Monitoring of Ukraine's implementation of its commitments in the Energy Community

With the Ministry of Energy and Coal Industry (MECI) Order No.542 of August 4, 2014, amendments were introduced to the approved in 2013 Ukraine-EU Association Agenda Priorities Action Plan and Energy Community acquis communautaire. An item on the provision of the EU-Ukraine Association Agreement implementation was added to the plan.

On September 16, Ukrainian and European Parliaments, simultaneously, ratified the Association Agreement.

The next day, the Cabinet of Ministers adopted Decree No.847-r "On implementation of the Association Agreement between Ukraine and European Union, European Atomic Energy Community and their memberstates". Authorized executive bodies have been instructed to prepare and submit EU laws implementation draft plans and designate responsible personnel by November 1.

On September 17, by Cabinet of Minister's Decree No.864-r, governmental implementation plan on the Protocol on the Accession of Ukraine to the Energy Community was updated. According to the decree, multilateral working group consisting of agencies accountable, business and NGO representatives should be established. This must be done in compliance with the Memorandum of Understanding between the Energy Community Secretariat and MECI, signed in February 2014.

On September 23, the Energy Community Ministerial Council meeting took place in Kyiv. Among practical solutions, application of a new regulatory document (347/2013) on Trans-European infrastructure development and common interest projects implementation, application of certain delegated regulations on energy labeling. "Energy Community for the future" High-Level Reflection Group (HLRG) report was presented.

Same day, the "European Energy Directives Implementation into Ukrainian Legislation" round table, organized

by MECI and the Energy Reforms coalition, with support of the EU and the International Renaissance Foundation, took place. Analytical report on reforms promotion was presented by the civil society. Earlier, in September, the Energy Community Secretariat presented its annual report on Ukraine's progress, which proves the need for opening markets and regulator's real independence.

According to the MECI's Order No.659 of September 23, inter-agency working group on uodating Ukraine's 2030 Energy Strategy was established. The new draft is to be prepared by November 30, 2014.

In general, Ukraine's progress in fulfilling its commitments to Energy Community in July-September is as follows:

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Security of supply For now, the Government has concentrated on short-term plans, however, promises to present its longerterm strategies On September 3, the Cabinet of Ministers (CoM) presented "Ukraine's Renewal" Action Plan. In the energy section, according to the document, the EU and the U.S. shall be involved to gas transmission system (GTS) operation, it also provides for reaching market agreement on Russian gas supplies and transit, nuclear fuel supplies diversification, signing agreements on building new and finishing construction of unfinished NPP units, strict energy resources saving with state support of natural gas substitution.

Also, in accordance with the Ukraine-EU Association Agreement 2014-2017 Action Plan, approved by the CoM Decree No.847-r, Ukraine should appoint coordinator and authorized persons for early prevention mechanism between Ukraine and the EU (MECI and Naftogaz responsible).

On September 4, MECI approved the Temporary Extraordinary Electricity Market Measures Implementation Plan for September 2014 (Order No.625). Namely, Ukrenergo had to develop capacity balance for the autumnwinter Ukraine's Unified Power System (UPS) maximum capacity, taking into account maximum use of NPPs capacity and critical thermal power plants (TPPs) coal supplies. CoM shall initiate extraordinary energy market measures extension for another month. Instead, the government promises to prepare energy sector anti-crisis plan by mid-October.

Considering difficulties with gas supplies, CoM is looking for ways to decrease gas consumption and its substitution with other energy sources On July 9, CoM passed the Resolution No.296 "Certain aspects of providing households, industry, state-funded institutions and organizations with natural gas for entire 2014-2015 heating season", which actually approves gas consumption "limits". From August 1 and until the end of heating season, the mentioned consumers should receive 14.01 bcm of gas. The Crisis Energy Headquarters, established within CoM, reported on preparation of an integrated action plan on stimulation of natural gas consumption decrease and substitution by heat companies, industrial users, state-funded institutions and organizations, and households. The Ministry of Finance also provided its proposals on substitution options for imported natural gas supplies.

On July 24-25, Ukraine and the EU agreed to set up a working group to promptly interact on gas issues, namely organizing reverse gas supplies to Ukraine from the EU. Ukraine and the European Commission also agreed to start working on joint monitoring of natural gas flows via Ukraine's territory.

