement between Ukraine and the EU on June 27, 2014, Ukraine’s obligation to adapt its legislation to the Directive is also required by the latter document (in accordance with the Annex 17

In accordance with the Order of the Ministry of Environment and Natural Resources No. 541 of October 22, 2008 “On Adoption of Technological Standards for Permissible Emissions of Pollutants from Thermal Power Plants, with the Nominal Thermal Capacity over 50 MW”19, by January 1, 2018 the companies shall take measures on streamlining or overhauling in the terms established by this Order and comply with the current and future technological standards. New installations must comply with the European standards. On April 9, 2014, the Verkhovna Rada adopted the Law “On Amendments to Certain Legal Acts of Ukraine Regarding the Reduction of Quantity of Permits”20. The document, inter alia, amends the Law “On Air Pollution” with regard to the terms of permits for pollutant emissions into the air from 18

Ministry of Environment and Natural Resources Presented the National Strategy of Approximation of Ukrainian Legislation to EU Law on Environmental Protection // Ministry of Environment and Natural Resources, August 21, 2014. – http://www.menr.gov.ua/index. php/press-center/news/123-news1/3005-mnpryrody-rredstavylonatsionalnu-stratehiyu-nablyzhennya-zakonodavstva-ukrayiny-dorrava-yes-v-haluzi-okhorony-dovkillya

Order of the Ministry of Environment and Natural Resources No. 541 of October 22, 2008 “On Adoption of Technological Standards for Permissible Emissions of Pollutants from Thermal Power Plants, with the Nominal Thermal Capacity over 50 MW” // Legislation of Ukraine. – http://zakon1.rada.gov.ua/laws/show/z1110-08

Law of Ukraine No. 1193-VII of April 9, 2014, “On Amendments to Certain Legal Acts of Ukraine Regarding the Quantity Reduction of Permits” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/1193-18

ENVIRONMENT

XXX to this Agreement). On August 21, 2014, the National Strategy for the Implementation of the Association Agreement with the EU in the field of Environmental Protection was presented at the Ministry of Environment and Natural Resources18. In general, during the meeting, two stages of the approximation process were considered: bringing national legislation into line with the EU law and the practical implementation of the requirements and standards of the EU. According to the Minister A.Mokhnyk, the implementation “will require a lot of time, financial and human resources”. He noted that the total cost of transposition of the documents referred to in Annex XXX of the Association Agreement, as well as of the measures for their implementation equals to about half a billion UAH – from “experience of the EU member states”, the expenses equal, on average, to about 1 thousand EUR per capita.

stationary sources. If the facility belongs to the first group, the permit shall be valid for seven years, while facilities belonging to the second group shall receive permits for the period of ten years, facilities belonging to the third group shall receive permits unlimited in time. On May 21, the Ministry of Environment and Natural Resources made public for consultations the draft Order “On Approval of the Reference Form of the Permit for Pollutant Emissions into the Atmosphere from Stationary Sources”21. The document is designed to approve the reference form of the permit for pollutant emissions into the atmosphere from stationary sources to meet the requirements of the Law “On the Permitting System in the Sphere of Business Activity” and to address deficiencies in this area. As explained by the Ministry, its adoption will facilitate the settlement of relations in the sphere of pollutant emissions, in the sphere of permitting activities by the competent authority, as well as will eliminate duplication. On May 30, the Ministry of Environment and Natural Resources published the draft Order “On Amendments to the General Guidelines to Preparing the Documents, Containing Substantiation of the Volumes of Emissions, in order to Receive the Permit for Pollutant Emissions into the Atmosphere from Stationary Sources for Enterprises, Institutions, Organizations and Private Entrepreneurs”22. The draft Order is designed to bring it into conformity with the Law “On Amendments to Certain Legal Acts of Ukraine on Optimization of Executive Powers in the Environmental Sphere and the Sphere of Natural Resources, Including at the Local Level”, which provides for the distribution of responsibilities between the Ministry of Environment and Natural Resources and local administrations, and eliminates violations of the regulatory policy principles in accordance with the Law “On Principles of Regulatory Policy in Business Activity”. Adoption of the document will allegedly facilitate settlement of relations in terms of permitting activities concerning pollutant emissions into the air from stationary sources.

raft regulatory acts // Ministry of Environment and Natural ResourcD es. – http://www.menr.gov.ua/index.php/normbaza/regulatory/554rroekty-rehuliatornykh-aktiv

Ibidem.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Article 17 of the Law No. 1166-VII of March 27, 2014 “On Prevention of Financial Meltdown and Creation of Conditions for Economic Growth in Ukraine” establishes increased tax rates for pollutant emissions into the air from stationary sources of pollution (by consumer price index) from April 1, 2014. In order to increase budget revenues, Tax Code of Ukraine was amended as appropriate.

Conclusion In 2014, there have been taken almost no measures directly related to the implementation of the Directive at the state level. At the same time, there were not approved such fundamental documents as the Emission Inventory and the National Emission Reduction Plan. Executive authorities focused on the development of secondary legal acts.

Directive 1999/32/ЕC relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EC, as amended and supplemented by Regulation 1882/2003 and Directive 2005/33/EC prohibits (with certain exceptions) the use of heavy fuel if its sulphur content exceeds 1% by weight, whereas light diesel fuel may not be used if sulphur content in it exceeds 0.1%. Sampling and analysis to verify compliance with these restrictions should be conducted in accordance with the established methods. The requirements of this Directive shall not apply to petroleum, diesel fuel, as well as fuel used in off-road vehicles and agricultural tractors.

In accordance with the Protocol on the Accession of Ukraine to the Treaty establishing the Energy Community, the Directive should have been implemented by January 1, 2012. In accordance with the Action Plan on Implementation of the Commitments within the Framework of the Treaty establishing the Energy Community, it was necessary to develop measures and methodology for reducing the sulphur content of certain liquid fuels by January 1, 2012. Authorities in charge were the Ministry of Economic Development and Trade, the Ministry of Environment and Natural Resources and the Ministry of Energy and Coal Industry. In accordance with the Baseline Approximation Plan of Ukrainian legislation to the EU law23, as approved in December 2012, it is necessary to amend the existing state standards of Ukraine or adopt new national standards for the sulphur content of certain liquid fuels, or adopt technical regulation (regulations) on the sulphur content in certain liquid fuels. 23

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

After signing the economic part of the Association Agreement between Ukraine and the EU on June 27, 2014, Ukraine’s obligation to adapt its legislation to Directive 1999/32/ЕC is also required by the latter document (the Annex XXX to this Agreement). The Ordinance of the Cabinet of Ministers No. 525-r of August 1, 201224 approved the action plan, aimed at the reduction of sulphur content in some types of liquid fuel. Particularly, by the end of 2012, the authorities in charge of the implementation of the Directive were to develop and implement the state standards for some types of liquid fuel, while the Ministry of Economic Development and Trade was to ensure the support at the Verkhovna Rada of the draft Law “On Amendments to the Law of Ukraine “On Licensing Certain Types of Business Activities” Regarding the Introduction of Licensing of Oil Products Manufacturing”. However, neither of the planned measures was fully implemented. The document also requires that the relevant state authorities should 24

Ordinance of the Cabinet of Ministers of Ukraine No. 525-r of August 1, 2012, “On Approval of the Action Plan for the Reduction of Sulphur Content in Some Types of Liquid Fuel According to the Requirements of Directive 1999/32/EC” // Legislation of Ukraine. – http:// zakon2.rada.gov.ua/laws/show/525-2012-%D1%80

On July 10, 2014, the Technical Regulation on Requirements to Motor Petroleum, Diesel, Marine and Boiler Fuel25 came into force, as approved by the Resolution of the Cabinet of Ministers No. 927 of August 1, 2013. The document sets limits for the sulphur content in petroleum, diesel, marine and boiler fuel. However, these requirements should be applied to environmental class Euro 3 before December 31, 2015, for environmental class Euro 4 – before December 31, 2017, and for environmental class Euro 5, the term is not limited in time. From January 1, 2017 onwards, the production and circulation of marine fuels containing sulphuretted hydrogen in the amount exceeding 0.0002 percent, as well as the production and circulation of boiler fuel (fuel oil), liquid boiler fuel (stove liquid fuel) with a sulphur content in the amount exceeding 1% by weight shall be prohibited. In accordance with Resolution of the Cabinet of Ministers No.25326 of June 25, 2014, the requirements of this Technical Regulation, inter alia, shall not apply to motor and diesel fuel produced at the production facilities of JSC “Ukrgazvydobuvannya”. With the aim of resolving the problem of application of the new Technical Regulation, a relevant working group was created27.

ENVIRONMENT

improve the methods of sampling and analysis of fuel with the aim of harmonization of these methods with the Directive and provide for monitoring the works on reconstruction and modernization of oil processing plants to increase oil refining efficiency to 85-90%, and the manufacture of oil products with sulphur content in accordance with the requirements of the Directive.

and boiler) quality, in accordance to which such are all accredited laboratories with a certificate of accreditation from the National Accreditation Agency in the section “Oil and Oil Products”28. This procedure is provisional because the fullfledged draft document is to be developed by the relevant structural units of the Ministry of Energy and Coal Industry before September 22, 2014, and all previous rules of procedure were cancelled.

Conclusion Since the approval of the Technical Regulation on Requirements to Motor Petroleum, Diesel, Marine and Boiler Fuel, virtually no progress has been made in the implementation of Directive 1999/32/EC. This is evidenced by the creation of the working group to address problems of application of the Technical Regulation. Measures to reduce the sulphur content of certain liquid fuels, which were approved in 2012 by the government, are not implemented. Working towards the implementation of the economic part of the Association Agreement between Ukraine and the EU could give impetus to practical implementation of the Directive.

At the same time, in late August, the Ministry of Energy and Coal Industry by its Order No. 583 approved the procedure for the selection of laboratories testing petroleum and fuels (diesel, marine 25

Resolution of the Cabinet of Ministers of Ukraine No. 927 of August 1 2013 “On Approval of the Technical Regulation on Requirements to Car Petrol, Diesel, Marine and Boiler Fuel” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/show/927-2013-%D0%BF

Resolution No. 253 of June 25, 2014 “On Amendments to the Technical Regulation on Requirements to Car Petrol, Diesel, Marine and Boiler Fuel” // Legislation of Ukraine. – http://zakon1.rada.gov.ua/ laws/show/253-2014-%D0%BF

Order of the Ministry of Energy and Coal Industry No. 573 of August 20, 2014 “On the Creation of the Working Group on Detection and Resolution of Problems of Application of the Technical Regulation on Requirements to Car Petrol, Diesel, Marine and Boiler Fuel” // Ministry of Energy and Coal Industry. – http://mpe.kmu.gov.ua/minugol/ doccatalog/document?id=244956474

Order of the Ministry of Energy and Coal Industry No. 583 of August 20, 2014 “On the Procedure for the Selection of Laboratories” // Ministry of Energy and Coal Industry. – http://mpe.kmu.gov.ua/minugol/ doccatalog/document?id=244955576

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Реформа ринку

ENERGY ГАЗ EFFICIENCY

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ENERGY EFFICIENCY

Directive 2006/32/EC concerning energy end-use efficiency and energy services requires to set national indicative energy saving target of 9%, as well as intermediate planned energy saving indicators, for the achievement of which there shall be drafted relevant programs and measures to improve energy efficiency (qualification, accreditation and certification of energy service providers, energy audit, measures of resource consumption, financial support in the form of incentives, loans, grants, guarantees and legislative schemes, stimulating tariff ). In addition, the government shall assign one or more authorities to provide general control and bear administrative, managerial and executive responsibility for implementation of the requirements in relation to improvement of rational use of energy.

The deadline for the implementation of Directive 2006/32/EC was February 1, 2012 (in accordance with the Ordinance of the Cabinet of Ministers); and December 31, 2011 (in accordance with the list of the Energy Community acquis for Ukraine). In 2013, the Energy Community Ministerial Council adopted the Recommendation to implement Directive 2012/27/EU with adaptations, thus, allowing contracting parties to prepare for the fact that this directive will become legally binding in 20141. It shall replace Directive 2006/32/EC, having set more ambitious targets in energy efficiency. On behalf of the Energy Community Secretariat, DecisionWare Group together with SEVEn Energy, Research Centre for Energy, Informatics and Materials of Macedonian Academy of Arts and Sciences, as well as with the Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine prepared a study on the impact assessment of this Directive in the case of its adoption2. It says that a number of economic indicators of the Energy Community countries shall be taken into account, and therefore targets in the range of 18% by 2025 and 25% by 2030 in final energy consumption are recommended for adoption as most feasible; a 2% energy modernization goal for public buildings is recommended; supplier obligation to follow the 1.5% annual end-use energy savings rate is also recommended3. Energy 1

11th Energy Community Ministerial Council. Meeting Conclusions. Belgrade, 24th October 2013. // Energy Community. – http://www. energy-community.org/pls/portal/docs/2388178.PDF

Impact Assessment of the Energy Efficiency Directive (2012/27/EU) for the Energy Community. DecisionWare Group, July 2014 // Energy Community. – http://www.energy-community.org/pls/portal/ docs/3304025.PDF

An Energy Community tailored Energy Efficiency Directive to bring

Efficiency Coordination Group endorsed the recommendations and proposed to adopt the Directive based on the results of the study4. Thus, the Energy Community continues to update its requirements, in particular, in relation to the energy efficiency indicators. National Energy Efficiency Action Plan The Ordinance of the Cabinet of Ministers No. 733-r of August 3, 2011 “On Approval of the Action Plan on Implementation of Commitments within the Framework of the Treaty Establishing the Energy Community” provides for the obligation to develop the National Energy Efficiency Action Plan before February 1, 2012. The State Agency on Energy Efficiency and Energy Saving developed the draft plan and presented it on 8 November 20135. However, as of the beginning of August 2014, the National Energy Efficiency Action Plan was not approved and, according to the Ministry of Economic Development and Trade of Ukraine, the State Agency on Energy Efficiency and Energy Saving, neither was the draft Ordinance of the Cabinet of Ministers “On Approval of the National Action Plan for Energy Efficiency by 2020 and Adoption of the Action Plan on its Implementation”. significant benefits, study concludes. Energy Community Secretariat. // Energy Community, 23.07.2014. – http://www.energy-community. org/portal/page/portal/ENC_HOME/NEWS/News_Details?p_new_ id=9381 4

Energy Efficiency Coordination Group. Meeting Conclusions // 5th Energy Community. – http://www.energy-community.org/pls/portal/docs/3308024.PDF

Kyiv, the National Action Plan for Energy Efficiency by 2020 was In Presented // Ukrainska energetyka [Ukrainian Energy], 8.11.2013. – http://ua-energy.org/post/38696

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

It is interesting to note that as recently as late June – early July, at a meeting of the Energy Efficiency Coordination Group, Ukraine reported that the NEEAP received approval of the Ministry of Economic Development and Trade of Ukraine and would be submitted for its further adoption by the Cabinet of Ministers6. Meanwhile, the State Agency on Energy Efficiency and Energy Saving prepared an Action Plan on the Implementation of the National Energy Efficiency Action Plan by 20207, which requires a total funding of 56.662 bln UAH and provides for reduction of energy consumption by 81.57 million tons of fuel oil equivalent; as well as the Explanatory Note to the draft Ordinance of the Cabinet of Ministers on the Approval of the Action Plan8, which provides for energy savings in the amount of 2% of the average end-use consumption by the end of 2014 and states that the measures are planned to be financed entirely by investment funds. There are different opinions in this context – from the adoption of the NEEAP as soon as possible to the need of its revision. Thus, the Ministry of Economic Development and Trade repeatedly returned the document for revision. The document was discussed with the Director of the Energy Community Secretariat J.Kopač9 and the European Commission Directorate-General for Energy F.Barbazo10; and the Energy Efficiency Coordination Group called the NEEAP adoption an urgent task11.

