Gas market reform in Ukraine five months behind schedule

Tuesday, April 5, 2016 - 14:22 (EEST) Section: Latest news

State energy holding NJSC Naftogaz of Ukraine says the reform of Ukraine`s gas market stipulated in a law, which came into force on October 1, 2015, is five months behind schedule.
The company states that the Ministry of Energy and Coal Industry has been instructed to develop by October 30, 2015, a Naftogaz reorganization plan to single out the operator of the Ukrainian gas transport system (GTS) in keeping with a plan for the reform of the gas sector.
The plan envisaged that all the necessary regulations to be put in place should have been developed, agreed by all the stakeholders and approved by the Cabinet of Ministers by January 31, 2016.
”As of late March 2016, the plan for separating the GTS operator [as a different legal entity], approved by the government, did not exist. Therefore, the process of creating a separate operator of Ukraine`s GTS is five months behind the approved schedule,” Naftogaz said in its statement.
It added the company had developed detailed proposals to speed up the process of Naftogaz`s reform and sent them to all the stakeholders.
As UaPosition reported earlier, Ukraine expects to complete by June 2016 the reform of management of its gas transport system, which will result in the creation of two separate companies for the management of main pipelines and underground gas storage facilities. The reform is also expected to help involve Western investors in the modernization of Ukraine`s gas transport infrastructure, built way back in the Soviet era.
In August 2014, the Verkhovna Rada adopted a law on amendments to some laws of Ukraine with respect to reforming the system of management of Ukraine`s gas transport system. The new law provides for engaging European and American investors in the Ukrainian GTS management.
It is noted that a contest for selecting investors will be transparent, requiring the participants to provide information about the structure of ownership and all beneficiaries. In addition, the winner company shall be required to report regularly (every five years) to the Ukrainian parliament regarding the scope of work performed.
The law provides for that the GTS and gas storage facilities will remain wholly owned by the state. At the same time, the company operator, which will be managed by investors, will stay under state control, with the state owning 51% of the shares and EU or U.S. investors holding another 49%.
Last year, a team of World Bank experts were working in Ukraine, tasked with developing a model to reform the Ukrainian GTS with a view of attracting Western investors to its modernization and management.