In early July, Naftogaz booked larger part of the exit transportation capacity on Vojany-Uzhgorod gas pipeline until 2019. After successfull OpenSeason procedure and test supplies, on September 2, Vojany-Uzhgorod gas pipeline was lauched into commercial operation. It is expected that maximum volumes of reverse gas flow shall be 27 mcm per day. Also, Naftogaz signed a contract with Statoil on natural gas supplies. Norwegian company started supplying gas to Naftogaz, via Slovakia, on October 1, 2014.

Due to crisis, control measures were strengthened; series of restrictions that are negatively perceived by market participants have been introduced or are being prepared Naftogaz CEO A.Kobolev held negotiations with private producing companies and discussed the "proposal" of priority injection, starting in August 2014, of 50% of the produced gas into underground gas storages (UGS) with the right of withdrawal starting from January 2015. On September 29, by the Resolution No.488, CoM acknowledged that from October 1, 2014 until 2014/2015 autumn-winter season ending, or until special CoM resolution, producers of mineral fertilizers are entitled to use only natural gas which they import.

Some private companies said they were not allowed to book capacities for importing the reverse gas. Adviser to the Naftogaz CEO Y.Vitrenko confirmed these restrictions had been set by Naftogaz to meet the demand of households and social sector.

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Gas sector Stakeholders are finalizing the draft law on gas market prepared by the Energy Community Secretariat Energy Reforms coalition, with support of the International Renaissance Foundation and with the participation of lawyers and some state bodies’ representatives initiated adaptation of the draft law on gas market prepared by the Energy Community Secretariat. Today, the updated docuiment has been presented for public debate. Before that, in July, a round table was held, where its participants - experts, MPs, representatives of Naftogaz, Ukrtransgaz and National Energy Regulatory Commission (NERC) - supported the draft law, but agreed it has to be adapted to Ukrainian conditions.

A number of legislative acts have been adopted to unbundle Naftogaz and regional gas suppliers (oblgazes) activities, attract investments and meet other Third Energy Package requirements On August 13, the Law on Amendments to Some Laws of Ukraine on Reforming Ukraine's Unified Gas Transportation System was adopted, which allows for inviting European and American companies to management of the capacities. CEO of Naftogaz A.Kobolev pointed out that establishing GTS and UGS operators would allow reaching another strategic goal, i.e. to move gas selling point to the eastern border of Ukraine and to start providing gas transportation services to European consumers, not to Gazprom.

In a media interview, Adviser to Naftogaz CEO Y.Vitrenko said that setting up new companies-owners "from scratch", instead of reforming Ukrtransgaz, was explained by Ukrtransgaz's unsolved legal problems and the need to quickly attact investors on asset-light model. The state will also receive additional revenues in rent payments paid by the operators. Naftogaz expects these revenues to be as much as billions of USD. In order to continue reform of Naftogaz assets, CoM adopted the Decree No.667-r of July 17, 2014 approving the list of state enterprises planned for privatization in 2014. Among others, state-owned shares in all oblgazes are in the privatization list. Thus, gas distribution market shall be completely transfered into private property.

Also, in August, by the MECI orders No.565 and No.568, Naftogaz subsidiaries’ – Budivelnyk and Naftogazbezpeka – liquidation deadlines were extended.

At the same time, on July 30, the regulator published a draft Resolution "On approval of License Conditions of Natural Gas and Coal-Bed Methane Supply on Regulated Tariff". The new conditions include mandatory requirement on the licensee unbundling natural gas distribution and supply on regulated tariff, as well as ensuring provision of information on consumers' rights, prices and tariffs, and gas quality parameters to the consumers.

Naftogaz itself proposed to introduce a single wholesale price for all categories of consumers - households, heating companies, state-funded companies and industry. Naftogaz CEO A.Kobolev says that such price had to be calculated as the average imported gas price plus wholesale trader profit (about +10%).

According to the updated Action Plan on Implementing Commitments under the Energy Community Treaty, MECI, the National Energy and Utilities Regulatory Commission (NEURC), and Naftogaz have to develop documents (draft laws, programs, other normative acts) to implement the Third Energy Package directives and regulations.

