Civil society continue to monitor and to raise the pressure on the government on implementation of Ukraine’s Energy Community committments In April, NGOs and experts working in the energy sector founded an “Energy Reforms” coalition. The coalition will monitor meeting of Ukraine’s commitments within the Energy Community, promote political dialogue with key stakeholders and develop a roadmap of reforms in the energy sector which will provide for specific proposals. In April and May, experts of the "DіXі Group" think tank presented in Kyiv, and subsequently in Brussels and Vienna, the study "Three Years in the Energy Community: Still Doesn’t Fit" on the progress of the reforms’ implementation. The analysis, supported by the International Renaissance Foundation, contains detailed overview of the implementation of all EU directives and regulations which should have been transposed into Ukrainian legislation as well as analysis of major events and decisions in the energy sector of Ukraine taken in 2013 - early 2014. Government declares political will to enhance reforms to meet the EU requirements In early April, the Ministry of Energy and Coal Industry announced priorities of the energy sector of Ukraine, one of which is taking advantage of the Energy Community presidency to enhance energy security. By the Order of the Cabinet of Ministers of May 21, 2014 No. 501-r, an additional position of a deputy minister in charge of European integration should be introduced in each ministry, however, the competition for the vacancy in the Ministry of Energy was conducted intransparently, behind closed doors, and principles of the winner selection are unknown. The most important event of the period was the signing of the economic part of the EU-Ukraine Association Agreement on June 27 in Brussels.
The document emphasizes the urgency of implementing provisions of the Energy Community Treaty, even if they could contradict the provisions of the Agreement. None of the Parties may refer to the dispute resolution clauses from the Agreement in order to violate the relevant provisions of the Treaty. Generally, in April-June Ukraine has achieved the following progress in meeting obligations within the Energy Community: Security of Supply "Gas conflict" raised the energy security issue higher on the agenda The Presidential Decree No. 448/2014 of May 1 enacted the decision of the National Security and Defense Council "On the status of ensuring energy security in connection with the situation on natural gas supplies ещ Ukraine" dated April 28. The measures contemplated in the decision include: approval of the forecasted natural gas supply and distribution balance, updating the provisions of Ukraine’s Energy Strategy by 2030, and updating the indicators of energy security level. Pursuant to this decision, the Cabinet of Ministers issued the Resolution of May 7, 2014 No. 138, mandating the Ministry of Energy and Coal Industry as well as the NJSC "Naftogaz of Ukraine" to engage professional and highly skilled lawyers to protect Ukraine’s rights and interests during the settlement of the dispute with Gazprom. On June 16, Naftogaz and Gazprom filed lawsuits against each other at the Stockholm arbitration court. Gazprom attempted to recover 4.5 bln USD debt from Naftogaz as a shortfall for the supplied gas, while Naftogaz demanded 6 bln USD back as overpayment for already delivered gas. In addition, Naftogaz demands to remove from the contract all the politically motivated clauses which enable Gazprom to abuse its monopoly position. The government and companies made certain steps to enhance market transparency On May 6, Naftogaz joined the Aggregate Gas Storage Inventory (AGSI+) transparency platform under the standards of Gas Storage Europe association (GSE). Also, the PJSC "Ukrtransgaz" began to publish daily realtime data on gas transportation. Meanwhile, taking effect on May 1, the NERC decision increased tariffs for gas injection and withdrawal from underground storage facilities and for gas storage. The Cabinet of Ministers Resolution No. 217 of 18.06.2014 approved the Procedure of distribution of the funds received on special purpose bank accounts for payments with guaranteed natural gas suppliers. Pursuant to the Law "On Heat Supply", all heat supply and generation companies were obliged to create special purpose bank accounts to facilitate automatic payments for the supplied gas. On June 25, the Cabinet of Ministers approved the Resolution No. 214, whereby the State Financial Inspection was ordered to perform permanent financial audit of several public companies, including state-owned companies "Energorynok", "Naftogaz of Ukraine", PJSC "Ukrgazvydobuvannya", PJSC "Ukrtransgaz", PJSC "UkrTransNafta", "Ukrenergo", "Energoatom" and "Ukrgidroenergo". On June 18, the government submitted to the parliament a draft law No. 4117a, which drew criticism of the MPs and market players, as it provided for "manual control" of the Ministry of Energy. The draft law proposed by the government was not approved in the first reading until early July, after an emotional speech of the Prime Minister A.Yatsenyuk. Natural Gas Preconditions for the liberalization of gas trade on the EU-Ukraine border have been created In mid-April, RWE was the first to start reverse gas supplies to Ukraine – in particular, through Poland. On April 14, operators of gas transmission systems PJSC "Ukrtransgaz" (Ukraine) and Gaz-System SA (Poland) signed an addendum to the operator agreement specifying the procedure for sharing operational and technical information between the companies.
