As two articles in the Post this week point out, the track record on energy policy implemented by the governing coalition led by Prime Minister Viktor Yanukovych is poor, poor, poor.
In what seems to amount to little more than a PR stunt intended to make Yanukovych’s camp look more pro-Western, the government has floated the bold idea of building an oil pipeline route that would ship Iraqi crude to Europe through Ukraine. A key expert told the Post, however, that the government has little intention of implementing this project and has merely created as an election showcase. Such projects could, in theory, help Ukraine and the region diversify energy supplies away from Moscow’s grip.
Rather, the Iraqi oil pipe plans appear to serve only as one of many masquerades veiling what is really happening in Ukraine’s vast energy sector: Well-connected business groups and politicians continue to bilk billions of dollars annually out of the sector through intermediary parasite companies, all to the detriment of state coffers, Ukraine’s energy security and taxpayers.
Such parasites can be found in the multi-billion-dollar gas-trading business, the electricity export business, where two elite groups are fighting to control power sales to Hungary, the recent clash between rival pro-government groups to control Ukraine’s largest oil refinery, Ukrtatnafta, and the uranium business.
The free-for-all frenzy finally triggered a response from Ukraine’s president. In a decree this week, Viktor Yushchenko prohibited the government from setting up a new atomic power holding, which, he said, was created to transfer prized state assets into private ownership, allegedly close to top government officials and Russian interests.
These parasites must be stopped and a strong will is needed to bring more transparency and true competition to Ukraine’s energy sector. One way of doing this is to attract more foreign investment into energy.
However, as an article in the Post this week points out, Yanukovych’s government has curtailed foreign investment into the development of hydrocarbons in Ukraine. A controversial ruling adopted in January 2007 forces private companies working in partnership with state enterprises to sell their hydrocarbons back to the state at a loss. Ukraine needs to wipe out such cancerous corruption in the energy sector fast and bring in fresh capital to help modernize and produce more energy at home. For this to happen, Ukraine needs a new prime minister.
Yanukovych, now prime minister for a second time, has repeatedly failed to tackle this issue, while his inner circle doesn’t seem to have a vested interest in improving Ukraine’s energy security. Ukrainian voters should take this into consideration when they go to the polls in September.