Efforts on Naftogaz financial balancing continue and include both market and administrative measures By the CoM Resolution No.302 of August 4, 2014, Naftogaz authorized capital was increased by 63.27 bln UAH via bail-out of government bonds. The document also mentions that the company should use the funds to buy and reserve 3.1 bln USD on the National Bank account; this account shall be used upon a CoM's resolution. The Prime Minister A.Yatsenyuk said that these funds were reserved for payment for Russian gas.

On August 20, by the Decree No.786-r CoM established an inter-agency working group on collecting debt receivable from natural gas consumers and on improving Naftogaz financial condition. The group, chaired by the energy minister, has to develop debt settlement plan until December 2015, with expected indicators by each consumer group. To solve this problem, the governmental draft law No.4557a, which provides for unified approach to establishing special use current accounts, also in the heat supply sector, was adopted.

According to the MECI Order No.634 of September 9, Ernst & Young was appointed as an independent auditor to determine Naftogaz assests real value (proposed service cost - 14.80 mln UAH).

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It is expected that the auditor shall perform several evaluations of Naftogaz and companies with at least 51% stock held by Naftogaz – to prepare consolidated financial statements for assets to be transfered to capital of the newly set up GTS and UGS operators, to attract additional funding to production segment, to introduce market-based gas transportation and storage tariffs. Same day, MECI, by the Order No.635, approved Naftogaz financial statements audit in accordance with international standards to be performed by Deloitte (proposed service cost - 17.88 mln UAH). The audit shall include evaluations to be performed by Ernst&Young and shall relate to Naftogaz, its subsidiaries and affiliates 2012-2014 financial statements. The current GTS operator Ukrtransgaz - has also announced an audit tender.

Also, in September, Naftogaz launched the Naftogaz-Europe web-site, which is an informational and analytical platform reflecting company's position and publishing gas market data (production, transit, storage volumes etc.).

Current procedure of access to GTS is considered to be effective; at the same time, CoM prepared a background for transition of gas transit to entry/exit system, which complies with European practices On July 15, the NERC published a basic monitoring report on some normative acts effectiveness, including its Resolution No.1722 of December 26, 2013, "On Amendments to the Procedure of Access and Connection to the Unified Gas Transportation System of Ukraine". Regulator's conclusion is positive: amendments allowed introducing more transparent connection procedure, defined external and internal gas supply definitions, set requirements for safe operation of gas networks.

By the Resolution No.510 of September 3, CoM passed a number of decisions on improving state policy in the sphere of regulating natural gas transportation activities via main gas pipelines. It is reported that the changes has been made in compliance with the Directive 2009/73/EC (Third Energy Package). Namely, the Temporary Tariff Setting Procedure for Gas Transportation was adopted for the GTS entry and exit points. The government, interfering into the NEURC jurisdiction, approved gas transportation tariffs for the period from November 1 to December 31, 2014. Regulator was recommended to approve a permanent tariff setting procedure for gas transportation based on entry/exit tariff system taking into account incentive-based regulation (by December 1, 2014). Naftogaz CEO A.Kobolev explained that certain changes should be made to make relations with Gazprom compliant with Ukraine's commitments – transit contract shall be revised, standard agreements on balancing and network connection have to be signed.

Electricity CoM prepares the required draft laws, while systematic changes are still to come In implementation of the Regulation No.714/2009, in August, MECI developed a draft order "On Approval of the Procedure for UPS Ten-Year Development Plan and its Publication". The development plan, which provides electricity networks and generating capacities for development by attracting investments, should include 2015-2024 data with details for the next three years.

Preparing for the new electricity market introduction, MECI developed a draft law bill "On Settling Debts for Electricity which Emerged on Ukraine's Electricity Wholesale Market". According to the other document – a draft order "On Approval of Amendments to State Energy Supervision (Monitoring) Act" - state control over electricity industry and energy consumers shall be improved.

At the same time, the Energy Community Secretariat reports it prepared and presented to MECI a draft law on electricity market, which complies with the Third Energy Package. As of today, the ministry has not come up with public comments and has not specified when the draft law will be finalized.