ian National Energy Efficiency Action Plan”12, emphasizing the need to revise and finalize the plan so that it “takes into account the latest data and current political and economic situation” and thus sets more realistic objectives. Experts believe that the stated objectives are unlikely to be achieved13, that funding is not enough, and they encourage the government to pursue “energy efficient policy with due regard to all sectors of the national economy.” For July 2014, together with the relevant NGOs14, the State Agency on Energy Efficiency and Energy Saving planned a round table discussion of the National Energy Efficiency Action Plan by 2020; however, there are no public data on its course or conclusions. Crisis Response Measures on Energy Saving It should also be noted that despite the government’s definition of the energy efficiency as one of priorities15, no clear structuring of the organization scheme or of action plans has taken place yet. In early July, the government dismissed the head of the State Agency on Energy Efficiency and Energy Saving16, O.Taran, who had been appointed on January 2017, and appointed S.Savchuk only on August 2018. Later, the agency was subordinated 12

Assessment and Recommendations in Relation to the Ukrainian National Action Plan for Energy Efficiency // European-Ukrainian Energy Agency. – http://www.minregion.gov.ua/attachments/contentattachments/2869/Booklet_EUEA_Final.pdf

verview of Legislation on Policy Development in the Field of Energy O Efficiency in Ukraine // European-Ukrainian Energy Agency. – http:// minregion.gov.ua/attachments/content-attachments/2869/2014_ POLICY_PAPER_Final_Ukr.pdf

The Tentative Plan of the State Agency on Energy Efficiency and Energy Saving of Public Consultations for 2014 // State Agency on Energy Efficiency and Energy Saving, 25.12.2013. – http://saee.gov.ua/ documents/plany-zvity/plan_consultations_2014.doc

Opening Speech of Prime Minister of Ukraine Arseniy Yatsenyuk at a Meeting of June 25, 2014 // Government Portal, 25.06.2014. – http:// www.kmu.gov.ua/control/uk/publish/article?art_Id=247413948&cat_ id=244823857

Ordinance of the Cabinet of Ministers of Ukraine No. 631-r of July 9, 2014 “ On the Dismissal of O.Taran from the Position of the Head of the State Agency for Energy Efficiency and Energy Saving of Ukraine” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/631-2014-%D1%80

Decree of the President of Ukraine No.25/2014 of January 20, 2014 “On the Appointment of O.Taran to the Position of the Head of the State Agency for Energy Efficiency and Energy Saving of Ukraine” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/25/2014

Ordinance of the Cabinet of Ministers of Ukraine No. 758-r of August 20, 2014 “On the Appointment of S.D.Savchuk to the Position of the Head of the State Agency for Energy Efficiency and Energy Saving of Ukraine” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/758-2014-%D1%80

Meanwhile, the public presented its “Assessment and recommendations in relation to the Ukrain6

Energy Efficiency Coordination Group. Meeting Conclusions // 5th Energy Community. – http://www.energy-community.org/pls/portal/docs/3308024.PDF

Action Plan on the Implementation of the National Action Plan for Energy Efficiency by 2020 // State Agency on Energy Efficiency and Energy Saving. – http://saee.gov.ua/sites/default/files/documents/ plan-zahodiv-052014.doc

Explanatory Note to the draft Ordinance of the Cabinet of Ministers “On Approval of the National Action Plan for Energy Efficiency by 2020 and Adoption of the Action Plan on its Implementation” // State Agency on Energy Efficiency and Energy Saving. – http://saee.gov.ua/ sites/default/files/documents/zapiska-052014.doc

Energy Efficiency Measure Today May Result in Immediate Reduction of Natural Gas Consumption // State Agency on Energy Efficiency and Energy Saving, 15.04.2014. – http://saee.gov.ua/uk/news/212

European Partners Support UKRAINE in its Efforts to Improve Energy Efficiency // State Agency on Energy Efficiency and Energy Saving, 19.06.2014. – http://saee.gov.ua/uk/news/273

Energy Efficiency Coordination Group. Meeting Conclusions // 5th Energy Community. – http://www.energy-community.org/pls/portal/docs/3308024.PDF

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Hence, there was created another authority – the Crisis Energy Office20 – while the Minister for Regional Development, Construction and Housing became its head and the Minister of Energy and Coal Industry became its deputy head, the role of the State Agency on Energy Efficiency and Energy Saving was not made public. The Office announced its special objective (to reduce gas consumption by district heating enterprises by 10% by the end of 2014 and for the next heating season21), whose correlation with the objectives of the NEEAP is not clear; and regional state administrations will present their plans on the reduction of gas consumption by district heating enterprises by 30% for this heating season22 (even though initially the stated figure was 10%23). Accordingly, in different regions various measures are planned to be implemented or are being already implemented, such as hot water cut-off with the aim of gas saving, recommendations to install electric boilers24, energy audit of buildings25, insulation 19

Order of the Cabinet of Ministers of Ukraine No. 442 of September 10, 2014 “On the Optimization of the Central Executive Power Bodies” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/442-2014-%D0%BF Crisis Office in Energy Sector was Created within the Government, – Arseniy Yatsenyuk // Government Portal, 17.06.2014. – http://www. kmu.gov.ua/control/uk/publish/article?art_id=247393688&cat_ id=244276429 District Heating Enterprises will Cut Down on Gas Consumption by 10% by the end of 2014 – task set by the Crisis Office in Energy Sector // Government Portal, 3.07.2014. – http://www.kmu.gov.ua/control/ uk/publish/article?art_id=247432549&cat_id=244277212 T his week, the Regions are Presenting Action Plans on the Reduction of Natural Gas Consumption by District Heating Enterprises by 30% for the 2014/2015 Heating Season // Ministry for Regional Development, Building and Housing, 28.07.2014. – http://www.minregion. gov.ua/news/cey-tizhden-regioni-rredstavlyatimut-svoyi-rlanizahodiv-zi-zmenshennya-spozhivannya-rrirodnogo-gazu-tp-na30-na-reriod-opalyuva-271842/ District Heating Enterprises will Cut Down on Gas Consumption by 10% by the End of 2014 – task set by the Crisis Office in Energy Sector // Ministry for Regional Development, Building and Housing, 3.07.2014. – http://www.minregion.gov.ua/news/teplopostachalni-ridpriemstva-na-10-skorotyat-spozhivannya-gazu-do-kincya2014-roku--zavdannya-krizovogo-energetichnogo-shtabu-783496/

“Kyiv has to Save Gas for Stable Heating Season”, – Dmytro Novytskyi // Kyiv City State Administration, 29.07.2014. – http://kievcity.gov.ua/ news/15525.html

Kyiv Authority Performs an Energy Audit of all City Buildings // Gov-

ENERGY EFFICIENCY

directly to the Cabinet of Ministers19 with the aim of a more efficient decision making process. However, given the cancellation of the control functions of the State Agency on Energy Efficiency and Energy Saving at the end of 2013, there may arise a problem with the exercise of state control over the efficient use of energy resources.

of schools26, modernization of housing sector27, installation of energy efficient street lighting system28, conversion of social institutions29 and boiler stations30 to the use of alternative and local fuels, and so on. According to the State Agency on Energy Efficiency and Energy Saving, there were revised 9 regional energy efficiency programs in terms of supplementing them with the measures to encourage the population to energy-saving measures, to reduce energy consumption by state-financed institutions and to encourage local governments to involve investment and loan funds for energy efficiency projects. Also, the head of the Office instructed the Ministry of Energy and Coal Industry and other ministries to develop an action plan to ensure stable heating season in Ukraine, which should include energy efficiency measures31, but their connection with the NEEAP was not explained either. Also, the Office says they have developed a comprehensive action plan to provide incentives to reduce consumption and substitution of natural gas used by heating enterprises, industrial consumers, public institutions, organizations and citizens32. Various state authorities are involved in developing solutions designed to promote energy efficiency ernment Portal, 31.07.2014. – http://www.kmu.gov.ua/control/uk/ publish/article?art_id=247494676&cat_id=244277216 26

the Beginning of the School Year, the Capital Plans to InsuBy late 70 Schools // Government Portal, 30.07.2014. – http://www. kmu.gov.ua/control/uk/publish/article?art_id=247490924&cat_ id=244277216

Kyiv May Become a Leading City in the Project “Warm House” // Government Portal, 23.07.2014. – http://www.kmu.gov.ua/control/uk/ publish/article?art_id=247478649&cat_id=244277212

Kyiv Citizens will Receive 80 New Trolley Buses and New Energy Efficient Lighting System // Government Portal, 29.07.2014. – http:// www.kmu.gov.ua/control/uk/publish/article?art_id=247488553&cat_ id=244277216

Rivne Oblast Saves Gas Thanks to Using Peat // Government Portal, 28.07.2014. – http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247487756&cat_id=244277216

T his Year, 170 Boiler will be Transferred to the Use of Alternative Energy in Zhytomyr Oblast // Government Portal, 10.07.2014. – http://www. kmu.gov.ua/control/uk/publish/article?art_id=247450750&cat_ id=244277216

Crisis Office in Energy Sector Develops a Plan for a Stable Heating Season, – Volodymyr Groysman // Government Portal, 21.06.2014. – http:// www.kmu.gov.ua/control/uk/publish/article?art_id=247404884&cat_ id=244276429

Crisis Office in Energy Sector Works on the Issue of Stimulating the Reduction of Natural Gas Consumption and its Replacement // Government Portal, 7.07.2014. – http://www.kmu.gov.ua/control/uk/ publish/article?art_id=247440887&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

and declare the relevant goals and objectives, however, due to their number, lack of order in the initiatives, absence of a clear public correlation with the NEEAP as well as the fact that several state authorities are responsible for the energy efficiency issues, there is an impression that there is no unified state policy in Ukraine. Thus, chaotic initiatives may lead to non-systemic results, and it seems that the National Energy Efficiency Action Plan is a theoretical exercise rather than a plan for real steps. The Cabinet of Ministers adopted the Resolution drafted by the Ministry for Regional Development, Construction and Housing “On Encouraging the Replacement of Natural Gas in Heat Supply Sector”33, with an effective date of October 1, 2014; the mentioned resolution provides for compensation for the difference in tariffs for heat production from any fuels other than gas. The government promises a special tariff for those converting from the use of gas boilers to electric ones34, allowing new opportunities both for the households as heat consumers, and for the boiler stations producing it from resources other than gas. The Ministry for Regional Development, Construction and Housing with the participation of the State Agency on Energy Efficiency and Energy Saving of Ukraine, ministries and other agencies, members of the Parliament (members of interfaction union “For Energy Independence”), as well as representatives of specialized institutions and associations are developing a comprehensive action plan to ensure gradual substitution of gas with other fuels35 and promise to submit it for consideration to the government shortly. The Ministry for Regional Development, Construction and Housing also announced the promotion of citizens and businesses in their decision to switch to alternative fuels or reduce gas consumption. In particular, this concerns facilitating permit33

Resolution of the Cabinet of Ministers of Ukraine No. 293 of July 9, 2014 “On Encouraging the Replacement of Natural Gas in Heat Supply Sector” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/ laws/show/293-2014-%D0%BF

Government will Give Preferences to Those Transferring from Expensive Russian Gas to Other Fuels // Government Portal, 9.07.2014. – http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247445885&cat_id=244276429

Volodymyr Groysman: Necessary mechanisms to Encourage Energy Savings and Replacement of Gas // Government Portal, 12.06.2014. – http://www.kmu.gov.ua/control/uk/publish/article;j sessionid=0ED061709663D861BE142DCCB1C72B8E.vapp63?art_ id=247383633&cat_id=244274130

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

ting procedures and opening a 24/7 dispatching service of the Ministry36. The Vice Prime Minister V.Groysman stated that Ukraine planned to reduce gas consumption by 5 billion cubic meters by 202037 and would encourage consumers to shift to electric heating. Quite unexpectedly, the Ministry of Finance presented its proposals with regards to the options for replacing imported natural gas38. At the same time, the government decided to reduce gas supply to industrial consumers and district heating enterprises during 2014-2015 heating season by 30%, and to state-financed organizations by 10%, while the Ministry of Energy and Coal Industry shall provide conditions for the efficient use of natural gas39 by industry, state-financed organizations and heating enterprises; as well as develop a mechanism to monitor compliance with the set limits by all consumers. Energy Service The Ministry for Regional Development, Construction and Housing, with the participation of experts, representatives of the EBRD, the USAID, the National Commission for State Regulation of Public Utility Services developed40 a number of draft laws41 related to the introduction of ESCO mechanisms, cooperation of state-financed institutions with energy service companies – Amendments

ispatching Service of the Ministry for Regional Development, BuildD ing and Housing May Be Contacted on the Issues of Transition to Biofuels and Reduction of Gas Consumption by Enterprises and Citizens // Government Portal, 31.07.2014. – http://www.kmu.gov.ua/control/uk/publish/article?art_id=247493774&cat_id=244277212

olodymyr Groysman: Ukraine has to Become Energy Independent// V Government Portal, 11.07.2014. – http://www.kmu.gov.ua/control/ uk/publish/article?art_id=247452556&cat_id=244276429

The Ministry of Finance of Ukraine Proposes 8 Options for Replacing Imported Natural Gas // Government Portal, 4.07.2014. – http://www. kmu.gov.ua/control/uk/publish/article?art_id=247434202&cat_ id=244276429

The Ministry of Energy and Coal Industry Discussed the Progress on Preparing to the Heating Period at the Board Meeting // Government Portal, 15.07.2014. – http://www.kmu.gov.ua/control/uk/publish/ article?art_id=247458213&cat_id=244276429

The Ministry for Regional Development, Building and Housing Prepared Draft Laws That Will Allow to Involve Funds from Energy Service Companies for Thermal Modernization of Social Facilities // Ministry for Regional Development, Building and Housing, 24.06.2014. – http://www.minregion.gov.ua/news/minregion-ridgotuvav-zakonoproekti-yaki-dozvolyayut-zaluchati-koshti-vid-energoservisnihkompaniy-na-termomodernizaciyu-obektiv--144060/

Renovation of Buildings will Save up to UAH 600 billion from Budget Funds// Ministry for Regional Development, Building and Housing, 22.05.2014. – http://minregion.gov.ua/news/sanaciya-budivel-zekonomit-do-600-mlrd--grn--byudzhetnih-koshtiv-292973/

Draft Law of Ukraine “On Amendments to the Budget Code of Ukraine (Concerning the Implementation of Energy Efficiency Measures in Public Institutions)” // Ministry for Regional Development, Building and Housing, 5.06.2014. – http://www.minregion.gov.ua/ regulatory/proekty-reguljatornyh-aktiv-dlja-obgovorennja-ta-analizy-reguljatornogo-vplyvu/proekt-zakonu-ukrayini-rro-vnesennyazmin-do-byudzhetnogo-kodeksu-ukrayini-schodo-vprovadzhennya-energoefektivnih-zahodiv-u-byud-446345/

