Ukraine and Energy Community: Still Does Not
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UKRAINE AND ENERGY COMMUNITY: STILL DOES NOT FIT THIS STUDY WAS IMPLEMENTED BY NGO “DIXI GROUP” WITH FINANCIAL SUPPORT OF THE INTERNATIONAL RENAISSANCE FOUNDATION WITHIN THE PROJECT “MONITORING OF THE IMPLEMENTATION OF UKRAINE’S COMMITMENTS UNDER THE ENERGY COMMUNITY AFTER THREE YEARS OF ITS MEMBERSHIP”. TABLE OF CONTENTS General Comments 4 Key Findings 6 DiXi Group is a Ukrainian think-tank carrying out research and consultation on issues of information policy, energy, security and investment. Its members are working as experts in numerous political and energy Recommendations projects in conjunction with government agencies, donor organizations and foreign investors. 8 DiXi Group activity has several directions, including organization of events and information campaigns, promotion of transparent and effective governance, and advocacy for European reforms in the energy The Implementation Process sector. “Ukrainian Energy” (www.ua-energy.org) is a unique platform created by DiXi Group. 10 Gas12 Dixi Group holds no political opinion; accordingly, any and all views expressed in this publication are exclusively those of the authors. Electricity24 For copies of this study and additional information, please contact: Renewables 40 P.O. Box 68, 24 Sribnokilska St., Environment 02095, Kyiv, 52 [email protected] Energy Efficiency 60 Oil 74 Statistics 76 Social Issues 80 Reference to Laws and Regulations 84 ©Dixi Group NGO, 2014 Design & Layout by Taras Mosiyenko Printed by SiLa LLC On 1 February 2014, Ukraine celebrated the third anniversary of its membership in the Energy Community. The Energy Community is the key to en- Having acceded to the Energy Communi- Having become the fully-fledged Energy This study is intended for the wide au- ergy security in all Europe; its particular ty, Ukraine actually joined the European Community member, Ukraine committed dience comprising government repre- importance, however, is in it being the only energy market. Membership in the Com- to implement a whole range of European sentatives (first of all, in the part that con- treaty that links the EU and Ukraine as of munity opens possibilities of introducing directives and regulations which would cerns recommendations on accelerating today. stronger competition, higher technical harmonise its legislation in the energy the process of acquis implementation in Jerzy Buzek, MEP, 10.02.2014 standards and regulations and better in- sector with European legal and regula- Ukraine), think tanks and wider audience vestment climate on the domestic mar- tory framework. Changes should have in Ukraine interested in activity of the ket. This also entails deeper integration of been introduced in natural gas, electric- current government, specifically in the the Ukrainian energy sector with markets ity, environment, renewables sectors etc. energy sector. ЕThe Energy Community is a regional of the EU Member States and strengthen- Assessment of the dynamics of these union of the South-Eastern European ing of country’s own energy security. An- changes makes the subject of this study. countries formed to secure social and other advantage of membership in this economic stability and security of sup- organisation involves additional possi- The study covers the monitoring of ply among its Contracting Parties. It was bilities for member states to attract inter- Ukraine’s progress throughout 2013, established in 2006 for a ten-year period national loans and technical assistance. evaluations from previous years can be term; however, the European Parliament E. g., there are two Ukrainian projects (on found in two other studies by Dixi Group recommended in 2013 to extend the GTS modernization and on the Brody-Ad- published in 2012 and 2013. Treaty establishing Energy Community amowo oil pipeline construction) among after 2016. projects of the Energy Community inter- est. The Energy Community requires that the Contracting Parties harmonise their leg- islative and regulatory framework with the EU standards and aims at establish- ing in the mid-term of integrated energy markets across the region. The Commu- nity currently unites the regional market with 73 million people. 4 PAGE UKRAINE AND ENERGY COMMUNITY: STILL DOES NOT FIT UKRAINE AND ENERGY COMMUNITY: STILL DOES NOT FIT PAGE 5 GENERAL The monitoring of the Ukraine’s implementation of its commitments before the Energy Community COMMENTS was carried this year in complex conditions. It is hard to analyse European standards performance when struggle rages on the streets. Like any other Ukrainian who wants to see his country a European-type democracy with responsible gov- NO PROgreSS: DirectiVES ernment, we had put aside our computers and went to the Maidan. As our work on this study showed 2009/28/ЕС, 2009/119/ЕС, not so much progress as one would expect, we also had to postpone presentation of the study results to a later date. Nevertheless, we hope this monitoring is well-timed and useful for the new government 2010/31/EU, THird EnergY as it will help understand the ‘starting point’ of further reforms in the