Regulator develops legislative base to improve transparency of electricity export procedures In August, the NERC re-published a draft of the Procedure for Electronic Auctions on Cross-Border Power Lines Capacity Distribution", as well as a draft resolution "On Approval of the Standard Agreement on Access to Cross-Border Power Lines Capacity" which should improve competition by means of holding electronic auctions, electronic documents and electronic digital signature.

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In September, regular monthly auction on the access to cross-border power lines capacity, with three participants, was held. DTEK purchased 140 MW electricity exports to Poland, 475 MW to Moldova and 650 MW to Belarus. Zakarpattyaoblenergo purchased access to 10 MW of the Ukraine-Slovakia crossing, while Donbasenergo purchased 75 MW of export capacities to Moldova.

While preparing for a difficult heating season, the government introduces new market regulation rules By the Decree No.764-r of August 13, 2014, "On Implementing Temporary Extraordinary Measures On Electricity Market", CoM defined the NERC's task on electricity tariffs adjustment and electricity wholesale market funds distribution algorithm; Ukrenergo and Energorynok measures, including setting temporary capacity restrictions of Ukraine's cross-border power lines and electricity production, complying with capacity limits, as well as grid load schedules.

In its turn, the NERC set an obligation on oblgazes to immediately create 24-hour energy crisis centers to ensure that consumers are supplied with electricity, "specifically during 2014-2015 heating season".

Regulation New regulator, which combined functions of the NERC and the National Utilities Regulatory Commission, has been established On August 27, according to the President Orders No.692 and No.693, the National Utilities Regulatory Commission and the NERC were dissolved. Instead, according to the Order No.694, the National Energy and Utilities Regulatory Commission (NEURC) was established. After these orders were published, respective draft laws which approve and describe regulator's status – namely, "On State Energy and Utilities Regulation" (No.5088 of 16.09.2014) and "On NEURC" (No.5089 of 16.09.2014) - were registered in the parliament.

Renewables Directive 2009/28/EC Implementation Plan and National Renewable Energy Action Plan were approved On September 3, CoM released the Decree No.791-r On Approval of the Directive 2009/28/EC Implementation Action Plan". Public reports on total renewable energy production shall be annually published on the State Agency for Energy Efficiency (SAEE) web-site, beginning from 2015. The government intentions to develop sustainability criteria for liquid and gas fuels produced from biomass, and to set technical specifications for biofuels production and use, depending on greenhouse gas emissions reduction (by at least 50% from January 2017 and by at least 60% from January 2018).

In addition, on October 1, the government approved the Decree No.902-r "On 2020 National Renewable Energy Action Plan", which specifies indicative target in Ukraine's total energy consumption at 11%. According to the plan, wind power plants capacities are expected to increase 5.6 times, solar power plants – 5.1 times, and small hydro energy – by 25%; biomass segment is expected to increase by record 40 times.

A case on local content was initiated against Ukraine On October 2, the Energy Community Secretariat initiated the case ECS-7/13 against Ukraine on the local content requirement. In a notification, the Secretariat explains that the mentioned requirement contradicts the Directive 2009/28/EC on promotion of renewables and the Article 7 of the Energy Community Treaty which prohibits discriminating approaches. In the meantime, the draft law No.4856, which proposes to cancel local content for wind power in terms of manufacturing blades and rotor, has been in consideration by parliamentary committees for over 5 months. The draft law No.2946, which cancels local content requirement for facilities generating electricity from biomass, biogas and domestic waste, has not even been considered.

Government's efforts to reduce feed-in tariffs for solar energy were hampered by active resistance of market participants and unexpected reform of the regulator Business representatives called regulator to cancel the contradictory CoM Decree No.589-r referring to Ukraine's investment climate worsening. However, regulator supported the government decision – on July 18,

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the NERC published a draft resolution "On Approval of Amendments to Feed-In Tariff Introduction, Review and Cancellation Procedure for Business Entities", with decreased peak coefficient for calculating solar energy tariffs. Some companies already filed court claims, while others were preparing to file similar claims. The NERC plans to hold a number of meetings with market participants on the CoM Decree No.589-r implementation issues. However, due to the regulator’s reform, such consultations have been postponed until resprective event plan is approved.