Draft Law of Ukraine “On Amendments to the Law of Ukraine “On Energy Saving” Concerning the Legal Basis for the Implementation of Energy Service Contracts” // Ministry for Regional Development, Building and Housing, 5.06.2014. – http://www.minregion.gov.ua/ regulatory/proekty-reguljatornyh-aktiv-dlja-obgovorennja-ta-analizy-reguljatornogo-vplyvu/proekt-zakonu-ukrayini-rro-vnesennyazmin-do-zakonu-ukrayini-rro-energozberezhennya-schodo-rravovih-zasad-realizaciyi-energoserv-446256/

raft Law of Ukraine “On Peculiarities of the Energy Services ProcureD ment” // Ministry for Regional Development, Building and Housing, 5.06.2014. – http://www.minregion.gov.ua/regulatory/proekty-reguljatornyh-aktiv-dlja-obgovorennja-ta-analizy-reguljatornogo-vplyvu/proekt-zakonu-ukrayini-rro-osoblivosti-zdiysnennya-zakupivelenergoservisu-833722/

The Ministry for Regional Development, Building and Housing is Working on a Comprehensive Settlement of Relations in the Field of Energy Efficiency of Buildings // Ministry for Regional Development, Building and Housing, 30.05.2014. – http://minregion.gov.ua/news/ minregion-vede-robotu-nad-kompleksnim-vregulyuvannyam-vidnosini-u-sferi-zabezpechennya-energetichnoyi-efektivnosti-budivel-835762/

The Ministry for Regional Development, Building and Housing and USAID Discussed New Areas of Cooperation in the Field of Energy Efficiency // Ministry for Regional Development, Building and Housing, 16.07.2014. – http://www.minregion.gov.ua/news/minregionta--USAID-obgovorili-novi-napryami-spivpraci-u-sferi-energoefektivnosti-537984/

Draft Law of Ukraine No.3071 of August 12, 2013 “On Efficient Use of Fuel and Energy Resources” // Verkhovna Rada of Ukraine. – http://

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to the Budget Code42 (the possibility for heads of state-financed institutions to enter into long-term contracts with energy service companies and to guarantee payments to energy service companies for savings achieved within the energy service contract), the draft Law “On Amendments to the Law of Ukraine “On Energy Saving” Concerning the Legal Basis for the Implementation of Energy Service Contracts”43 (key terms of an energy service contract), the draft Law “On Peculiarities of the Energy Services Procurement”44 (the mechanism of selecting the winner of tenders for the provision of energy services). The mentioned draft laws, developed by the Ministry for Regional Development, Construction and Housing were made public on its website for public consultations and will be submitted to the government for consideration after its follow-up revision45. The Ministry works together with the USAID on the issue of involving loan funds in the thermal modernization of social facilities by energy service companies46. On February 27, 2014, the government withdrew the draft Law “On Efficient Use of Fuel and Energy Resources”, as registered on August 12, 201347.

Metering In cooperation with the State Agency on Energy Efficiency and Energy Saving, the Ministry for Regional Development, Construction and Housing is working on the draft Ordinance of the Cabinet of Ministers “On Approval of Action Plans on Implementation of Directive 2006/32/EC, Directive 2010/31/EC and Directive 2010/30/EC” containing, in particular, measures to ensure commercial metering in the sphere of public utilities; to develop and provide support at the Verkhovna Rada of the draft law on energy efficiency of residential and public buildings; to draft relevant regulations and to approve regulatory documents. According to the Ministry of Economic Development and Trade of Ukraine, the draft ordinance will soon be submitted for consideration to the Cabinet of Ministers. As of 2013, the actual level of equipment of buildings with metering devices was the following: cold water – 30.5% (52 374 buildings); hot water – 19.9% (7999 buildings); thermal energy – 35.1% (37,576 buildings)48. In early August 2014, the Ministry for Regional Development, Construction and Housing assessed the equipment status with building-level heat meters at about 35% across Ukraine (amounting to 107 thousand residential buildings with central heating in total), having notified on the goal to increase this share up to 45% by the end of the year (according to the Memorandum with IMF). For this purpose, the National Commission for State Regulation of Public Utility Services adjusted investment programs of district heating enterprises49. By October, the Crisis Energy Office shall equip heat consumption systems of apartment buildings without heat measurement devices, with limiting devices on the user’s inputs50. The Ministry for Rew1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=48018 48

Equipment Status of Apartment Buildings with Modern Buildinglevel Metering Equipment // Ministry for Regional Development, Building and Housing, 6.03.2014. – http://minregion.gov.ua/zhkh/ reforma-zhitlovo-komunalnogo-gospodarstva/stan-osnaschennyabagatokvartirnih-budinkiv-suchasnimi-robudinkovimi-zasobamiobliku-952912/

Main Tasks of Preparation to winter in Housing and Utility Sector are to be the Following: Technologic Heat Metering, Building-level Metering Devices, 5% of Gas Saving // Ministry for Regional Development, Building and Housing, 29.05.2014. – http://minregion. gov.ua/news/tehnologichniy-oblik-tepla-budinkovi-rriladi-obliku5-ekonomiyi-gazu--osnovni-zavdannya-u-ridgotovci-zhkg-do-zimi-970019/

District Heating Enterprises shall reduce gas consumption by 10% by the end of 2014 – the task of the Crisis Office in Energy Sector // Government Portal, 3.07.2014. – http://www.kmu.gov.ua/control/

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

gional Development, Construction and Housing estimates the cost of full equipment of apartment buildings with building-level and apartment-level cold and hot water metering devices as well as heat meters at about 30 bln UAH51.

tion and Development, the European Investment Bank, the EBRD and the NEFCO, preparing projects that will involve an investment of 872 mln USD and 872.08 mln EUR55 in the areas of heating, energy, water supply, sewerage, solid waste.

Opportunities for Funding

The Vice Prime Minister V.Groysman made statements about the intention to attract56 3 bln USD for energy saving within the World Bank programs, and 290 mln EUR from the European Bank for Reconstruction and Development. The World Bank has allocated57 382 mln USD for the project on improving energy efficiency in the district heating sector of Ukraine, while the EBRD called the support of energy efficiency projects to be “strategic assistance of the Bank”58, and in cooperation with the Eastern European Energy Efficiency and Environment Partnership Fund (E5P) will allocate 25 mln EUR to Lugansk59 (of which 20 mln EUR as loan funds and 5 mln EUR as a grant) to improve the district heating system.

The international community has shown its willingness to invest in the energy efficiency sector of Ukraine, but the government has a huge responsibility for the most transparent and efficient use of funds. With its Ordinance No. 611-r of July 2, the government allocated additional 26.1 mln UAH for projects to improve energy efficiency52, in particular within the Eastern European Energy Efficiency and Environment Partnership. With its Resolution No. 165 “On Certain Issues of the Use of Funds for the Implementation of Energy Efficiency and Energy Saving in 2014”53, the government transferred the funds received in the second and third tranches of the program (i.e. 173.32 mln UAH) for measures within the State Target Economic Program on Energy Efficiency and Development of the Energy Production from Renewable Energy Sources and Alternative Fuels for 2010-2015. The Cabinet of Ministers issued the Ordinance No. 296-r54 “On Attraction of Loan Funds from the International Bank for Reconstruction and Development for the Implementation of the Investment Project “Improving Energy Efficiency in the District Heating Sector of Ukraine” (loan funds in the amount of 382 mln USD); and the Ministry for Regional Development, Construction and Housing is working in cooperation with the International Bank for Reconstruc-

In April, Ukraine signed the Partnership Agreement on Energy Efficiency with the European Commission’s Directorate General for Energy, according to which the Ministry for Regional Development, Construction and Housing was appointed the National Coordinator of “Covenant of Mayors”60 in Ukraine. The State Agency on Energy Efficiency and Energy Saving signed a Memorandum of Understanding61 with the project “Mu55

ousing and Utility Sector will Receive Investments in the Amount of H USD 872 million and EUR 872.08 million, – A. Bilousov // Ministry for Regional Development, Building and Housing, 23.06.2014. – http:// www.minregion.gov.ua/news/v-zhkg--zaluchat-872-mln--dolarivssha-i-87208-mln--evro-investiciynih--koshtiv---a--bilousov-241806/

Ukrainian Energy Efficiency Projects will Involve USD 3 billion of Investment Funds, – Groysman // RBK-Ukraina, 10.04.2014. – http:// tek.rbc.ua/ukr/ukrainskie-rroekty-energoeffektivnosti-rrivlekut-bolee-10042014115500

The World Bank Increases Greatly its Support for Ukraine’s Recovery // Ministry for Regional Development, Building and Housing, 23.05.2014. – http://minregion.gov.ua/news/svitoviy-bank-znachnozbilshue-ridtrimku-dlya-vidnovlennya-v-ukrayini-956498/

Our Assistance in Energy Efficiency will Improve Competitiveness of Ukraine – Director at the EBRD // Ukrainska energetyka [Ukrainian Energy], 29.05.2014. – http://ua-energy.org/post/44318

EBRD and E5P Fund will Allocate EUR 25 million to Lugansk for District Heating // Yevropeiska Pravda, 4.06.2014. – http://www.eurointegration.com.ua/news/2014/06/4/7023175/

The Ministry for Regional Development, Building and Housing was officially appointed the National Coordinator of “Covenant of Mayors” in Ukraine // Ukrainska energetyka [Ukrainian Energy], 3.04.2014. – http://ua-energy.org/post/42787

The State Agency on Energy Efficiency and Energy Saving of Ukraine and USAID “Municipal Energy Reform in Ukraine” will work together // The State Agency on Energy Efficiency and Energy Saving of

uk/publish/article?art_id=247432549&cat_id=244277212

Adequate Metering of Gas in Multi-storied Buildings will Cost UAH 30 billion – Ministry for Regional Development, Building and Housing // Ukrainska energetyka [Ukrainian Energy], 6.08.2014. – http:// ua-energy.org/post/46159

The Government Allocated an Additional UAH 26.1 Million for Energy Efficiency Projects // Ukrainska energetyka [Ukrainian Energy], 4.07.2014. – http://ua-energy.org/post/45415

Resolution of the Cabinet of Ministers of Ukraine No.165 of June 4, 2014 “On Certain Issues of the Use of Funds for the Implementation of Energy Efficiency and Energy Saving in 2014” // Legislation of Ukraine. – http://zakon2.rada.gov.ua/laws/show/165-2014-%D0%BF

Ordinance of the Cabinet of Ministers of Ukraine No. 296-r of March 19, 2014 “On Attraction of Loan Funds from the International Bank for Reconstruction and Development for the Implementation of the Investment Project “Improving Energy Efficiency in the District Heating Sector of Ukraine” // Legislation of Ukraine. – http://zakon4.rada. gov.ua/laws/show/296-2014-%D1%80

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Information Despite the extremely important issue of energy efficiency in modern Ukraine, as well as formal decisions of public authorities (for example, the decision of the National Security and Defence Council of Ukraine concerning the instruction of the Cabinet of Ministers to take steps to create a system to ensure prudent and rational use of energy by all categories of consumers62), until recently, the public authorities have not launched awareness campaigns on the issue of energy efficiency, although preparation was announced. The State Agency on Energy Efficiency and Energy Saving informed about the annual exhibition and forum. As for encouraging people, the Agency refers to a mechanism of stimulation approved by the government and included in the State Target Program on Energy Efficiency for 2010-2015; however, state funding thereof is not provided for the year of 2014. At the same time, the draft amendments to the program for 2014 provide for allocation of the funds to the popularization of energy efficiency with a wide awareness-raising campaign. Public information campaigns were also held by the public (e.g., public initiative Energy Evolution UA63). We may assume that the largest factor for raising public interest in energy efficiency issues will be the increase of tariffs for natural gas, heat and electricity supply. On August 20, an information campaign “Energy Independence of Ukraine”64 was launched, initiated by the government in order to raise awareness of Ukraine, 13.03.2014. – http://saee.gov.ua/uk/news/200 62

Decree of the President of Ukraine No.448/2014 of May 1, 2014 “On the Decision of the National Security and Defense Council of Ukraine of April 28, 2014 “On Situation on Providing with Energy Security in Connection with the Status of Natural Gas Supply to Ukraine” // Legislation of Ukraine. – http://zakon1.rada.gov.ua/laws/show/448/2014

Web page of EnergyEvolution.UA on Facebook: https://ru-ru.facebook.com/energyevolutionua

August 20, there Launched an Information Campaign “Energy On Independence of Ukraine” // Ministry of Energy and Coal Industry, 19.08.2014. – http://mpe.kmu.gov.ua/minugol/control/uk/publish/ article?art_id=244954302&cat_id=35109

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nicipal Energy Reform in Ukraine”, funded by the United States Agency for International Development (USAID) and implemented by International Resources Group (IRG).

Ukrainians of the need for energy and natural gas saving as a factor in Ukraine’s energy security and economic growth. The Crisis Energy Office was empowered with the task of holding the campaign.

Conclusion The government proclaimed a policy of energy efficiency as a key issue in the activity of public authorities, which, in their turn, developed and produced a large number of solutions to facilitate the implementation of Ukraine’s commitments in this sector. However, an urgent need to intensify energy efficiency policy has exposed the lack of a unified state policy in the field of energy efficiency and saving, as well as a large number of developed legal documents against some negligence of the mechanisms of the Energy Community. It is also noteworthy that in 7 months there has been essentially taken no key decisions on the immediate implementation of the commitments. Also, regard must be paid to the general weakness of the drafted laws and regulations, since in most cases they reflect only a few issues that meet the following criteria: they do not create additional direct obligations for various authorities; they do not require additional funding; they do not require the introduction of a program approach in the implementation of individual instruments/tasks. While as to achieve largescale changes, program approach should be adopted and conditions for investment in energy efficiency should be established. Typically, a particular program provides funding of the proposed event/project only in the amount of 20-30% of its cost, leading to the involvement of investment funds several times as large. In addition, complaints are caused by various project plans, since they look as if prepared under ideal conditions – with almost inexhaustible material and financial reserves, the highest level of competence and institutional capacity of all stakeholders, etc. However, the government fails to consider energy efficiency issues in different sectors – public procurement, particularly in the supply of heat, repairs and construction of public institutions.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Directive 2010/30/EU on energy product labelling provides that most of household products should bear labelling that shall clearly specify the key consumer characteristics of the product. The Directive not only covers household products, but also expands the scope of regulation to industrial and commercial appliances and equipment. Labelling applies to refrigerators, freezers, washing machines, laundry driers, dishwashers, ovens, cooktops, water heaters and hot water storage vessels, air conditioners, lamps, TV sets, motor vehicles. In addition, the European Commission has adopted a range of Delegated Regulations. In particular, Regulation 626/2011 (with regard to energy labelling of air conditioners), Regulation 1059/2010 (with regard to energy labelling of household dishwashers), Regulation 1060/2010 (with regard to energy labelling of household refrigerating appliances), Regulation 1061/2010 (with regard to energy labelling of household washing machines), Regulation 1062/2010 (with regard to energy labelling of televisions). For most of them, the deadline for their implementation is December 31, 2012 (in accordance with the list of the Energy Community acquis for Ukraine). In addition, the following Directives, which form the part of the Energy Community acquis with regard to energy labelling, were also adopted: Directive 2002/40/EC with regard to household electric cookers, Directive 98/11/EC with regard to household lamps, Directive 96/60/EC with regard to household combined washer-driers, and also Directive 95/13/EC with regard to household electric tumble driers. The deadline for the implementation of all the Directives above is 31 December, 2011.