2
On April 28, Ukrainian and Slovak operators signed a memorandum on reverse supplies of natural gas. The parties agreed on "small-scale" reverse, i.e. supplies through the Vojany-Uzhgorod pipeline with the maximum capacity (22 mcm per day, or 8 bcm per year) to be reached by October. Also, Ukrtransgaz offered Eustream to sign an operator agreement on connecting the neighboring gas transportation systems. To-date, the parties have signed the operator agreement for the Vojany-Uzhgorod pipeline. On April 7, the Verkhovna Rada registered a draft law No. 4645 "On Amendments to the Tax Code of Ukraine and other legislative acts to eliminate certain inconsistencies of the legislation", whereby the government proposed that private companies should be charged VAT on imported gas as of May 1. On April 10, the Parliament backed the draft law, but decided to postpone the introduction of VAT until September 1. On June 5, the Parliament also revoked the duty on gas exports to the Energy Community countries, having thus supported the draft law No. 2471a in the second reading. Reform of the gas transit system and modernization of the GTS are still the top priorities On April 23, the Energy Minister Y.Prodan estimated that the first stage of the Ukrainian GTS modernization will cost 4 bln USD and emphasized Ukraine’s readiness to cooperate both with the European Commission (with which the Ministry meets regularly) and with Western investors. On May 20, the Prime Minister A.Yatsenyuk urged the European Commission and the leaders of the EU member states to start receiving Russian gas on the Russia-Ukraine border and to sign new appropriate contracts to allow European gas companies to use free capacity of Ukraine’s underground gas storage facilities. The EU representatives supported the proposal. At a conference in Brussels on May 21, the CEO of Naftogaz A.Kobolyev invited European companies to take part in the GTS modernization. The European Commission urged the largest European consumers to fill Ukrainian underground gas storages and promised to support the modernization. Trying to implement the Third Energy Package, the government does not explain the logic of its activity On April 15, the Director of the Energy Community Secretariat J.Kopač presented to the Deputy Minister of Energy and Coal Industry V.Ulida a proposal on the gas market law which, if adopted, will enable to align the legislation with the Third Energy Package. At present, the document is still under consideration. In early June, speaking in the Parliament, the Prime Minister A.Yatsenyuk claimed that the government will decide on the Naftogaz reform and unbundling to create two additional operating companies (one - for gas transportation and the other – for storage), noting that this is a requirement of the Third Energy Package, the Energy Charter and the Energy Community Treaty. By the Resolution No. 172 of June 4, the Cabinet of Ministers decided to establish on the basis of the PJSC "Ukrtransgaz" two joint stock companies in 100% state ownership, similar to the ISO model under the Directive 2009/73/EC. On June 18, the Cabinet of Ministers submitted to the Parliament a draft law No. 4116a, which proposes to remove restrictions for lease, concession and management of main gas pipelines and underground gas storage facilities that are part of Ukraine's GTS, on the fixed-term and paid-for basis, without full property rights. In this way, the draft law suggests a possibility to incorporate the PJSCs, created by the Resolution No. 172. The parliament did not approve the document in the first reading until early July, after an emotional speech of the Prime Minister A.Yatsenyuk. Stabilization of Naftogaz financial condition remains one of the key challenges today The National Security and Defense Council authorized the Cabinet of Ministers to introduce practical mechanisms to stabilize the financial and economic standing of Naftogaz. In April, speaking to the Parliament, the Minister of Finance O.Shlapak estimated the Naftogaz budget deficit in 2014 at 46 bln UAH. By the Resolution of the Cabinet of Ministers of 29 May 2014 No. 151, the registered capital of Naftogas was increased by a record 22.271 bln UAH. Also, heat and utility companies have been decreasing their debts, notably as starting from July they do not longer receive budget subsidies due to the transitions towards costbased tariffs for heating. 3
In addition, Naftogaz intends to check operational performance of Ukrgazvydobuvannya and ordered an audit of own performance, focusing particularly on cash flow and cash deficit.