MECI sets restrictions on wind power generation, explaining such actions by crisis In September, wind power plants directors received the MECI's letter No.03-32/5805 with a request to stop electricity generation at night time (on daily basis, from 11:00 PM to 7:00 AM) in order "to create conditions for fuel accumulation on thermal power plants". Instructions were sent out due to the Temporary Extraordinary Electric Power Market Measures Implementation Plan implementation (Order No.625 dated September 4). As a result, wind power plants were asked to shut down about 60 MW of generating capacity.

Government took some steps on stimulating heat generation from renewable sources, electric vehicles market development, having also removed some administrative barriers On a closed parliamentary session on July 31, the Law "On Introducing Some Amendments to the Tax Code of Ukraine and Other Legislation (on Improving Certain Provisions)", which removes corporate profit tax exemption for companies generating electricity from RES. It also proposed to set temporary – by January 1, 2015, 99 – EUR/t excise tax on alternative fuels. Despite sector associations addressed the President to veto the draft law, it has taken effect.

Within the framework of natural gas substitution in heat supply, tariff compensation to companies generating heat from RES was approved (the CoM Resolution No.293 of July 9). Notably, compensation volumes cannot exceed difference between the actual heat energy tariff for households and its production cost taking into account maximum profitability of 21%. On September 10, CoM also approved the Resolution No.453 "On Stimulating Natural Gas Substitution in Heat Generation for State and Local Budget-Funded Institutions and Organizations" which recommends local governments to support renewable energy investment projects.

As part of stimulating Ukrainian market of electric vehicles, the Ministry of Economic Development and Trade initiated public hearings of the draft law No.4205a, prepared by MP V.Polochaninov, on canceling import taxes on electric cars. The author proposes to cancel electric cars import duties and excise tax for 3 years.

Also, the administrative barrier of bioenergy facilities attribution to the Vth complexity category (facilities of higher environmental risks) was removed. On July 1, 2014, changes to the DSTU B.V.1.2-16:2013 (State Construction Standards) took effect. For boilers and CHPs working on biomass and biogas units this means removal of additional requirements to location, design and construction works.

Environment Ministry of Environment presented the strategy for approximating Ukrainian legislation to the EU laws On August 21, 2014, the National Strategy for Environmental Protection Legislation Approximation with the EU law was presented by the Ministry of Environment and Natural Resources. Minister A.Mokhnyk said that "two to twenty years are given for implementation", and in some cases such period would be determined by the Association Council depending on the achieved progress; total cost of works under Annex XXX to the Association Agreement is about 0.5 bln UAH. CoM set new interim targets and terms for key directives of the section In the updated Implementation Plan on the Protocol on the Accession of Ukraine to the Energy Community (Decree No.864-r), it is planned to develop National Emissions Reduction Plan for Large Combustion Plants by October 30, 2014, in accordance with the Directive 2001/80/EC requirements (MECI, Ministry of Environment responsible).

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It is emphasized in the Energy Community Ministerial Council’s conclusions that Ukraine had to further work on the National Emissions Reduction Plan, presented at the meeting, by December 2014, when the next PHLG meeting would take place. Only in such case this plan implementation can be extended after 2018 to reach full compliance with emission levels specified in the Directive 2010/75/EU. According to the EU-Ukraine Association Agreement Implementation Plan in 2014-2017 approved by the CoM Decree No.847-r, documents for implementation of the mentioned directive (in terms of measures to be implemented by the end of 2017) has to be prepared by December 2017. The same document specifies measures regarding the environmental component: preparing legal acts and regulation to implement the Directive 2011/92/EC (by August 2016, Ministry of Economic Development, MECI, Ministry of Environment responsible) and the Directive 2009/147/EC (by December 2017, Ministry of Environment and State Forest Resources Agency responsible).

Another draft law in fulfillment of Ukraine's obligations is registered in the Parliament Draft law "On Environmental Impact Assessment", which is a key element for the Directive 2011/92/EC (85/337/EEC) implementation, has been registered in the Verkhovna Rada on May 30, 2014. Based on the draft law review by the Energy Community Secretariat, performed on the request of the Energy Reforms coalition, it is considered a good background for transposition of the Environmental Impact Assessment Directive.