The deadline for the implementation of Directive 2010/30/EU is February 1, 2012 (in accordance with the Ordinance of the Cabinet of Ministers) and December 31, 2011 (in accordance with the list of the Energy Community acquis for Ukraine). The importance of harmonization of national standards and regulations with EU ones in the context of reforms in the sphere of technical regulation as well as assistance to Ukrainian export was stressed by the Minister of Economic Development and Trade P.Sheremeta65. The Directive 2010/30/EU and part of regulations were formally incorporated into the Ukrainian legislation by Resolution of the Cabinet of Ministers No. 702 of August 7, 2013. According to the Ministry of Economic Development and Trade of Ukraine, from July 1, 2015 and onwards, state monitoring over the compliance of energy products with the requirements of technical regulations on energy labelling is planned to take place. At the same time, authorities in charge of the gradual development of technical regula65

Pavlo Sheremeta Identified Three Major Tasks for the Success ful Reform of Technical Regulation Sphere // Government Portal, 24.07.2014. – http://www.kmu.gov.ua/control/uk/publish/article?art_ id=247480308&cat_id=244276429

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

tions on energy labelling by types of products (in accordance with the Technical Regulations on Energy Product Labelling) are the State Agency on Energy Efficiency and Energy Saving and the Ministry of Economic Development and Trade. As of August, the State Agency on Energy Efficiency and Energy Saving developed draft Technical Regulation on energy labelling of televisions; draft Technical Regulation on energy labelling of household air-conditioners; draft Technical Regulation on energy labelling of household electric lamps and lighting fixtures, as well as draft Technical Regulation on energy labelling of household dishwashers.

Conclusion Despite the declarations, open sources lack the comprehensive information on the implementation of the Directive or measures to introduce energy labelling, tracking its effectiveness or consumers’ awareness raising during the research period.

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Directive 2010/31/EU on the energy performance of buildings requires the adoption of measures to guarantee minimum energy efficiency requirements for buildings and structures, to guarantee the compliance of new and existing buildings with these requirements. It encourages modernization of buildings for them to become structures with close to zero energy consumption; in particular, attention is paid to objects in state and communal property. To this end, the government should develop and further update national and regional programs of financial support to achieve energy efficiency of buildings. Additional measures include the creation of energy certification of buildings, independent assessment of heating and air conditioning systems and public demonstration of certificates.

The Ministry for Regional Development, Construction and Housing developed a draft Law “On Energy Efficiency of Buildings”, which after much discussion66 at the working group level, and consideration of proposals and comments67, was published68 on the Ministry’s website for electronic public consultations. The draft Law contains the principles of public policy in the energy efficiency of buildings, authorities exercising control in this area, a list of major measures on information management, approaches to determining the energy efficiency of buildings and setting minimum requirements; it also introduces passportization and certification of energy performance of buildings, lists measures for the provision of energy efficiency and the source of their funding. The Department of Reform and Development of Housing of the Ministry for Regional Development, Construction and Housing stressed the introduction of energy efficiency certification for buildings69 subject to alienation and leasing, as well as for public buildings. At the same time, the need for certification of municipal buildings is 66

discussions regarding the draft Law of Ukraine “On Energy EfOn ficiency of Residential and Public Buildings” // Ministry for Regional Development, Building and Housing, 18.04.2014. – http://minregion.gov.ua/zhkh/reforma-zhitlovo-komunalnogo-gospodarstva/ pro-obgovorennya-rroektu-zakonu-ukrayini-rro-energetichnu-efektivnist-zhitlovih-i-gromadskih-budivel-487782/

the Work of the Working Group to Prepare Draft Law on EnOn ergy Efficiency of Buildings // Ministry for Regional Development, Building and Housing, 18.04.2014. – http://minregion.gov.ua/zhkh/ reforma-zhitlovo-komunalnogo-gospodarstva/pro-robotu-robochoyi-grupi-z-opracyuvannya-zakonoproektu-rro-energetichnuefektivnist-budivel-225377/

Draft Law “On Energy Efficiency of Buildings” // Ministry for Regional Development, Building and Housing, 8.07.2014. – http://www.minregion.gov.ua/regulatory/proekty-reguljatornyh-aktiv-dlja-obgovorennja-ta-analizy-reguljatornogo-vplyvu/proekt-zakonu-ukrayinirro-energetichnu-efektivnist-budivel-104322/

Draft Law “On Energy Efficiency of Buildings” Introduces Requirements to Mandatory Certification not for all Buildings, but for Stateowned ones // Ministry for Regional Development, Building and Housing, 30.07.2014. –

determined by the relevant executive authorities of village, town and city councils. The draft Law provides that in case of its adoption it will take effect only six months after its publication, which is not very clear and apparently caused by the need of the Cabinet of Ministers to adopt regulations for its implementation. Given the time for the development of the draft law, its final version, and the importance of the energy saving issue for the government, the approach to the development of regulations would have been more efficient if the draft regulations had been submitted for consideration to the Cabinet of Ministers soon after the consideration of the draft Law by the Verkhovna Rada. The State Agency on Energy Efficiency and Energy Saving indicates the need for “putting national laws and regulations in a date order in compliance with the requirements of the directive on EU standards”70. During the meeting of the Energy Efficiency Coordination Group of the Energy Community, the representative of Ukraine informed that the draft Law was expected to be adopted in the fall, that a great number of standards for energy efficiency in buildings had either been approved or developed, that Ukraine planned to develop a methodology for certification (within the framework of the EBRD Project) and that a good system of training and certification of experts was already in place71. The issue of energy efficiency of buildings is discussed at meetings with international financial 70

Who will Take Responsibility for the Implementation of Energy Efficiency Programs in Ukraine? // the State Agency on Energy Efficiency and Energy Saving, 25.07.2014. – http://saee.gov.ua/uk/news/291

Energy Efficiency Coordination Group. Meeting Conclusions // 5th Energy Community. – http://www.energy-community.org/pls/portal/docs/3308024.PDF

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

institutions72, and with international experts73. By the estimate of the Gas Institute of the NAS of Ukraine, buildings rehabilitation may yield reduction of heat losses by 41% (saving 150-600 bln UAH), while modernization of heat generating equipment at boiler stations may yield reduction of heat losses by 4% (or 141 bln UAH), and heating systems upgrade – by 14% (33 bln UAH)74. In reply to a request for information, the Ministry for Regional Development, Construction and Housing said that the National Action Plan on Energy Efficiency in Buildings, prepared by the Institute of Regional Development, constitutes a part of the National Energy Efficiency Action Plan. A number of state standards of Ukraine in the field of energy efficiency of buildings have already been introduced, and, as officials say, are aimed at implementing the provisions of Directive 2010/31/EC,75 including: DSTU B ENISO 13790:2011 “Energy Efficiency of Buildings. Calculation of Energy Consumption for Heating and Cooling (ENISO 13790:2008, IDT)”; DSTU B EN 15217:2013 “Energy Efficiency of Buildings. Methods of Representation of Energy Efficiency Characteristics and Energy Certification of Buildings (EN 15217:2007, IDT)”; DSTU B EN 15603:2013 “Energy Efficiency of Buildings. Total Energy Consumption and Energy Evaluation (EN 15603:2008, IDT)”; DSTU B EN 15459:201X “Energy Efficiency of Buildings. Procedure for Economic Evaluation of Energy Systems of Buildings (EN 15459:2007, IDT)”; DSTU-N

the Continuation of Cooperation with the European Bank for On Reconstruction and Development to Attract Funding for the Project of “Technical Assistance to Improve Energy Efficiency of Residential Buildings” // Ministry of Regional Development and Construction of Ukraine, 2.04.2014. – http://minregion.gov.ua/zhkh/reforma-zhitlovo-komunalnogo-gospodarstva/pro-rrodovzhennya-spivpraci-zevropeyskim-bankom-rekonstrukciyi-ta-rozvitku-schodo-zaluchennya-finansuvannya-rroektu-tehnichna-r-691725/

a Meeting of an Expert Group of the German Association for InOn ternational Cooperation (GIZ) // Ministry of Regional Development and Construction of Ukraine, 8.04.2014. – http://minregion.gov.ua/ zhkh/reforma-zhitlovo-komunalnogo-gospodarstva/pro-zasidannya-ekspertnoyi-grupi-nimeckogo-tovaristva-mizhnarodnogo-spivrobitnictva-GIZ-35940/

Buildings Rehabilitation May Save up to UAH 600 billion of budget funds // Ministry of Regional Development and Construction of Ukraine, 22.05.2014. – http://minregion.gov.ua/news/sanaciya-budivel-zekonomit-do-600-mlrd--grn--byudzhetnih-koshtiv-292973/

The Ministry of Regional Development and Construction of Ukraine Discussed the Formation of a Specialized Legal Framework in the Area of Energy Efficiency of Buildings // Ministry of Regional Development and Construction of Ukraine, 2.04.2014. – http://minregion. gov.ua/news/v-minregioni-obgovorili-ritannya-formuvannya-specializovanoyi-zakonodavchoyi-bazi-v-sferi-zabezpechennya-energetichnoyi-efektivn-607520/

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

B A.2.2-XXX:201Х “Energy Efficiency of Buildings. Method of Calculation of Energy Consumption for Heating, Cooling, Ventilation, Lighting and Hot Water Supply”; DSTU-N B A.2.2-XXX:201X “Energy Efficiency of Buildings. Guidance on Application of the Method of Energy Efficiency Evaluation and Energy Certification of Buildings.” According to the Ministry for Regional Development, Construction and Housing, discussions as to the implementation of ISO 50001 “Energy Management Systems – Requirements and Implementation Advisor” are under way; in particular, it has been translated and presented in Ukrainian76. In addition, the government is assessing the Display tool which allows to evaluate energy efficiency of buildings, inform the owners and users of buildings on the need for sustainable energy use and to accumulate a database of energy and operational performance characteristics of buildings.

Conclusion The government is on the way to develop the necessary legislation. Currently, this took quite a long time, especially taking into account that the most important part is still ahead – i.e. awareness raising campaign for both ordinary people and decisionmakers, and testing theory in practice. Unfortunately, little has been done for that matter; neither has for transparency of the work of the authorities in charge during the development of the relevant legislation. The fact that only some issues were covered by legislative initiatives and that the program approach is being neglected raises concerns. Another area that needs attention is the energy efficiency in multi-apartment buildings, because the existing regulatory framework makes it difficult to implement energy efficiency measures, creating barriers for residents instead of incentives.

Experts on Energy Efficiency and Saving in Housing and Utility Sector have Discussed Ways to Implement ISO 50001 and “Display” Tool // Ministry of Regional Development and Construction of Ukraine, 13.03.2014. – http://minregion.gov.ua/news/eksperti-z-energoefektivnosti-ta-energozberezhennya-u-sferi-zhkg-obgovorili-shlyahivprovadzhennya-ISO-50001-ta-instrumentu-disp-423178/

OIL

OIL Directive 2009/119/EC imposing an obligation to maintain minimum stocks of crude oil and/or petroleum products requires creation and maintenance of the stock system equivalent to 90 days of average daily net imports or 61 days of average daily inland consumption. Existing security situation in the oil market requires prompt decisions According to the director of special projects of the Research and Development Centre “Psikheia” G. Riabtsev, last year the share of oil produced in Russia in the structure of Ukrainian fuel imports exceeded 35%. Namely, 40% of diesel fuel and 3% of petroleum were imported from Russia. Another 47% and 35% respectively came from Belarus or from Lithuania through its territory. From January to June 2014, the share of the three countries in imports of petroleum rose to 71%, and diesel fuel – up to 88%. Thus, by “pressing” Belarus (directly or through Russian shareholders of the Mozyr refinery), Russia is able to block the two-thirds of the supply of petroleum and diesel fuel Ukrainian economy needs. At that, market participants are unable to quickly increase the supply of petroleum products due to the lack of working capital and excessive lending rates, which already led to the reduction of current stocks of retailers to 7-10 days of consumption. Thus, blocking the supply of petroleum products by the Russian Federation will lead to the shortage in Ukraine of petroleum and diesel in the amount of 2.5 and 3.5 million tons a year, which may be compensated by available reserves of the state, operators and consumers only by quarter, while the current supplies of fuel in the domestic market are enough for only 7-10 days. Since petroleum products belong to infrastructure products, their shortage will lead to a cumulative increase in prices of goods and services, reduction of an already low paying capacity of the population and strengthening of social discontent, especially in the eastern and southern regions of the country.

The formation of the stocks has been initiated repeatedly. The deadlines for creating stocks were June and December 2004, July 2005, January, March and November 2006, January and February 2007 and 2008. However, the relevant regulations set unrealistic deadlines for their formation and provided no funding. For example, in January 2006, the government ordered the State Agency of Reserves to form by November 1 stocks of petroleum and diesel fuel in the amount of 10% of their consumption, “having forgotten” to allocate 2.5 bln UAH for its purchase which had not been provided for in the budget either. No funds were allocated for the creation in November 2006 of the stabilization reserve of petroleum products. The purchased crude oil was planned to be stored in tanks of Ukrtransnafta and processed at the Kremenchuk refinery. These 80-110 thousand tons of petroleum and 100-130 thousand tons of diesel fuel were planned to be sold to farmers and other consumers with the lowest possible mark-up and only during the seasonal increase in prices. Not having received the necessary credit to purchase oil, the then-Ministry of Fuel and Energy tried to involve UkrGazEnergo to form the stocks. However, ineffective decisions of the company led to overstocking the Kremenchuk refinery with petroleum products, whose price greatly exceeded the market price. Hopes to keep fuel in tanks of the SE “Ukrtransnaftoprodukt” were also deceived, since the latter proved unable to place the required amount of petroleum and diesel fuel. Due to this, petroleum products produced from crude oil purchased at the peak of the value were stored in tanks of the Lysychansk refinery on commercial terms. UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

The Concept for creating minimum stocks of crude oil and petroleum products in Ukraine for the period until 2020, as approved by Ordinance of the Cabinet of Ministers No. 1498-r of December 8, 2009, also “sank” in ministerial offices. In response to the relevant request, the Ministry of Energy and Coal Industry indicated that the latter had not received approval from the Ministry of Economic Development and Trade even after its revision. The issue of the procurement effectiveness and assessment of the risks associated with lending the stock under the conditions of significant variability in oil prices was not considered in April 2011, when NJSC “Naftogaz of Ukraine” acquired another batch of crude oil for the “stabilization reserve”. After 13 unsuccessful auctions, in which the company tried to sell the fuel produced from this oil at a price 5-11% higher than its market price, there was an impression that “the formation of a stabilization stock” was only an attempt to compensate for losses from inefficient management of individual companies at the cost of public funds. In 2014, the obligation to establish a system of stocks is used to justify violations of a certain company Experts got the same impression from a recent attempt of the PJSC “Ukrtransnafta” to create a “strategic stock”1 based on 675 thousand tons of technological oil withdrawn from pipelines in March-May 2014. The necessity of this step was explained by the threat of capture of crude oil by the separatists, although the resource within the area of the antiterrorist operation amounted to only 200 thousand tons. Ukrtransnafta planned to process about 400 thousand tons of crude oil at the Kremenchuk refinery and to place 275 thousand tons for storage in reservoirs of the companies controlled by “Privat” group2. However, the proposed fee for processing 1