Electricity The government treats prompt synchronization of Ukrainian and European grids as priority In June, the Ministry of Energy and Coal Industry issued the Order No. 409 whereby it recognized the connection of the Ukraine’s United Power System (UPS) to the EU united electricity network by 2017 as priority. As part of the project, it is planned to unbundle energy companies into two categories: distribution and supplying entities. The same order of the Ministry also has set up a working group on organizational and technical measures to prepare Ukraine’s UPS to the interconnection. DTEK is still the leading electricity exporter, but no longer a monopolist in the market In the period between April and June, DTEK purchased more than 2,500 MW access to cross-boder exporting capacity to Belarus and Moldova. In April, Ukrinterenergo also took part in the auction, for the first time after a two-year break, intending to resume electricity exports to Slovakia, Hungary and Romania. Media noted the increase of competition and the number of bidders, while the Energy Community Secretariat said it was looking forward to even greater transparency and effective competition in the market of electricity exports. Despite improved competitiveness of the market, some problems remain unresolved. For example, at the end of June, Ukrenergo didn’t manage to sell access to the July transmission capacity in amount of 650 MW. The reason for this, according to the company, was the exhaustion of technical capabilities. State Regulation of Energy Sector Energy regulator designs new elements of the reform in consultation with international partners As part of technical assistance project for the NERC, implemented with support of the World Bank and aimed at drafting a law on regulation of the energy sector in line with the EU Third Energy Package, on May 15 and 30, the NERC members met with I.Levington, chief advisor of DNV KEMA Energy & Sustainability - KEMA Consulting GmbH.
Renewables The government attempts to reduce the feed-in tariff for solar generation, facing resistance from market participants The governmental draft law No. 4644 "On amendments to certain legislative acts of Ukraine (on improvement of payments for energy)" was submitted to the Parliament on May 7. Another, similar by the spirit, draft law No. 4596 "On amending the Law of Ukraine "On Electricity" (on promoting electricity generation from alternative energy sources)" was submitted by the MPs Y.Moskalenko and V.Polochaninov ("Batkivshchyna" faction). The governmental draft law No. 4644 was considered three days after its submission and was rejected. The draft law No. 4596 has been under study of the parliament committees for more than one month. In response to this move, a Chinese company CNBM appealed to the then Acting President O.Turchynov, asking to protect its assets with a total capacity of 1000 MW. Moreover, a major domestic manufacturer, the PJSC "Kvazar", announced that investors from Italy, Germany and the United States decided to "freeze" projects in the field of solar energy. Experts of Asters law firm also alleged a decrease of investment due the tariff revisions. The NERC published its official reply to the proposed tariff changes, having supported maintaining the coefficients for large solar power plants at 2,0-3,6 (the draft law No. 4596 suggested they should be 1,22-2,4; while the draft law No. 4644 – 1,47-4,8), referring to the data of AF-Mercados EMI. On May 12, the NERC released a draft resolution "On amendments to the Procedure for the establishment, review and cancellation of feed-in tariff for business entities". 4
The document provides for an additional condition for granting the FiT to energy objects with a capacity of over 5 MW in the form of "compliance of construction of such facilities to the UPS ten-year development plan". On June 18, the government approved the Order No. 589-r "On improving the system of payments for electricity from alternative energy sources" whereby it recommended that the NERC should reduce the peak coefficient used in the FiT calculation for solar energy from 1.8 to 1.01, in order to reduce the tariff burden on end-users. The regulator disregarded recommendations of the government and by its Resolution No. 931 of June 27 set the feed-in tariffs for solar energy, effective from July 1, without the recommended decrease. Meanwhile, the Procedure of sales, accounting and payments for electricity produced from solar energy facilities (generating units) owned by private households, approved by the NERC Resolution of 27.02.2014 No. 170, came into effect. The consumers are entitled to establish in their private households energy generating units with the installed capacity up to 10 kW. Administrative barrier of "local content" requirement is still in effect, notwithstanding attempts of the government and market participants to adjust its size The draft law No. 4644 "On amendments to certain legislative acts of Ukraine (on improvement of payments for energy)" provided for reduction of the "local content" requirement for wind and solar power plants and for biofuel facilities, the construction of which commenced after January 1, 2012 and which were commissioned after July 1, 2013, to 30%. After three attempts to include this issue on agenda, the MPs failed to approve the document.