Energy efficiency During the entire period, Ukraine's approach to energy efficiency implied rather gas consumption reduction According to the Crisis Energy Center decisin, from July 28, regional state administrations presented at the Ministry of Regional Development the plans of natural gas consumption reduction by 30% by heating companies for the coming heating season. The Deputy Minister A.Bilousov said that it was planned to save 2.43 bcm (29.1%) of gas (not taking Lugansk region into account), although gas consumption levels in some regions significantly exceed the limits. Over 500 mln UAH of subventions were allocated for local budgets on energy saving measures for natural gas substitution in heat supply (the Resolution No.369 of August 8, 2014).

In addition, by the Resolution No.314 of August 6, 2014, the government introduced amendments to the Procedure of Using State Budget Funds Allocated for Support of Energy Saving Measures by Loan Compensation Mechanism.

On the nation-wide level, the government introduced gas consumption substitution programs; however, such consistency and efficiency of policy can be questioned Out of the 500 mln UAH provided by the EU, 50 mln UAH will be spent for reimbursement of loans on electricity and heat generating units or solid fuel boilers for households (the Resolution No.491 of October 1, 2014). The government promises to compensate 20% of boiler cost and counts on covering with the program about 33,000 households by the end of the year. At the same time, still under consideration are draft resolutions "On the Connection of Household Power Generating Facilities for Electric Heating (stipulates free connection of up to 16 kW) and "On Stimulating Natural Gas and Heat Energy Consumers to Convertion to Electric Heating and Hot Water Supply (provides for increasing in winter of the monthly electricity consumption standards to 5000 kWh without change of tariffs). For the period from October 1, 2014 to October 1, 2019, CoM leveled tariff on 1 Gcal of heat generated from gas and renewable fuels. Together with the previously adopted Resolution No.293 "On Stimulating Natural Gas Substitution in Heating Industry", this is also aimed at attracting investors.

The State Agency for Energy Efficiency (SAEE) works on increasing supply of Ukrainian-made boilers working on biofuels and fuels for them. The Ministry of Agricultural Policy reported on the possibility of substituting app. 10 bcm of gas with biofuels in 3 years. The next year, CoM plans to substitute app. 1 bcm of gas by converting municipal boilers to solid fuels. Before the heating season starts this year, it is planned to launch 498 boilers working on alternative fuels, which will allow saving 4% of gas consumption. Due to per capita standards of gas consumption, the government reported on managing to use about 1 bcm of additional gas for the need of households.

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SAEE believes that successful implementation of the proposed gas substitution mechanisms will allow, already in 2018, to provide population, state-funded and municipal heating companies with domestically produced gas, while 443 mln UAH spent on investment incentives will help replace 0.191 bcm of gas.

Legislative solution of energy efficiency in buildings will have to be made by the next Parliament The Ministry of Regional Development prepared a draft law "On Energy Efficiency in Buildings" and held public on-line consultations on it. The ministry stressed on introducing energy efficiency certification of buildings which are subject to disposition and rent, as well as state-owned buildings. At the same time, there is a continued cooperation with international experts on "opening special bank loan programs" for energy efficient measures in buildings. Also, some draft laws - on energy service agreements implementation and on introducing energy efficient measures in state-funded institutions - are still to be prepared and discussed. SAEE reported on the need to update the Law "On Energy Saving".

The issue of metering is still to be resolved Crisis Energy Center should provide for equipping heat supplying systems of residential buildings without metering devices with limiting devices on entry connections; by October, technological accounting has to be present on 100% of heating companies, while by the end of December, heat energy metering devices should be installed in over 45% of residential buildings. The draft Law No.4563a "On Utility Services", submitted by the government, describes issues of commercial accounting and sources of funding the respective actions, and sets responsibility for violating commercial accounting legislation.

Changes are possible in the SAEE The Vice Prime Minister V.Groysman stated that SAEE had to be developed in "national security agency". On September 10, CoM adopted the Resolution No.442 "On Central Executive Bodies’ System Optimization", according to which the SAEE activity is coordinated by Vice Prime Minister - Minister of Regional Development, Construction and Housing. A new draft Procedure of the SAEE has been prepared, which, as expert S.Neykov put it, defines clear functions and undertakes to implement state policy in energy efficiency and renewable energy industry.