“Ukrtransnafta”, Headed by the Manager of “Privat” Wants to Let “Privat” Get a Billion Earning for the Discharge of Oil // Nashi Hroshi, 11.04.2014. – http://nashigroshi.org/2014/04/11/ukrtransnaftaocholyuvana-menedzherom-rryvatu-hoche-daty-rryvatu-milyardnyj-zarobitok-na-zlyvi-nafty/ “Ukrtransnafta” Continues to Impose a Scheme for Processing Crude Oil // OilNews, 22.07.2014. – http://oilnews.com.ua/a/news/Ukrtransnafta_prodolzhaet_navyazivat_shemu_pererabotki_tehnologicheskoy_nefti/213560

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

oil at the Kremenchuk refinery amounted to 1080 UAH/t (in 2011-2012, the Lysychansk refinery performed processing for 288 UAH/t, and the Kremenchuk refinery – for 670 UAH/t) and technical losses of the company were estimated at 11.8%, which is almost twice the average level. Given that, the export of crude oil with the purchase of the relevant volumes of petroleum products abroad would save Ukrtransnafta about 33 mln USD. In addition, the question of the price of oil delivered to the Kremenchuk refinery remains unclear, since the difference between its balance-sheet value and its market value is about 280 mln USD. Reportedly, at that time the Ministry of Energy and Coal Industry was working on a draft Resolution of the Cabinet of Ministers, according to which the entire amount of crude oil had to be deposited at the State Reserves Agency3. Meanwhile, NJSC “Naftogaz of Ukraine” sent to the Ministry of Energy and Coal Industry a request which proposed to create strategic stocks of oil and petroleum products on the basis of crude oil already withdrawn from pipelines of Ukrtransnafta under the responsibility of the latter4. Moreover, oil withdrawal was carried out without any project documentation or environmental impact assessment, without proof of ownership and without approval of the Cabinet of Ministers or the Ministry of Energy and Coal Industry. Given that, and given the precedent of 2009, when the Kremenchuk refinery processed Ukrtransnafta crude oil which was supposed to be in the company’s safe storage, the General Prosecutor’s Office started an inspection of the legality of raw material withdrawal by the operator of oil transportation system of Ukraine5. There is no doubt that similar problems may arise during the formation of minimum stocks of oil and petroleum products, whose presence may 3

Crude Oil will be Transferred to the State Reserves Agency, – draft Resolution // OilNews, 27.06.2014. – http://oilnews.com. ua/a/news/Tehnologichesk aya_nef t_budet_peredana_v_ Gosrezerv_%E2%80%93_proekt_rasporyazheniya/213276

Ukraine will Form its Strategic Stocks from the Oil Pumped by Kolomoiskyi– Todiichuk / Ukrainska energetyka [Ukrainian Energy], 3.07.2014. – http://ua-energy.org/post/45399

General Prosecutor’s Office is Inspecting of the Displacement of over 600 thousand tons of crude oil from the lone system // RBK-Ukraine, 2.08.2014. – http://toplivo.rbc.ua/ukr/genprokuratura-rroveryaet-zakonnost-otkachivaniya-bolee-02082014152600

OIL

prevent the development of adverse events in the scenario. To avoid this, it is necessary to:

• supplement the existing legislation by regula-

tions governing the organizational and economic principles of the formation and management of stocks of petroleum products, in particular to establish a sustainable balance between the government and commercial stocks, develop mechanisms and conditions for their formation, storage, use and rotation;

• create the institutional framework for managing

the stocks, which requires the establishment of an agency, which within its competence will form the structure of the stocks and manage it; selection of an operating company; involvement of market players in the formation of the stocks; development of the regulations of all participants in the creation, maintenance and operation of the stocks; formation of minimum stocks of oil and petroleum products from national special period stocks, the state reserve stocks and other target stocks of the country;

• form the infrastructure of the stocks to meet the

needs of the regions, as well as to take into account the existing within their territory storages of crude oil producing companies, oil transport companies and oil refineries, marine and rail terminals, petroleum product companies, army and departmental oil storage facilities;

• establish a system of information disclosure on formation, storage, usage and rotation of the stocks. There already exists a possibility to create nationwide fuel stock for a short period of consumption According to G.Riabtsev, in order to implement Directive 2009/119/EC on the establishment of minimum stocks of oil and petroleum products, and Regulation 1099/2008 on energy statistics, Ukraine has to form a stable stock for 90-day consumption period at normal levels demand (1.13 million tons of petroleum and 1.35 million tons of diesel fuel). The creation of such stocks in Ukraine is a long and costly process, so it should be phased, along with the development of appropriate funding mechanisms which may be the following:

• purchase of petroleum products at the expense

of the proceeds from increased levels of taxation of petrol and diesel. In order to form stocks for 90-day period in six years, it is sufficient to increase the excise tax on petrol and diesel fuel by 32 EUR and 30 EUR per ton (or 0.4 UAH if calculated per litre). The need of this measure should be explained to the citizens of Ukraine and the target allocation of the mentioned funds for the creation of the stock should be legally provided;

• reservation agreements, providing the right to buy at any time and at market prices of stocks owned by third parties. The relevant services shall be provided to agencies with insufficient reserves, by international banks, including Goldman Sachs, at 2.3% per annum (in May 2012, “Naftogaz of Ukraine” received such proposal).

Since the structure of the stocks should provide for rapid response to fast changing environment, it is necassary to create a reserve of raw domestic production (in the amount of up to 25% of its annual consumption) in the first phase of forming minimum stocks. The first priority should be to create in the coming months a stock of motor fuel, calculated for 20-day consumption at normal levels of demand (550 thousand tons), with further increase of its amount by each entity operating in the market, to up to 10% of the annual sales. The structure of such stock shall comply with the structure of retail sales (65% of petroleum and 35% of diesel fuel), namely 350 thousand tons of petroleum A-95-Euro type II and 200 thousand tons of diesel fuel (in April and October– Type L (summer), in November and March – Type Z (winter)). The choice of the types is conditioned by the largest amount of their consumption in Ukraine and decisive influence on domestic pricing. According to the Research and Development Centre “Psikheia”, the stocks of petroleum products shall be distributed as follows:

• in western region – 27%, particularly 7% in Lviv region;

• in northern region – 23%, particularly 18% in Kyiv region;

• in

central region – 20%, particularly 8% in Dnipropetrovsk region;

• in eastern region and Zaporizhzhia region – 17%; • in southern region – 13%. UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

For fuel storage, there may be used capacities of the market participants (of more than 1 million tons, particularly 700 thousand tons by “Privat” group), tanks of the Ministry of Defence (up to 900 thousand tons), Marine Oil Terminal “Pivdennyi” (170 thousand tons) and other storage terminals, SE “Ukrtransnaftoprodukt” (30 thousand tons) and PJSC “Ukrgazvydobuvannia” (20 thousand tons), whose inventory shall be performed immediately. The decision to use the stock of each type of petroleum products should be taken for each region in the event of an increase in retail prices of the respective resource by more than 5% within ten days. Purchase of fuel for the formation of the stocks should be done in case of an urgent need and in times of projected decline in prices of petroleum products, given the time lag of 2-3 weeks. Stock rotation should be carried out twice a year during the projected increase in prices of petroleum products, but by no more than 25%.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Conclusion Given the crisis conditions due to the military aggression of the Russia Federation, Ukraine won’t be able to meet the requirements of Directive 2009/119/EC on establishing by the end of 2016 the oil and petroleum products stock system equivalent to 90 days of average daily net imports or 61 days of average daily inland consumption. However, the government should immediately initiate the formation of minimum reserves, which would avoid the deficit, including due to possible declaration by the Customs Union countries of embargo on exports of petroleum products to Ukraine. The pragmatic way in the situation would be to create a smaller-scale oil and petroleum products stocks with minimal burden on the state budget – by using such tools as the purchase with funds from tax increases or reservation agreements. The process should start with a supplement of existing legislation with organizational and economic principles of creation of petroleum products stocks, creation of the institutional structure of its management, development of mechanisms and conditions of the formation, storage, use and rotation.

STATISTICS

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Directive 2008/92/EC concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users requires measures to develop a detailed statistical reporting system in companies supplying gas and electricity to end consumers. Regulation 1099/2008 on energy statistics specifies uniform framework conditions for receipt, transfer, evaluation and dissemination of energy statistics. According to the decision of the Energy Community Ministerial Council D/2013/02/MC-EnC, with the aim “to avoid gaps in data submissions to Eurostat”, Regulation 147/2013 is also applied.

In accordance with the Decision, Ukraine should have brought its legislation into conformity with both regulations by December 31, 2013. The commitments were incorporated into the national legislation with adoption by the Cabinet of Ministers of Ordinance No. 833-r, whereas December 1, 2013 was set as the deadline for the acquis in the field of statistics.

Also, on June 25, the State Statistics Service adopted a new reporting form “Monthly Report on Economic Indicators in Terms of Types of Economic Activity Related to the Mining Industry and Excavating of Quarries, Processing Industry, Electricity, Gas, Steam, Conditioned Air and Water Supply, Sewerage and Waste Treatment”2.

Competent authority may not claim significant progress in the implementation of commitments while specific information on the progress of implementation is not published

There is virtually no data in public sources on the implementation by Ukraine of the Action Plan on Energy Statistics3, approved on July 26, 2013 on the basis of Memorandum of Understanding signed with INOGATE4.

According to the State Statistics Service in its reply to the request for public information, the current system of statistical reporting indicators fully meets the requirements of Regulation 1099/2008, in particular, it concerns monthly reporting of production and consumption of primary fuels, as well as annual reports on production and consumption of fuels and energy (in kind).

The document covers the period of 2012-2015 and includes an assessment of the current legal and institutional framework, identifies gaps and shortcomings of the existing system, contains a description of the required activities and associated implementation plans. Among the goals mentioned, there are the following: strengthening institutional capacity, development of reporting systems based on international standards (IEA, Eurostat), calculation of energy balances, development of accounting in the energy and energy efficiency sector.

However, as to Directive 2008/92/EC (reporting of prices and tariffs), the State Statistics Service refers to the NERC, which is in charge of this information. The Service acknowledges that the regulator has aggregated information on the current prices of gas and electricity, without differentiation by consumer groups, and the question “is at the decision-making stage”. On July 29, the NERC published the draft Resolution “On Approval of Amendments to the the NERC Reporting Forms in the Oil and Gas Sectors and Instructions for Their Filling In”, developed to meet the requirements of the Law “On Amendments to Certain Legal Acts of Ukraine in order to Simplify Starting a Business”1. 1

Draft Resolution “On Approval of Amendments to the NERC Reporting Forms in the Oil and Gas Sectors and Instructions for Their Filling

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

In” // NERC, 29.07.2014. – http://www.nerc.gov.ua/?id=11517 2

Order No. 200 of June 25, 2014 “On Approval of the Form for State Statistical Observations No. 1-ПЕ (monthly) “Monthly Report on Economic Indicators in Terms of Types of Economic Activity Related to the Mining Industry and Excavating of Quarries, Processing Industry, Electricity, Gas, Steam, Conditioned Air and Water Supply, Sewerage and Waste Treatment””// State Statistics Service. – http://www. ukrstat.gov.ua/norm_doc/2014/200/200_2014.htm

Please refer to http://www3.inogate.org/media/documents/FINAL%20 ESAP_UA_ENG.pdf

lease refer to http://www3.inogate.org/media/documents/Ukraine_ P MoU_ENG%20and%20UA.pdf

STATISTICS

Intensity of international contacts remains high within INOGATE and Twinning projects and other international initiatives aimed at reforming the Ukrainian statistical area. In 2013-2014, the State Statistics Service will coordinate its actions with INOGATE and Eurostat to improve the annual data collection (e.g. energy consumption), estimation of monthly data, improvement of methodologies and procedures for collecting statistics on prices5. Basic mechanisms of interaction are study visits, consultations “on equal terms” gaining knowledge on best practices in other countries.

Conclusion The State Statistics Service may implement Directive 2008/92/EC and Regulation 1099/2008 within a short period of time. This is facilitated by international projects and technical assistance from the EU, as evidenced by extensive contacts of Ukrainian officials. However, there is no reason to talk about significant progress in building a system of energy statistics of the European type yet.

In April, the head of the State Statistics Service O. Osaulenko took part in the 11th meeting of the OECD Committee on Statistics and Statistical Policy6 and confirmed the agreement reached earlier between the State Statistics Service and the OECD on strengthening existing cooperation in the field of further European integration of Ukrainian statistics. Mr. O.Osaulenko also participated in regular plenary session of the Conference of European Statisticians7. Also, according to the Facebook messages of the Twinning Project “Support to the Process of Developing the State Statistics Service of Ukraine to Improve its Capacity and Production”8 for the recent months, 4 groups of experts from the State Statistics Service have been on study visits in France, Denmark and Lithuania. The project with a total budget of 1.5 mln EUR, which started in November 2013, is aimed at strengthening the institutional capacity of the State Statistics Service for the collection, processing and dissemination of statistical products in accordance with the acquis9. 5

Activities of the Energy Community in the Field of Energy Statistics in INOGATE Partner Countries // Energy Community Secretariat, 8.10.2013. – http://www3.inogate.org/media/documents/ECS%20 -%20EnC%20statistics%20and%20INOGATE_RUS.pdf

State Statistics Service Strengthens Cooperation with OECD Department of Statistics // Government Portal, 8.04.2014. – http://www. kmu.gov.ua/control/uk/publish/article?art_id=247187791&cat_ id=244277212

The head of the State Statistics Service Oleksandr Osaulenko Participated in a session of the Conference of European Statisticians // Government Portal, 11.04.2014. – http://www.kmu.gov.ua/control/ uk/publish/article?art_id=247200810&cat_id=244277212

Please refer to https://www.facebook.com/twinning.statistics

General Information on Twinning Project “Support to the Process of Developing the State Statistics Service of Ukraine to Improve its

Capacity and Production” // State Statistics Service. – http://www. ukrstat.gov.ua/menu/zmist_tvit_2.htm

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

COMPETITION

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

COMPETITION

Requirements to the legislation on competition are described in Chapter IV of Title II of the Treaty establishing the Energy Community . According to the document, the countries shall eliminate any conspiracy, concerted actions of market players that may distort or restrict competition in the market; block players from abusing their dominant market position; grant no public aid that would violate competition in the market.