Environment Q2 2014 was marked with more active development and adoption of environmental legislation In late March, the Parliament registered a draft law No. 4568, which proposed amendments to the Forest Code aimed at protecting birds listed in the Red Book of Ukraine. In April, the document was passed to several parliamentary committees, including the Committee for European Integration. On April 17, a revised draft law No. 3570 "On amendments to certain legislative acts of Ukraine (on the implementation of the 1979 Convention on the protection of wild flora and fauna and natural habitats in Europe)" was brought to the Parliament. The document provided for increased fines on companies, institutions and citizens for the destruction or damage of plant and animal species. On June 18, the Parliament adopted the draft laws No. 3672 "On amendments to certain legislative acts of Ukraine on protection of biodiversity" and No. 4004 "On amendments to certain legislative acts of Ukraine on protection of wildlife". The first one strengthens requirements for the protection of birds listed in the Annex 2 of the Berne Convention while the latter document introduces "seasons of silence" to be declared by local authorities in May and June in the areas of mass breeding and rearing of animals. On May 6, the Verkhovna Rada registered a draft law No. 4823 "On amendments to certain legislative acts of Ukraine (on protection of fauna, flora and increased combat against poaching)". The document provides for amendments to nine laws and codes of Ukraine, which should enhance the protection of fauna and flora. Facing serious criticism of the international community with regard to undertaking environmental impact assessment (EIA), the Verkhovna Rada registered a number of legislative initiatives to bring these procedures in line with European norms and practices On April 8, the Committee on the implementation of the Espoo Convention alleged that Ukraine committed violations in the process of making decisions to extend the lifetime of the Rivne NPP units 1 and 2. In opinion of the Committee, one of the violations was the lack of environmental impact assessment in the decisionmaking process to extend the NPP operation time. The VI Meeting of the Parties to the Espoo Convention held on June 2-5, 2014 in Geneva (Switzerland) acknowledged that the violation did take place. On May 30, the Verkhovna Rada registered a draft law No.4972 "On environmental impact assessment". The new procedure stipulates a public EIA process of environmentally hazardous industrial facilities prior to their construction, and makes sure that public opinion is taken into consideration. 5
Adoption of the draft law will ensure the implementation of the Directive 85/337/EEC, the Aarhus Convention and the Espoo Convention. On June 20, the Ministry of Environment published a draft resolution of the Cabinet of Ministers "On approval of the list of extra-hazardous activities and facilities". The new version of the list streamlines and specifies types of business and other activities, and the facilities posing high environmental risk. Energy Efficiency The government focused on preparations for the winter season in the absence of gas supplies from Russia On June 17, the government created an Energy Crisis Task Force under the Vice Prime Minister and the Minister of Regional Development, Construction and Housing V.Groysman (as its Head), and the Minister of Energy and Coal Industry Y.Prodan (as his Deputy). The Task Force goals are to reduce energy consumption, promote energy efficiency measures, and substitute natural gas with other fuels. In addition, V.Groysman commissioned the Ministry of Energy and Coal Industry and other ministries to prepare an action plan to ensure smooth flow of the upcoming heating season in Ukraine. A comprehensive action plan to faciltiate gradual substitution of gas for other fuels, currently developed by the policy-makers, MPs and industry associations, should be approved in the nearest future. To attract loans for energy efficient renovations of residentail buildings, some initiatives are now designed to confer residents of multi-apartment buildings with joint decision-making powers. The draft resolution of the Cabinet of Ministers "On promoting the natural gas substitution in heating" was published on the Ministry of Regional Development website for public discussion. In particular, the document outlines incentive-based pricing and setting tariffs for heat produced from other types of fuel to substitute natural gas. The NEEAP is not adopted, and there are calls for its revision In the period between April and June, the National Energy Efficiency Action Plan was not approved. Instead, the document was discussed with the Director of the Energy Community Secretariat J.KopaÄ? and the Director of the European Commission DG ENER F.Barbaso (and so was the draft law "On the efficient use of energy resources"), whereas the civil society activists presented an "Assessment and recommendations for the Ukrainian National Energy Efficiency Action Plan (NEEAP)", emphasizing the need to revise and finalize the plan. Meanwhile, the State Agency on Energy Efficiency and Energy Saving prepared an Implementation Plan of the NEEAP, which requires 56.662 bln UAH of total funding and aims to achieve 81.57 mln toe reduction of energy consumption. The draft law on energy efficiency of buildings, although urgent, is not yet ready for public discussion The document was developed by the Ministry of Regional Development and is under discussion of the working group, the members of which analyzed shortfalls of the draft law against the requirements of Directives 2010/31/EC and 2012/27/EC and made a number of suggestions and comments. Energy efficiency in buildings is the focal point of negotiations with the international financial institutions and international experts. To facilitate implementation of the Directive 2010/31/EC provisions, a number of state standards of Ukraine have been introduced in the field of energy efficiency in buildings. The Cabinet may soon review the package of draft laws on introduction of ESCO mechanisms With input of experts and representatives of the EBRD, the USAID, and the National Commission for Regulation of Utility Services Market, the Ministry of Regional Development came up with a set of draft laws on introduction of ESCO mechanisms.