Despite the announced information campaign, public initiatives are more visible at the moment On August 20, CoM announced the beginning of Ukraine's Energy Independence information campaign, aimed at increasing awareness on the need of energy and gas saving. The campaign is to be run by the Crisis Energy Center; however, public campaigns with different events, for example demonstrating energy saving lighting advantages, are more noticeable.

Oil The issue of minimun oil stocks is brought up in the context of fuel quality According to the Ukraine-EU Association Agreement 2014-2017 Action Plan approved by the CoM Decree No.847-r, the draft law "On Minimum Stocks of Oil and Oil Products" has to be prepared by July 2015 (MECI, Ministry of Economic Development, Ministry of Finance, and Naftogaz responsible). It is also planned to implement the Directive 98/70/EC on the quality of petrol and diesel fuels by August 2017 (MECI, Ministry of Economic Development, and Ministry of Environment responsible).

On 19 August, by the Order No.573, MECI established a working group which should analyze and solve the problems of the Technical Regilation on Requirements to Motor Petrols and Diesel, Ship and Boiler Fuels. On September 24, by the Order No.662, MECI approved the permanent procedure for accreditation of fuel quality testing labs: according to it, these are all testing labs accredited for "oil and oil products" by the National Accreditation Agency.

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Statistics The State Statistics Service approved new reporting form and got clearer responsibility On June 25, by the Order No.200, the Statistics Service approved the new "Monthly Report of Economic Parameters by Types of Economic Activity which are Related to Extractive Industry and Mining, Processing Industry, Electricity, Gas, Steam and Conditioned Air Supply, Water Supply, Sewage and Waste Disposal" reporting form. On September 23, CoM passed the Resolution No.481 approving the Procedure of State Statistics Service, notably regarding the right to exchange statistical data with the EU statistical bodies.

Technical aid projects are given significant role in adaptation to the European standards According to Ukraine-EU Association Agreement 2014-2017 Action Plan approved by the CoM Decree No.847r, Statistics Service, MECI and other stakeholders should improve energy statistics, also by means of the INOGATE Component D, by September 2016. Twinning in statistics is also ongoing, with over 20 missions and training visits by European experts planned.

Social policy Work on improving the focus of subsidies has to be continued On July 1, program of compensating additional expenses to cover gas and heat tariffs growth for the most vulnerable households was launched. As of August, number of families which asked for additional compensation accounted 2194, while in September the number increased to 4500 families. The government reported on changing the procedure of setting subsidies starting from October 1: it is expected to increase the number of recipient families from 1.3 to 1.6 mln. Namely, social housing standard shall be increased, utilities social standards shall be reviewed, and mandatory family payment shall be individually calculated.

The Ministry of Regional Development also emphasized the correspondence of standards to actual consumption, which was achieved due to studying over 55,000 households which receive subsidies across Ukraine. The ministry also noted the simplification of procedures and promised not to change tariffs in the nearest future. Given this fact, the World Bank will allocate 300 mln USD loan to widen the targeted social aid program. Ukraine was also granted around 100 mln USD loan from the Japan International Cooperation Agency which should be also allocated to energy subsidies reform.

The government proposes draft law on utilities On August 29, CoM introduced to the parliament the draft law No.4563a "On Utility Services" which mentions application of social standards, defines responsibility of state bodies and local government, also in terms of granting subsidies and reimbursing costs. On September 3, an alternative draft law No.4563a-1 (prepared by MP M.Rudkovskyi) was registered. To a large extent, the document coincides with the governmental draft, but differs in terms of billing for utility services and fines for untimely payment (based on court rulings).

Ministries have to develop the Social Action Plan The Social Action Plan development by January 1, 2015, in accordance with the Memorandum of Understanding on Social Issues under the Energy Community Treaty, is specified by the CoM Decree No.864-r as responsibility of Ministry of Social Policy, MECI and NEURC. Also, the Minister of Social Policy L.Denisova continues to build cooperation with the representatives of labor unions and employers unions within the National Trilateral Social and Economic Council. .

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