In November 2012, in the framework of the Energy Community there was created the Competition Network (Energy Community Competition Network), which included representatives of the competition authorities of the member states of the Energy Community, the Antimonopoly Committee being Ukrainian representative for that matter1. The Network aims to become a platform for dialogue and exchange of experience2 that would help member states to adopt the relevant legislation quickly and efficiently, to cooperate with the investigation, to implement best practices. According to the report of the Antimonopoly Committee for 20133, Ukraine’s energy sector operates in a “moderately favourable” competitive environment. According to the findings of the Committee, 46.9% of the goods were traded on the markets with no structural restrictions of competition. Almost the same percentage of goods was sold in the markets with structural features of the dominance of one entity and fully monopolized markets, and 6.8% – in the markets with oligopolistic structure. Antimonopoly Committee identified most violations in the field of anticompetitive concerted practices and abuse of dominant position. Also, special attention was paid to the abuse of authority related to the accession to the electricity and gas networks – by abusing its monopoly position, they stopped the supply of energy without a reasonable basis, unfoundedly refused to provide supplies, and set special technical standards, which suppressed the rights of consumers. Gas supply companies 1

Please refer to http://www.energy-community.org/portal/page/portal/ENC_HOME/AREAS_OF_WORK/Competition/Network/Organisations

Joint Declaration on Cooperation between the Competition Authorities of the Contracting Parties and the Energy Community Secretariat on the establishment of an Energy Community Competition Network // Energy Community, 23.11.2012. – http://www.energy-community. org/pls/portal/docs/1816177.PDF

Report of the Antimonopoly Committee of Ukraine for 2013 // Antimonopoly Committee of Ukraine, 14.03.2014. – http://www.amc.gov. ua/amku/doccatalog/document?id=103172&schema=main

exceeded deadlines for the issuance of technical standards, issued unreasonable invoices for the works, stopped supplying gas to consumers. According to media reports4, in the first half of 2014, the Committee started an investigation against 16 gas distribution companies. The Committee also found unjustified price increases for fuel and filed cases against a number of networks of sale of petroleum products5. In 2013, the Antimonopoly Committee submitted to the Parliament a draft law on the approval of the National Program of Competition in Ukraine for 2014-2024 (registration No. 34066); however, the document was withdrawn on February 27, 2014. In addition, draft laws “On State Support to Business Entities” and amendments to the Law “On Protection of Economic Competition” developed by the Antimonopoly Committee weren’t approved either. In a broader context, it is necessary for the government and the AMC to comply with the recommendations of the expert review of the United Nations Conference on Trade and Development7. These changes are needed to strengthen the antimonopoly control instruments, including in regards to financial and industrial groups, final beneficiaries and others. In August 2014, Energy Community Secretariat issued a statement which required Ukraine to eliminate serious infringements of EU law on com4

Antimonopoly Committee of Ukraine Instituted 16 Investigations into the Activities of Gas Distribution Companies // UNN, 6.08.2014. – http://www.unn.com.ua/uk/news/1372892-amku-rozpochav-16-rozsliduvan-schodo-diyalnosti-gazorozpodilnikh-ridpriyemstv

Antimonopoly Committee of Ukraine Instituted an Investigations against Kolomoiskyi’s petrol stations // Ukrainski novyny [Ukrainian news], 13.08.2014. – http://ukranews.com/uk/news/economics/2014/08/13/132478

Draft Law No. 3406 of October 10, 2013 “On State Program on Competition in Ukraine for 2014-2024” // Verkhovna Rada of Ukraine. – http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=48634

nited Nations Conference on Trade and Development. Voluntary ExU pert Review of Competition Law and Competition Policy. Full Report 2013 // Antimonopoly Committee of Ukraine. – http://www.amc.gov. ua/amku/doccatalog/document;jsessionid=5D27AE1165C4B9EC386 96E3F52703F44.app3:1?id=98780&schema=main

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

petition in the contract between Naftogaz and Gazprom on gas supplies to Ukraine8. According to the findings of the Secretariat, some provisions of the agreement do not meet European legislation, in particular concerning the destination clause and the “take or pay” principle.

Energy Community requires that Ukraine should amend agreements between “Naftogaz” and “Gazprom” // energetyka [Ukrainian Energy], 8.08.2014. – http://ua-energy.org/post/46223

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Conclusion There are some steps to address the violations and abuses, and restore competition in the energy market, however, they are often very narrowly focused on certain segments, and do not affect the large scale abuses and major players. Antimonopoly Committee, for its part, has developed the necessary legislation to improve competition, but it has not yet been adopted at parliamentary level. Despite active public work of the Antimonopoly Committee, there is not enough information on its cooperation with the Energy Community Secretariat.

SOCIAL ISSUPS

SOCIAL ISSUES

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Memorandum of understanding on social issues in the context of the Energy Community Signatory countries undertake to promote effective social dialogue in the energy sector and will maintain it through information, consultations and other forms of involvement of social partners at all appropriate levels. The aim is to achieve the maximum possible levels of consumers’ social protection, suitable for viable competitive market and, if necessary, to apply the guarantees to the most vulnerable groups, and to improve the workers adaptation, support investment into human capital, life-long learning and promote mobility. In close cooperation with social partners, there should be developed a social action plan aimed at addressing these issues.

Tariffs increase for different categories of consumers Services Consumer category Tariff increase for households, for consumers, using up

Gas supply

to 2500 cubic meters annually for consumers, using 2500-6000 cubic meters annually for consumers, using over 6000 cubic meters annually households

Electricity supply other consumers (state-financed

Heat supply

organizations and industry) district heating enterprises

Tariff policy and social protection The new Ukrainian government had to start bringing tariffs for gas, heat and electricity to economically justified levels. Thus, natural gas tariffs were increased as of May 11, retail electricity tariffs – as of June 12, and tariffs for the services of heat supply for heating companies – as of July 1. As the Minister of Finance O. Shlapak informed, the government plans annual increase of gas price for households three more times – until 1

esolution No. 420 of April 3, 2014 “On Setting Retail Prices for Natural R Gas Used for Households Needs” // NERC. – http://www.nerc.gov.ua/ index.php?id=10635 NERC Corrects Tariffs on Electricity for Households to Economically Justified Level // NERC, 29.05.2014. – http://www.nerc.gov.ua/index. php?news=3805&pag=1

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

by 50%2 by 63% by 62% by 10-40% (depending on the size of consumption) by 4,8%4 on the average by 40%5

20173, and heat tariffs will rise during this period by 120%4. Meanwhile, the Ministry for Regional Development, Construction and Housing encouraged local self-government authorities to pursue a balanced approach to the issue of revision of tariffs for utility services5. According to the Ministry, the average compensation rates for the 3

Gas for households will increase in price in three stages till 2017– Ministry of Finance of Ukraine // Ukrainska energetyka [Ukrainian Energy], 2.04.2014. – http://ua-energy.org/post/42760

The government wants to raise tariffs on heat more than twice // Ukrainska energetyka [Ukrainian Energy], 31.03.2014. – http://uaenergy.org/post/42652

Government Enhances Social Protection in the Context of Increased Prices and Tariffs for Utility Services // Ministry for Regional Development, Building and Housing, 5.06.2014. – http://www.minregion. gov.ua/news/uryad-rosilyue-socialniy-zahist-naselennya-v-umovahridvischennya-cin-i-tarifiv-na-komunalni-roslugi-824483/

Despite the development of a system of compensations, the government failed to reorganize benefits in order to provide targeting in accordance with the IMF requirements In addition to the usual subsidies, the Resolution of the Cabinet of Ministers No. 83 “On Enhancement of Social Protection in the Context of Increased Prices and Tariffs for Utility Services”8, which came into force on 1 July 2014, introduced special compensation for additional costs for utilities. Compensation will be available to families whose average total income for the previous six months did not exceed the subsistence level 6

Daft Law “On Amendments to the Law of Ukraine “On Restructuring of Indebtedness for Rents, Payments for Utility Services, Consumed Gas and Electricity” // Ministry for Regional Development, Building and Housing, 5.06.2014. – http://www.minregion.gov.ua/regulatory/ proekty-reguljatornyh-aktiv-dlja-obgovorennja-ta-analizy-reguljatornogo-vplyvu/proekt-zakonu-ukrayini-rro-vnesennya-zmin-dozakonu-ukrayini-rro-restrukturizaciyu-zaborgovanosti-z-kvartirnoyirlati-rlati-za-z-908125/ Law of Ukraine No. 1198-VII of April 10, 2014 “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources” // Legislation of Ukraine. – http://zakon4.rada.gov. ua/laws/show/1198-18 Resolution of the Cabinet of Ministers of Ukraine No. 83 of April 5, 2014 “On Enhancement of Social Protection in the Context of Increased Prices and Tariffs for Utility Services” // Legislation of Ukraine. –http://zakon4.rada.gov.ua/laws/show/83-2014-%D0%BF

SOCIAL ISSUPS

actual cost of housing services are 78%. In early June, the Ministry for Regional Development, Construction and Housing also developed and published for public consultations a draft Law “On Amendments to the Law of Ukraine “On Restructuring of Indebtedness for Rents, Payments for Utility Services, Consumed Gas and Electricity” to “determine the mechanism of solving the problem of restructuring the indebtedness for housing and utility services, accumulated as of January 1, 2014”6. In addition, on April 10, in order to improve the payments for energy between natural monopolies, the Law No. 1198-VII “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources”7 was adopted, which entitles the National Commission for State Regulation of Public Utility Services to set tariffs for heat energy with account of heating services; to introduce transfer of resources for heat energy to the current accounts with special use of district heating and heat-generating organizations for payments for consumed gas.

for a family. Compensation will be calculated as the difference between the amount to be paid for the services after the increase of payments and the payment which the family paid before the changes. Compensation will be provided from the month of the relevant application with the request therefore and to the end of the heating 2014-2015 period; and taking into account the fact that gas prices increased from May 19, compensation may optionally be appointed in May. Compensation will not be granted in cash, but will immediately be transferred to the account of the beneficiary10. According to the estimates of the government, this year, 1 million low-income families will benefit from subsidies, whereas 3.5 million more families will have special compensation for additional costs for utilities11. Social Dialogue The Ministry of Social Policy of Ukraine declared its determination to have a dialogue with trade unions and social partners12. In particular, the Minister L. Denisova became a head of the National Trilateral Social and Economic Council13, which was created at the suggestion of national trade unions, employers’ associations and the Cabinet of Ministers as an advisory body under the President of Ukraine. The Ministry of Social Policy also signed a Memorandum of understanding on co-operation with the project “Municipal Energy Reform in Ukraine” by 30 September 201714. The 9

Ministry of Social Policy of Ukraine: From 1 July and onwards there Functions the Mechanism of Compensation of Housing and Utility Services // Ministry of Social Policy of Ukraine, 1.07.2014. – http://www.mlsp.gov.ua/labour/control/uk/publish/article?art_ id=163180&cat_id=107177

Ministry of Social Policy of Ukraine: Payment Documents will contain the Sum for Utility Services with account of Compensation, 3.06.2014. – http://www.mlsp.gov.ua/labour/control/uk/publish/ article?art_id=162184&cat_id=107177

Bilousov: the Government takes Measures to Enhance Social ProA tection in the Context of Increased Tariffs // Ministry for Regional Development, Building and Housing, 13.05.2014. – http://minregion. gov.ua/news/a-bilousov--uryad-vzhivae-zahodi-dlya-rosilennyasoczahistu-naselennya-v-umovah-ridvischennya-tarifiv-448348/

Ministry of Social Policy of Ukraine will continue to enhance cooperation with social partners // Ministry of Social Policy of Ukraine 16.06.2014. – http://www.mlsp.gov.ua/labour/control/uk/publish/ article?art_id=162577&cat_id=107177

Liudmyla Denisova was appointed the Head of the National Threerarty Social and Economic Council // Ministry of Social Policy of Ukraine, 4.07.2014. – http://www.mlsp.gov.ua/labour/control/uk/ publish/article?art_id=163382&cat_id=107177

Ministry of Social Policy of Ukraine and the Project “Municipal Energy Reform in Ukraine” signed the Memorandum of understanding // Ministry of Social Policy of Ukraine, 24.06.2014. – http://www.

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Memorandum provides for measures to improve the mechanisms of social protection of consumers of utility services, promote energy efficiency measures, etc. The Ministry of Social Policy also informed on a large number of information activities15 in regard with the compensation program, in particular, information thereon was instructed to be put on the bills, as well as on the development of the relevant software. However, the information on the consultations with the public on the Social Action Plan was not available in public sources. At the same time, in response to an information request, the Ministry of Social Policy provided information on the implementation of the Action Plan for the implementation of the Memorandum of Understanding on social issues in the framework of the Energy Community. In the open sources, there couldn’t be found the Action Plan itself, although as early as in May, trade union representatives reported that they developed proposals to be included in the draft Plan, and the First Deputy Minister of the Cabinet of Ministers O. Parakuda instructed the Ministry of Social Policy, the Ministry of Economic Development and Trade, the Ministry of Finance, and the Ministry of Energy and Coal Industry to involve parties of the social dialogue16. Judging from the Progress of the Implementation of the Action Plan, provided by the Ministry of Social Policy, the following are defined as measures for the implementation of the Memorandum:

• analysis

and determination of priority needs in the development of social dialogue at the local government level,

• identifying communities at the local lev-

el, for which energy reforms may cause major social consequences,

• conducting

pre-emptive measures in

mlsp.gov.ua/labour/control/uk/publish/article?art_id=162978&cat_ id=107177 15

Liudmyla Denisova: the IMF praised Ukraine’s preparations for introduction of the new compensation program // Ministry of Social Policy of Ukraine 1.07.2014. – http://www.mlsp.gov.ua/labour/control/uk/publish/article?art_id=163170&cat_id=107177 Trade unions initiate participation of social partners in the development of the national economic and social policy // National Threerarty Social and Economic Council, 7.05.2014. – http://www.ntser. gov.ua/page6/page27/93

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

regard to the employees who fall under the mass dismissal as a result of reforms in the energy sector; development of schemes for redistribution to other sectors of the workforce dismissed as a result of energy sector reforms,

• implementation of programs of retraining, professional development, internships to improve the skills and abilities of workers who lost or may lose their jobs,

• improving the system of retraining and professional development in higher and vocational educational establishments and at the places of production to implement the principle of lifelong learning,

• ensuring

productive employment of the working population of the satellite towns of nuclear power plants,

• widespread adoption of modular technology of vocational training at the places of production,

• ensuring

the development of professional standards and upgrading qualification characteristics by the employers in energy sector as a basis for updating national standards for vocational education,

• establishment on the basis of specialized vocational educational institutions of the centres for innovative technologies in the field of energy and coal industries,

• development

and implementation of measures to promote entrepreneurship, aimed at specific target groups,

• analysis of the existing European prac-

tices of developing an integrated system and effective mechanisms of social support for employees,

• development

of comprehensive programs for creating a system of social support in different segments of energy sector,

• development

of effective mechanisms for “connecting” skilled personnel to the nuclear industry,

• development of programs for the crea-

• introduction

of programs for the development of mono-industrial satellite towns of nuclear, thermal and hydro power plants, and development of local action plans to mitigate the social consequences for communities experiencing the negative consequences of reforming the energy sector.