energy sector. PacKage, StatuS The past year witnessed an unprecedented occlusion of public information from the public. As OF THE regulatOR, in previous years, DiXi Group, pursuant to the Law on Access to Public Information, sent information inquiries to key ministries and agencies with requests for information about the status of respective SOCIAL ISSUES directives’ implementation. With some exceptions (specifically, the NERC, the Ministry of Economic De- velopment, and the State Agency for Energy Efficiency and Energy Saving), the institutions would only provide general information. The Ministry of Energy and Coal Industry (which is responsible for the BEING IMPLEMENTED: implementation of commitments in the Energy Community) turned out to be the most closed one as it took three requests to receive an informative reply. DirectiVES 79/409/ЕЕС, 85/337/ЕЕС, 1999/32/ЕС, Monitoring and analysis of the legislation and the regulatory framework publicly available on official websites in 2013 was another method of gathering information for the study. These included orders and 2001/77/ЕЕС, 2001/80/ЕС, resolutions of the Cabinet of Ministers, ministerial orders, resolutions of the National Energy Regulatory 2003/30/ЕС, 2003/54/ЕС, Commission (NERC), and progress reports of institutions on their performance in 2012 and 2013. It is worth noting that the practice of refraining from publication of important documents, whether 2003/55/ЕС, 2004/67/ЕС, in draft form or already adopted, persists in Ukraine. The information on adoption in July 2013 of an updated version of the Energy Strategy of Ukraine by 2030 was withheld for six months. Despite the 2005/89/ЕС, 2006/32/ЕС, Ministry of Energy order to transfer the authority of the GTS operator ’s to Ukrtransgaz was released in December 2013, the absence of information on the document registration by the Ministry of Justice 2008/92/ЕС, 2010/30/EU, made its enforcement impossible. RegulatiON 1228/2003, SECURITY OF SUPPLY Given the lack of a single source of integrated information on the acquis implementation status and the fact that ministries and institutions would often provide incomplete information and some documents StateMENT might be inaccessible, DiXi Group is unable to affirm the list of documents mentioned in the study to be an exhaustive one; at the same time, the list represents the most complete collection of deci- sions made by the government authorities in respect of the commitments made by Ukraine in the Energy Community. DiXi Group experts also assessed key developments and decisions in the energy sector of Ukraine dur- CLOSE TO ing the previous year in terms of their compliance with European norms and principles. IMPLEMentatiON: RegulatiONS 1715/2005, 1099/2008 6 PAGE UKRAINE AND ENERGY COMMUNITY: STILL DOES NOT FIT UKRAINE AND ENERGY COMMUNITY: STILL DOES NOT FIT PAGE 7 gas pipeline construction executed with transit of implementation of the Third Energy Package countries3. The Slovak party also agreed to enter which is mandatory. There is no decision on a spe- into agreement on reverse flows to Ukraine4. An cific schedule of implementation of either the LCP ongoing political dialogue and clearly formulated Directive or the Directive on Oil Stocks. It is neces- requests from the Ukrainian side can alter internal sary to decide on these issues as soon as possible political situation in the EU and reach mutually as they matter for setting up priorities in the na- KEY beneficial results. tional economy and should be taken into account while adopting legislation and regulatory acts. The Ukrainian party kept procrastinating with FINDINGS performing its commitments. Despite a more Some directives are already implemented with dynamic, compared with 2012, process of adopt- violations. The Law on the Principles of Electricity ing the necessary legal and regulatory frame- Market Operation adopted last October, despite work, the Ukrainian government showed no generally necessary for the country, did contain ‘breakthrough’ in practical reforms implementa- a range of provisions which deviated from Euro- tion. The energy companies do not disclose infor- pean principles and standards: specifically, it pre- mation about free network or storage capacities served cross-subsidising. Comments expressed although it is required by the NERC resolution on by the World Bank and the Energy Community access to GTS. The Law on Alternative Fuels, in the were not fully taken into account. The draft law on part on 5% bioethanol share in mixed petrols, is state regulation in the energy sector, which is un- still inoperative in spite of no action to postpone der consideration in the Parliament, in its current implementation of the requirements approved. version, actually makes the regulatory authority There is no proper monitoring and control of short of those powers that the EU requires. This quality of reforming at the implementation phase. leads to a situation when the Energy Commu- nity may be used for manipulations, and already One of the key reasons behind such procrasti- adopted documents should be sent for a second nation is weak communication both inside the round of revision.