6
These include: amendments to the Budget Code (allowing owners of state-funded institutions to enter into long-term contracts with energy service companies), the draft law "On amendments to the Law of Ukraine "On Energy Saving" on the legal basis of executing energy service contracts" (listing key provisions of an energy service contract), and the draft law "On specifics of purchasing energy services" (the mechanism of selecting energy service provider via a competitive process). These documents were drafted by the Ministry of Regional Development, published online and will be sent for approval to other central executive bodies after finalization. Ensuring transparent use of funds is critical when involving external funding for energy efficiency The Vice Prime Minister V.Groysman announced his intentions to attract 3 bln USD from the World Bank under its energy efficiency programs, and 290 mln EUR from the EBRD. The World Bank allocated 382 mln USD for an EE project in the district heating sector in Ukraine. In cooperation with the Eastern European Energy Efficiency and Environmental Partnership (E5P), the EBRD will provide 25 mln EUR to Lugansk to improve the district heating system. The EU has already transferred 173.32 mln UAH to Ukraine under the program "Support for the implementation of the Energy Strategy of Ukraine in the field of energy efficiency and renewables". Meanwhile, Ukraine failed to use the 324,802 mln UAH aid received earlier from the EU under the same program. By the Resolution No. 165 "Some issues of the use in 2014 of the funds for energy efficiency and saving measures", the government assigned the funds received via second and third tranches of the program (173.32 mln UAH total) for the implementation of measures of the State Target Economic Program on Energy Efficiency and Promoting Energy Generation from Renewable and Alternative Sources for 2010-2015. The Cabinet issued the Order No. 296-r "On the loan from the International Bank for Reconstruction and Development for the implementation of the project "Improving energy efficiency in the district heating sector of Ukraine" (382 mln USD total), while the Ministry of Regional Development is cooperating with the International Bank for Reconstruction and Development, the European Investment Bank, the EBRD and the NEFCO, preparing projects to attract 872 mln USD and 872.08 mln EUR investment in the heating, energy, water, wastewater, and solid waste industries. In April, Ukraine signed with the European Commission DG ENER a Partnership agreement on energy efficiency, according to which the Ministry of Regional Development was appointed as the national coordinator for the Covenant of Mayors initiative. The State Agency on Energy Efficiency and Energy Saving signed a Memorandum of Understanding with the project "Municipal Energy Reform in Ukraine", funded by the USAID and implemented by International Resources Group (IRG).
Oil and Oil Products The oblogation to create and maintain a system of oil and/or oil products’ stock was used to justify violations of a certain company The PJSC "Ukrtransnafta" sent a letter to the Minister Y.Prodan asking for permission to free almost all main oil pipelines, and to send the whole amount of withdrawn technological oil for direct processing at the Kremenchuk refinery. Having not received an answer, Ukrtransnafta started withdrawing technological oil, as was proven by the documentation of the Kremenchuk refinery, leaked to the media. As of April 29, the company had withdrawn 173.68 thousand tons of oil to several refineries. In May, the Kyiv District Administrative Court prohibited withdrawal of technological oil by the company. According to media reports, as of June 1 Ukrtransnafta had withdrawn 607.3 thousand tons of technological oil from the pipelines. The media also reported that the Ministry of Energy prepared a draft government resolution, accroding to which the whole amount of technological oil should have been transferred to the State Reserve Agency. Meanwhile, Naftogaz has sent a letter to the Ministry of Energy, suggesting that the technological oil, which was withdrawn from pipelines, should be used to establish strategic reserves of oil and oil products under responsibility of Ukrtransnafta. 7
Statistics Implementation of the INOGATE and Twinning projects, as well as other international initiatives aimed at reforming the Ukrainian statistics continues 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 Policy, where the parties confirmed the earlier agreement reached between the State Statistics Service and the OECD Statistics Committee to strengthen the existing cooperation aimed at further European integration of the Ukrainian statistical system. Mr. Osaulenko also took part in the plenary session of the Conference of European Statisticians.