However, according to the information provided by the Ministry of Social Policy, among the parties to the social dialogue there mostly appear trade union representatives, while as to ensure transparency and publicity, the documents should at least be published on the Ministry’s website and representatives of other NGOs should be invited to work on this issue. The Ministry of Social Policy informed about the meeting on April 24 chaired by the Prime Minister concerning the activities of the funds of obligatory state social insurance, as well as the meetings on April 30 and May 27 with representatives of the Ministry of Social Policy in cooperation with the representatives of the Ministry of Energy and Coal Industry, the Ministry of Economic Development and Trade and the State Employment Service concerning the draft action plan to encourage employers to maintain and create jobs in the context of anticipated increase in unemployment. All regional state administrations and the Kyiv City State Administration submitted their proposals to the Action Plan, which was submitted for approval to the Cabinet of Ministers. According to the Ministry, among the planned measures there are the following: improvement of criteria for mass dismissal; intensification of the work of special committees; introduction of monitoring over the planned dismissal during the structural optimization of coal industry enterprises; development of longterm and short-term plans for socio-economic development of the regions with great concentration of coal industry enterprises. In addition, the Ministry reported on the existence of a working group within the Ministry of Energy and Coal Industry on development of the program to reform the coal industry, which includes repre-

SOCIAL ISSUPS

tion/renewal of social infrastructure to meet the needs of the regions,

sentatives of the Ministry of Social Policy and the State Employment Service. In addition, the Ministry of Social Policy informed about continuous measures of the State Employment Service on vocational guidance of the dismissed employees – about 3 thousand measures during 2013, involving over 75 thousand people. In addition, since 2013, the State Employment Service has been implementing training programs for people aged over 45 on the basis of vouchers. During January – April 2014 on the basis of the training assignment of the State Employment Service, 106.5 thousand registered unemployed people were given vocational training. The Ministry also informed on the work on recognition of informal vocational training – organization of relevant workshops with specialists from regional employment centres, development of recommendations as to approaches to the provision of services, promotion of public awareness about the list of professions, development of requirements to organizations as well as of the procedure for the establishment of committees. Employment rate increased from 59.7% in 2012 to 60.3% in 2013. The World Bank will provide Ukraine with a 300 mln USD loan for the implementation of the project “Modernization of the Social Support System in Ukraine”17, in particular for the expansion of targeted social assistance programs. It is expected that the number of people who receive state social assistance will double – from 586 thousand in 2013 to 1.1 million in 2019. Also, in four regions, orphans and orphan children with disabilities will be able to receive a number of social benefits. The project will last for six years. In its Ordinance No. 478-r of May 16, 201418, the Cabinet of Ministers determined it appropriate to attract loans from the International Bank for Reconstruction and Development for the Project “Modernization of the Social Support System in Ukraine”, and in 17

The World Bank will Provide Ukraine with a Loan in the Amount of USD 300 Million for Social Support to the Population // Yevropeiska pravda, 4.07.2014. – http://www.eurointegration.com.ua/ news/2014/07/4/7023928/

Ordinance No. 478-r of May 16, 2014 “On Involvement of Loan Funds from the International Bank for Reconstruction and Development for the Implementation of the Project “Modernization of the Social Support System in Ukraine”” // Legislation of Ukraine. – http://zakon2. rada.gov.ua/laws/show/478-2014-%D1%80

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

the Ordinance No.880/2014-rp of May, 22 201419, the President formed a delegation to participate in negotiations with the World Bank and approved the relevant directives.

Ordinance No. 880/2014-rp of May 22, 2014 “On Delegation of Ukraine to Participate in Negotiations with the International Bank for Reconstruction and Development concerning the Loan Agreement (“Modernization of Social Support Ukraine” Project) between Ukraine and the International Bank for Reconstruction and Development” // Legislation of Ukraine. – http://zakon4.rada.gov.ua/laws/ show/880/2014-%D1%80%D0%BF

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Conclusion Despite the fairly sharp increase in tariffs and a great need in social dialogue, the government has not yet engaged all the mechanisms offered by the Energy Community at their full capacity. Naturally, in the state of military aggression, annexation of the territory of Ukraine and the appearance of internal migrants, the Ministry of Social Policy has been overwhelmed with a very important and responsible part of work; however, in the context of implementing the obligations in the Energy Community, and in conditions of great importance of providing with energy supplies and tariffs for housing and utility services, and in order to build a full-fledged social dialogue, there is a need in a greater openness of the implementation process as well as in the involvement of a wider range of participants to the dialogue.

REFERENCE TO LAWS AND REGULATIONS

REFERENCE TO LAWS AND REGULATIONS Energy Community

Cabinet of Ministers of Ukraine

•

Treaty establishing the Energy Community

•

Joint Declaration on Cooperation between the Competition Authorities of the Contracting Parties and the Energy Community Secretariat on the establishment of an Energy Community Competition Network

Resolution No. 927 of August 1, 2013 “On Approval of the Technical Regulation on Requirements to Motor Petroleum, Diesel, Marine and Boiler Fuel”

•

Resolution No. 81 of March 25, 2014 “On Improving State Regulation Policy of Natural Gas Prices and Heating Energy Tariffs and on Providing With Enhanced Social Security of Population when Paying for Housing and Public Utility Services”

•

Resolution No. 83 of April 5, 2014 “On Enhancement of Social Protection in the Context of Increased Prices and Tariffs for Utility Services”

•

Resolution No. 138 of May 7, 2014 “Certain Issues of Performance of National Joint Stock Company “Naftogaz of Ukraine””

•

Resolution No. 148 of May 7, 2014 “On Peculiarities of Regulation in Energy Sector on Temporary Occupied Territory of Autonomous Republic of Crimea and the City of Sevastopol”

•

Resolution No. 149 of May 21, 2014 “On Improvement of the State Policy in Regulation of Tariffs for Electricity Sold to Households and Other Consumers to Which Such Tariffs Apply”

•

Resolution No. 151 of May 29, 2014 “On Increasing the Equity Capital of the National Joint Stock Company “Naftogaz of Ukraine””

•

11th Energy Community Ministerial Council. Meeting Conclusions. Belgrade, 24th October 2013.

•

Impact Assessment of the Energy Efficiency Directive (2012/27/EU) for the Energy Community. DecisionWare Group, July 2014.

•

5th Energy Efficiency Coordination Group. Meeting Conclusions

President of Ukraine •

•

Decree No. 25/2014 of January 20, 2014 “On the Appointment of O.Taran to the Position of the Head of the State Agency for Energy Efficiency and Energy Saving of Ukraine” Decree No. 448/2014 of May 1, 2014 “On the Decision of the National Security and Defence Council of Ukraine of April 28, 2014 “On Situation on Providing with Energy Security in Connection with the Status of Natural Gas Supply to Ukraine”

•

Decree No. 692/2014 of August 27, 2014 “On Liquidation of the National Commission on State Regulation of Utility Services”

•

Resolution No. 165 of June 4, 2014 “On Certain Issues of the Use of Funds for the Implementation of Energy Efficiency and Energy Saving in 2014”

•

Decree No. 693/2014 of August 27, 2014 “On Liquidation of the National Energy Regulatory Commission of Ukraine”

•

Resolution No. 172 of June 4, 2014 “On Urgent Actions for Reforming Management System of Integrated Gas Transmission System”

•

Decree No. 694/2014 of August 27, 2014 “On the National Commission for State Energy and Public Utilities Regulation”

•

Decree No. 695/2014 of August 27, 2014 “On Appointment of Members of the National Commission of Ukraine for State Energy and Public Utilities Regulation”

Resolution No. 214 of June 25, 2014 “On Certain Measures of Providing Financial Control Over Performance of Entities of Public Sector of Economy”

•

Resolution No. 217 of June 18, 2014 “On Approval of the Procedure for Distribution of Funds Received to the Current Accounts With Special Conditions of Use for Settlements With Guaranteed Natural Gas Suppliers”

•

Resolution No. 253 of June 25, 2014 “On Amendments to the Technical Regulation on Requirements to Motor Petroleum, Diesel, Marine and Boiler Fuel”

•

Resolution No. 293 of July 9, 2014 “On Encouraging the Replacement of Natural Gas in Heat Supply Sector”

•

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

•

Resolution No. 302 of August 4, 2014 “On Increasing the Equity Capital of the National Joint Stock Company “Naftogaz of Ukraine””

•

Resolution No. 346 of August 13, 2014 “On Government Office for European Integration”

•

Resolution No. 392 of August 20, 2014 “On Amendments to point 3 of Resolution of the Cabinet of Ministers No. 302 of August 4, 2014”

•

Ordinance No. 1498-r of December 8, 2009 “On Approval of the Concept for Creating Minimum Stocks of Crude Oil and Petroleum Products in Ukraine for the Period until 2020”

•

Ordinance No. 790-r of August 17, 2011 “On Approval of the Action Plan on Implementation of National Program of Approximation of Ukrainian Legislation to that of the European Union in 2011” Ordinance No. 525-r of August 1, 2012 “On Approval of the Action Plan for the Reduction of Sulphur Content in Some Types of Liquid Fuel According to the Requirements of Directive 1999/32/EC” Ordinance No. 833-r of October 23, 2013 “On Amendments to the Action Plan on Implementation of Commitments within the Framework of the Treaty Establishing the Energy Community”

of the State Agency for Energy Efficiency and Energy Saving of Ukraine” •

Ordinance No. 667-r of July 17, 2014 “On Approval of the List of State Property Objects Subject to Privatization in 2014”

•

Ordinance No. 758-r of August 20, 2014 “On the Appointment of S.D.Savchuk to the Position of the Head of the State Agency for Energy Efficiency and Energy Saving of Ukraine”

•

Ordinance No. 786-r of August 20, 2014 “On Establishment of Interagency Working Group on Recovery of Accounts Receivable from Natural Gas Consumers and Improvement of Financial Situation of National Joint Stock Company “Naftogaz of Ukraine””

•

Ordinance No. 791-r of September 3, 2014 “On Approval of Action Plan for Implementation of the Directive 2009/28/EC of the European Parliament and of the Council”

•

Draft Ordinance “On Approval of Action Plans on Implementation of Directive 2006/32/EC, Directive 2010/31/EC and Directive 2010/30/EC”

•

Draft Ordinance “On Approval of the National Action Plan for Energy Efficiency by 2020 and Adoption of the Action Plan on its Implementation”

The Verkhovna Rada of Ukraine •

Law of Ukraine No. 3038-VI of February 17, 2011 “On Regulation of Urban Construction Activity”

•

Law of Ukraine No. 4970-VI of June 19, 2012 “On Amendments to Certain Laws of Ukraine Regarding Production and Use of Motor Fuels Containing Bio-components”

•

Law of Ukraine No. 1166-VII of March 27, 2014 “On Prevention of Financial Meltdown and Creation of Conditions for Economic Growth in Ukraine”

•

Ordinance No. 1020-r of December 23, 2013 “On the Signing the Agreement to Fund the Program “Maintenance of Support in the Implementation of the Energy Strategy of Ukraine””

•

Ordinance No. 296-r of March 19, 2014 “On Attraction of Loan Funds from the International Bank for Reconstruction and Development for the Implementation of the Investment Project “Improving Energy Efficiency in the District Heating Sector of Ukraine””

•

Law of Ukraine No. 1193-VII of April 9, 2014 “On Amendments to Certain Legal Acts of Ukraine Regarding the Quantity Reduction of Permits”

•

Ordinance No. 589-r of June 18, 2014 “On Improvement of System of Settlements for Electricity Generated from Alternative Energy Sources”

Law of Ukraine No. 1198-VII of April 10, 2014 “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources”

•

Law of Ukraine No. 1258-VII of May 15, 2014 “On Ratification of Guarantee Agreement Between Ukraine, as a Guarantor, and the European Atomic Energy Community, as a Loaner, on the

•

Resolution No. 296 of July 9, 2014 “Certain Issues of Providing Households, Enterprises, Entities and Organizations with Natural Gas Until the End of Heating 2014/15 Season”

Ordinance No. 631-r of July 9, 2014 “ On the Dismissal of O.Taran from the Position of the Head

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

•

Law of Ukraine No. 1267-VII of May 15, 2014 “On Ratification of Guarantee Agreement (Ukraine: Comprehensive (Overall) Program of Improving the Safety of Power-Generating Units at Nuclear Power Plants) Between Ukraine and the European Bank for Reconstruction and Development”

•

Law of Ukraine No. 1621-VII of July 31, 2014 “On Amendments to the Tax Code of Ukraine and some other Legal Acts of Ukraine”

•

Draft Law “On Amendments to Certain Laws of Ukraine on Implementation of Provisions of the Convention on Environmental Impact Assessment in a Transboundary Context”, registration No. 2109а of May 23, 2013

•

Draft Law “On Amendments to Point 9 of Section II “Final Provisions” of the Law of Ukraine “On Amendments to Certain Legal Acts of Ukraine” (Regarding Exportation of Energy Resources to Member States of the Energy Community)”, registration No. 2471a of July 2, 2013

•

Draft Law “On Efficient Use of Fuel and Energy Resources”, registration No. 3071 of August 12, 2013

•

Draft Law “On State Regulation of Energy Sector”, registration No. 3095 of August 16, 2013

•

Draft Law “On State Program on Competition in Ukraine for 2014-2024”, registration No. 3406 of 10 October 2013

•

Draft Law “On Strategic Environmental Assessment”, registration No. 3758 of December 16, 2013

•

Draft Law “On Amendments to Article 197 of the Tax Code of Ukraine (Regarding Taxation of Operations on Importation of Natural Gas into Ukrainian Customs Territory)”, registration No. 3853 of January 8, 2014

•

Draft Law “On Amendments to Article 197 of the Tax Code of Ukraine (Regarding Taxation of Operations on Importation of Natural Gas into Ukrainian Customs Territory”, registration No. 3853-1 of January 14, 2014

•

Draft Law “On Amendments to Certain Legal Acts of Ukraine Concerning the Protection of Wildlife”, registration No. 4004 of January 21, 2014

•

Draft Law “On Repealing the Law of Ukraine “On Amendments to Article 197 of the Tax Code of Ukraine Regarding Exemption of Operations on Importation of Natural Gas into Ukrainian Customs Territory from VAT Taxation”, registration No. 4025 of January 27, 2014

•

Draft Law “On Amendments to Article 197 of the Tax Code of Ukraine Regarding Exemption of Operations on Importation of Natural Gas into Ukrainian Customs Territory from VAT Taxation”, registration No. 4039 of January 28, 2014

•

Draft Law “On Amendments to the Law of Ukraine “On Electricity” (Regarding Improvement of Electricity Consumers’ and Suppliers’ Situation”, registration No. 4106 of February 6, 2014

•

Draft Law “On Amendments to Certain Laws of Ukraine Regarding Reforming of Management System of Integrated Gas Transmission System of Ukraine”, registration No. 4116a of June 18, 2014

•

Draft Law “On Special Period in Fuel and Energy Sector”, registration No. 4117 of June 18, 2014

•

Draft Law “On Amendments to the Tax Code of Ukraine and Certain Other Legal Acts of Ukraine (Regarding Improvement of Certain Provisions”), registration No. 4309a of July 21, 2014

•

Draft Law “On Amendments to the Tax Code of Ukraine Regarding VAT Taxation of Natural Gas”, registration No. 4397 of March 11, 2014

•

Draft Law “On Amendments to Article 197 of the Tax Code of Ukraine Regarding Exemption from VAT Taxation of Operations on Importation of Natural Gas into Ukrainian Customs Territory Imported by Entity of Creation of Natural Gas Resource for Ukrainian Households and Consumers Authorized by the Government”, registration No. 4397-1 of March 17, 2014

•

Draft Law “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources and for Repayment of Loans Received from International Finance Organizations”, registration No. 4557a of August 29, 2014 UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

REFERENCE TO LAWS AND REGULATIONS

Agreement of Mechanism of Granting a Loan in the Amount of EUR 300 million (Three Hundred Million), Dated August 7, 2013, Between the National Nuclear Energy Generating Company “Energoatom” and the European Atomic Energy Community for Implementation of the Comprehensive (Overall) Program of Improving the Safety of Power-Generating Units at Nuclear Power Plants”

•

Amendments to Certain Legal Acts of Ukraine Concerning the Protection of Biodiversity” •

Resolution No. 1610-VII of July 23, 2014 “On Establishment of Provisional Investigatory Commission of the Verkhovna Rada of Ukraine for Verification of Compliance With the Legislation in the Field of State Regulation of Natural Monopolies and Related Markets in Energy, Heat and Water Supply Sectors”

•

Draft Law “On Amendments to Certain Laws of Ukraine on Preventing Bankruptcy and Stabilization of Work of Entities in Energy Sector”, registration No. 4566-1 of March 26, 2014

•

Draft Law “On Amendments to the Law of Ukraine “On State Budget of Ukraine for 2014””, registration No. 4575 of March 27, 2014

•

Minutes of the Meeting of the Verkhovna Rada Committee on Fuel and Energy Sector, Nuclear Policy and Nuclear Safety No. 23 of July 2, 2014

•

Draft Law “On Prevention of Financial Meltdown and Creation of Conditions for Economic Growth in Ukraine”, registration No. 4576 of March 27, 2014

•

Minutes of the Meeting of the Verkhovna Rada Committee on Fuel and Energy Sector, Nuclear Policy and Nuclear Safety No. 24 of July 23, 2014

•

Draft Law “On Amendments to the Forest Code and Land Code of Ukraine (on Strengthening Measures to Protect Forests)”, registration No. 4568 of March 26, 2014

Minutes of the Meeting of the Verkhovna Rada Committee on Fuel and Energy Sector, Nuclear Policy and Nuclear Safety No. 25 of August 11, 2014

•

Draft Law “On Amendments to the Law of Ukraine “On Electricity” (Regarding Encouragement of Production of Electricity Using Alternative Sources of Energy)”, registration No. 4596 of March 27, 2014

•

Draft Law “On Amendments to Certain Laws of Ukraine Regarding Arrangement of Determination and Repayment of Liabilities Arisen Due to Incomplete Payments for Energy Resources”, registration No. 4566 of March 26, 2014

Draft Law “On Amendments to Certain Laws of Ukraine (Regarding Improvement of Settlements for Energy Resources)”, registration No. 4644 of April 7, 2014

Ministry of Energy and Coal Industry •

Order No. 227 of February, 26 2014 “On Organization of Work of the Ministry of Energy and Coal Industry of Ukraine for the Implementation of the Law of Ukraine “On Principles of the Electricity Market Operation in Ukraine””

•

Order No. 237 of March 11, 2014 “On Urgent Actions for Stabilization of Financial Situation of the Sector and Corruption Prevention”

•

Order No. 413 of June 4, 2014 “On the Approval of the Procedure for Defining Available Transfer Capacity of Interstate Electric Networks of Ukrainian Bulk Electricity System”

•

Draft Law “On Amendments to the Tax Code of Ukraine and Certain Other Legal Acts of Ukraine Regarding Elimination of Specific Discrepancies in Legal Provisions”, registration No. 4645 of April 7, 2014

•

Draft Law “On Amendments to Certain Laws of Ukraine Regarding Improvement of Settlements for Energy Resources”, registration No. 4671 of April 9, 2014

•

Order No. 409 of June 4, 2014 “On Providing With the Implementation of the Project of connection of United Power System of Ukraine to electricity interconnections of EU Member States”

•

Draft Law “On Amendments to Certain Legal Acts of Ukraine (regarding protection of fauna, flora and on Stepping up the Fight Against Poaching)”, registration No. 4823 of May 6, 2014

•

Draft Law “On Amendments to Article 17-3 of the Law “On Electricity” Regarding Improvement of Conditions for Electricity Production Using Wind”, registration No. 4856 of May 13, 2014

Order No.450 of June 17, 2014 “On Adoption of Regulations for Standing Commission on Administration of State Property Included in Administrative Management Domain of the Ministry of Energy and Coal Industry, and of Property of Business Entities in Respect of Which the Ministry of Energy and Coal Industry Provides Management of Equity Rights of the State, and Composition of the Standing Commission”

•

Draft Law “On Environmental Impact Assessment”, registration No. 4972 of May 30, 2014

•

Resolution No. 1516-VII of June 18, 2014 “On Approval in Principle of the Draft Law of Ukraine on

Order No. 481 of June 27, 2014 “On Establishment of Interagency Working Group on Replacement of Natural Gas with Other Fuel Types”

•

Order No. 542 of August 4, 2014 “On Amend-

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

Resolution No. 1722 of December 26, 2013 “On Approval of Amendments to the Procedure of Access and Connection to the United Gas Transportation System of Ukraine”

•

Resolution No. 28 of January 16, 2014 “On Introduction of Feed-in Tariff for Private Households”

•

Resolution No. 170 of February 27, 2014 “Procedure for Selling, Metering and Settlements for Electricity Generated with the use of Solar Energy by Electricity Facilities (Generating Units) in Private Households”

•

Resolution No. 352 of March 31, 2014 “On Setting Marginal Price Level for Natural Gas for Entities and Organizations Financed by State and Local Budgets”

•

Resolution No. 353 of March 31, 2014 “On Setting Marginal Price Level for Natural Gas for Industrial Consumers and Other Entities”

•

Resolution No. 420 of April 3, 2014 “On Setting Retail Prices for Natural Gas Used for Households Needs”

•

Draft Law “On Amendments to Article 2 of the Law of Ukraine “On Alternative Fuels””

Resolution No. 749 of May 23, 2014 “On Amendments to Tariffs for Electricity Sold to Households”

•

Draft Resolution of the Cabinet of Ministers “On Approval of the Procedure for Distribution of Funds Received to the Current Accounts of Guaranteed Natural Gas Suppliers With Special Conditions of Use”

Resolution No. 757 of May 27, 2014 “On Establishment of Retail Electricity Tariffs for June 2014 Considering Marginal Tariff Levels in Gradual Transition to Setting Single Retail Tariffs for Consumers on Ukrainian Territory”

•

Resolution No. 931 of June 27, 2014 “On Establishment of Feed-in Tariffs for Electricity”

•

Order of the the NERC No. 683 of December 31, 2013 “On Adoption of the Tentative Plan of Holding Consultations with Public in the National Commission Providing With the State Regulation in Energy Sector, for 2014”

•

Letter No. 1563/17/47-14 of March 14, 2014 to Licensees Pursuing Business of Natural Gas Distribution and Supply of Natural Gas as per Regulated Tariff

•

Draft Resolution “On Approval of the Procedure of Holding Online Auctions on Distribution of Transmission Capacities of Interstate Electric Networks”

•

Draft Resolution “On Approval of the Procedure for Selling, Metering and Settlements for Electricity Generated with the Use of Solar Energy by Electricity Facilities (Generating Units) in Private Households”

•

Draft Resolution “On Amendments to the Procedure of Application of Electricity Tariffs”

Order No. 565 of August 14, 2014 “On Amendments to Order of the Ministry of Energy and Coal Industry No.999 of December 24, 2013” Order No. 568 of August 18, 2014 “On Amendments to Order of the Ministry of Energy and Coal Industry No.998 of December 24, 2013” Order No. 573 of August 20, 2014 “On the Creation of the Working Group on Detection and Resolution of Problems of Application of the Regulation on the Requirements to Motor Petroleum, Diesel, Marine and Boiler Fuel” Order No. 582 of August 20, 2014 “On Cancellation of Certain Orders of the Ministry of Energy and Coal Industry”

•

Order No. 583 of August 20, 2014 “On the Procedure for the selection of laboratories”

•

Order No. 590 of August 21, 2014 “On Approval of the Draft Decision of the General Meeting of Shareholders of Public Joint-Stock Company “Ukrtransgaz””

• •

•

Draft Order of the Ministry of Energy and Coal Industry “On Approval of the Procedure for the Selection of Laboratories (Centres) Testing Petrol and Fuels Quality (Diesel, Marine and Boiler)” Draft Order of the Ministry of Energy and Coal Industry “On Approval of the Procedure for Development by the System Operator of a Plan for Development of Ukrainian Bulk Electricity System for the Next Ten Years, and the Procedure for its Publication” Draft Order of the Ministry of Energy and Coal Industry “ On the Procedure for the Development and Implementation of the Projects for Thermal Power Plants Reconstruction”

NERC •

Resolution No. 75 of March 31, 2013 “On Amendments to the NERC Resolution No. 420 of April 19, 2012”

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

REFERENCE TO LAWS AND REGULATIONS

•

ments to Order of the Ministry of Energy and Coal Industry No.2 of January 3, 2013”

•

Draft Resolution “On Adoption of Amendments to the Procedure for Setting, Review and Suspension of Feed-in Tariff for Entities”

•

Draft Resolution “On Approval of Amendments to the the NERC Reporting Forms in the Oil and Gas Sectors and Instructions for Their Filling In”

•

Draft Resolution “On Approval of Amendments to the NERC Reporting Forms in Electricity and Heat Supply Sectors and Instructions for Their Filling In”

Draft Law “On Specifics of the Energy Services Procurement”

•

Memorandum of Understanding on the Cooperation with the Project “Municipal Energy Reform in Ukraine”

Ministry of Environment and Natural Resources •

Order No. 541 of October 22, 2008 “On Adoption of New Technological Standards for Permissible Emissions of Pollutants from Thermal Power Plants, with the Nominal Thermal Capacity over 50 MW”

•

Order No. 659 of December 17, 2012 “On approval of the Basic plan of Adaptation of Ukrainian Environmental Law to the EU Law (Baseline approximation plan)”

•

Draft Law “On Amendments to the Law of Ukraine “On Natural Reserve Fund of Ukraine” Regarding its Bringing into Compliance with the Law of Ukraine “On Administrative Services” and “On Permitting Activities in the Sphere of Business Activity”

•

Draft Resolution “On Approval of the List of Activities and Objects, which Pose Increased Environmental Danger”

Draft Resolution “On Approval of License Terms for Business Activities Related to Supply of Natural Gas, Gas (Methane) of Coal Deposits as per Regulated Tariff”

•

Draft Order “On approval of the Concept of fighting with land degradation and desertification”

•

Draft Order “On Approval of the Reference Form of the Permit for Pollutant Emissions into the Atmosphere from Stationary Sources”

Ministry for Regional Development, Construction and Housing

•

Draft Order “On Amendments to the Instruction on General Requirements to Documents, Containing Substantiation of the Volumes of Emissions, to Receive the Permit for Pollutant Emissions into the Atmosphere from Stationary Sources for Enterprises, Institutions, Organizations and Private Entrepreneurs”

•

Information on the State of Compliance of Ukrainian Legislation with Council Directive 79/409/EEC of April 2, 1979 on the conservation of wild birds

•

Draft Resolution “On Approval of Amendments to the Procedure for Electric Facilities Connection to Electricity Networks”

•

Draft Resolution “On Amendments to the Procedure for Calculation of Payment for Connection of Electric Facilities to Electricity Networks”

•

Draft Resolution “On Amending the Resolution of the National Energy Regulatory Commission No. 15 of June 13, 1996”

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Draft Resolution “On Amendments to the NERC Resolution No. 1665 of December 20, 2012”

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Draft Resolution “On Approval of Amendments to the Procedure for Distribution of Funds Received to the Current Accounts of Guaranteed Natural Gas Suppliers With Special Conditions of Use”

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Order No. 135 of May 12, 2014 “On Adoption of Amendment No. 1 to the State Standard of Ukraine DSTU-N B V.1.2-16:2013”. Establishment of Class of Consequences (Responsibility) and Category of Difficulty of Construction Object”

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Draft Law “On Amendments to the Law of Ukraine “On Restructuring of Indebtedness for Rents, Payments for Utility Services, Consumed Gas and Electricity”

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Draft Law “On Energy Efficiency of Buildings”

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Draft Law “On Amendments to the Budget Code of Ukraine (Concerning the Implementation of Energy Efficiency Measures in Public Institutions)”

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Draft Law “On Amendments to the Law of Ukraine “On Energy Saving” Concerning the Legal Basis for the Implementation of Energy Service Contracts”

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

State Agency on Energy Efficiency and Energy Saving •

Draft Action Plan on the implementation of the National Action Plan for Energy Efficiency by 2020

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The Tentative Plan of the State Agency on Energy Efficiency and Energy Saving of Public Consultations for 2014

Explanatory Note to the Draft Ordinance of the Cabinet of Ministers “On Approval of the National Action Plan for Energy Efficiency by 2020 and Adoption of the Action Plan on its Implementation”

Miscellaneous •

Energy Strategy of Ukraine by 2030 (new edition of 2013)

• Report of the Antimonopoly Committee of Ukraine for 2013 •

National Energy Statistics Action Plan for Ukraine

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State Statistics Service Order No. 200 of June 25, 2014 “On Approval of the Form for State Statistical Observations No. 1-PE (monthly) “Monthly Report on Economic Indicators in Terms of Types of Economic Activity Related to the Mining Industry and Excavating of Quarries, Processing Industry, Electricity, Gas, Steam, Conditioned Air and Water Supply, Sewerage and Waste Treatment”

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National Strategy for the Implementation of the Association Agreement with the EU in the field of Environmental Protection

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UN Economic and Social Council. Meeting of the Parties to the Convention on Environmental Impact Assessment in a Transboundary Context, Sixth session (Geneva, 2–5 June 2014). Decision on the review of compliance with the Convention.

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UN Economic and Social Council. Meeting of the Parties to the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, Fifth session (Maastricht, 30 June and 1 July 2014). Decision V/9n concerning compliance by Ukraine with its obligations under the Convention

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?

REFERENCE TO LAWS AND REGULATIONS

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The Energy Reforms coalition is an association of leading experts, think tanks and NGOs, established to enhance the effectiveness of the Ukrainian civil society efforts to advance reforms within Ukraineâ&#x20AC;&#x2122;s commitments in the Energy Community. The coalition monitors implementation of these commitments, builds political dialogue with key stakeholders, representatives and executive authorities, and develops an Energy Reforms Roadmap with specific proposals regarding relevant changes. For more information about our activities, please visit the Energy Reforms website (http://enref.org/) Members of the coalition:

Natalia Andrusevych

Chairman of the Board, Resource & Analysis Centre "Society and Environment"

Maryana Bulgakova

Director, Expert Advisory Centre "Legal Analytics"

Ildar Gazizullin

Director of Economic Programs, Ukrainian Institute for Public Policy

Georgiy Geletukha

Chairman of the Board, Bioenergy Association of Ukraine

Svitlana Golikova

Independent expert

Iryna Golovko

National coordinator, CEE Bankwatch Network

Vladyslav Deineko

Head of Energy Programs, Analytical Centre for Regional Cooperation

Sergiy Diachenko

Head, Bureau for Complex Analysis and Forecasting

Andriy Konechenkov

Chairman of the Board, Ukrainian Wind Energy Association

Olga Kosharna

Expert, Director for Public Relations, Directorate of the Ukrainian Nuclear Forum Association

Andriy Martynyuk

Chairman of the Board, NGO Ecoclub

Volodymyr Omelchenko

Energy Programs Director, Razumkov Centre

Olena Pavlenko

President, DiXi Group think tank

Sviatoslav Pavliuk

Key Expert, Covenant of Mayors - East

Gennadii Riabtsev

Independent expert, Professor of the Chair of Public Policy and Policy Administration, National Academy for Public Administration under the President of Ukraine

Oleg Savytskyi

Coordinator of the Program for Energy Environmentalization, AllUkrainian NGO "National Ecological Centre of Ukraine"

Bogdan Sokolovskyi

Expert, former Special Envoy of the President of Ukraine on Energy Security

Oleksii Khabatiuk

Director, Green Investments Fund

UKRAINE AND ENERGY COMMUNITY: ITâ&#x20AC;&#x2122;S HIGH TIME?

UKRAINE AND ENERGY COMMUNITY: IT’S HIGH TIME?