Social Issues Despite a fairly sharp tariffs increase and the need for the public dialogue, the government has not deployed mechanisms offered by the Energy Community. Taking effect on May 1, the NERC raised tariffs for natural gas for households by 50% (for customers with annual consumption up to 2,500 m3); by 63% (for customers with annual consumption from 2500 to 6000 m3); by 62% (over 6,000 m3); and by 63% (for customers using gas for cooking and/or water heating). Also, starting from June 1, retail tariffs for electricity were raised by 10-40% for households (depending on the volume of consumption), and by 4.8% for other customers (state-funded organizations and industrial companies), since the population actually paid only 24% of the actual costs of generation, transmission and supply of electricity, and the difference between the set and market-based tariffs for households was covered by all other categories of consumers. The National Commission for Regulation of Utility Services Market and local authorities set market-based tariffs for heating for district heating companies starting from July 1, 2014, having increased the price by 40% on average. According to the Minister of Finance O.Shlapak, the government plans to increase gas prices for households at least three times more by 2017, while tariffs for heating will increase in this period by 120%. At the end of May, pursuant to the Resolution of the Cabinet of Ministers of May 21, 2014 No. 149 "On improving the policy on regulating tariffs for the electricity supplied to households and other consumers, for which the same rates apply", the NERC approved the increase in electricity tariffs for population from June 1 this year. Starting from July 1, the government introduced compensations of additional costs for housing and utility services (Cabinet of Ministers Resolution of 5 April 2014 No. 83) in addition to existing subsidies. The compensations shall not be provided in cash, they will be directly deposited to the payer’s account. The Ministry of Social Policy expects that 3.5 million households will benefit from these reimbursements, while the program of housing subsidies will be still in place for another 1 million households. The Ministry of Regional Development also emphasizes the importance of bringing prices for centralized water supply and sewage services to the market-based level. Moreover, in order to improve payments for energy between natural monopolists, the Verkhovna Rada adopted the Law No. 1198-VII "On amending some laws of Ukraine on improvement of payments for energy", which entitles the National Commission for Regulation of Utility Services Market to set tariffs for heat energy taking into account heating services; to introduce the procedure of depositing the funds paid for heat energy to the special purpose bank accounts of district heating and heat generating companies, which they will use for payments for consumed natural gas. Meanwhile, the NERC and the IMF are confident that it is necessary to provide more targeted subsidies to protect the poorest social groups from the effects of tariff increase. The government, in turn, wants to attract a 300 mln USD loan from the International Bank for Reconstruction and Development under the project "Modernization of social care of Ukraine’s population". For this reason, the President issued the Decree of May 22, 2014 No. 880/2014-rp, which composed a delegation to negotiate with the World Bank and gave the relevant instructions. 8
The Ministry of Social Policy announced its readiness to enter into dialogue with trade unions and social partners. In particular, the Minister L.Denysova was elected as the Head of the National Tripartite Social and Economic Council, which was created at the proposal of All-Ukrainian trade unions, employers' associations and the Cabinet of Ministers as an advisory body to the President of Ukraine. The Ministry of Social Policy also signed a Memorandum of Understanding on cooperation with the project "Municipal Energy Reform in Ukraine" by September 30, 2017. The Memorandum provides, inter alia, for measures to increase impact of social protection mechanisms of the utility services consumers and to promote energy efficiency initiatives.
Competition and Investments On April 22, the Energy Community Secretariat initiated a preliminary dispute resolution procedure, having notified Ukraine on its failure to meet obligations under the Treaty establishing the Energy Community. The point is that Ukraine failed to adopt legislation prohibiting government aid and did not ensure compliance with such ban. The purpose of the preliminary procedure is to allow Ukraine, within a two-month term, to respond to the statement of non-compliance with the Energy Community acquis.
9