At the
end of last month Ukraine, hosted a session of the Ministerial
Council of Energy Community, a body established between the European
Union and other countries to extend the energy market. The session
was focused on security issues such as stress testing the gas
distribution networks to Europe, blocking the South Stream project,
and a common position in relations with Russia.
The
implementation of European Directives and regulations, in Ukraine
among other countries, was given much less attention.
But
why should the energy reform agenda be guided by crisis
management principles
rather than pursue strategic
changes?
Experts, officials
and businessmen tried to find responses to these challenging
questions in the course of a round table organized right after the
Ministerial Council session.
In
particular, an analytical
report
was presented by a group of experts from the non-government sector
who have joint effort in the Energy Reforms coalition to promote
changed that arise from the Ukrainian commitments under the Energy
Community.
First
and undoubted conclusion of this study is that the new Ukrainian
government clearly demonstrated its vector towards European
integration. The EU Association Agreement was ratified. The
Government recognized the need to fulfill the Third Energy Package,
in particular, functional separation of NJSC Naftogaz of Ukraine,
enhancing the transparency of monopolies, ensuring free and
non-discriminative access to infrastructure.
However,
political will alone is not enough to duly implement the EU
legislation.
Adoption
of documents does not necessarily result in the qualitative changes
either.
For
example, in spite of all the efforts on adoption of framework laws
and sub-legal acts the gas and energy markets still
have very little competition,
while some players (state-owned companies or private holdings) still
enjoy a privileged
status.
There
is also a lack of transparency in the new pricing mechanism for
energy supplies and utility services. It’s not clear for an average
citizen. Consumers do not feel sufficiently informed and protected
during the crisis.
Moreover,
difficulties in implementation of European reforms are still caused
by the fact that the decision-making system in Ukraine at present
fails to produce high quality and prompt results.
Ukraine
has adopted framework laws on energy and gas market liberalization
and approved conditions for access to the gas network, but there is a
need to improve these laws. They do not comply with the Energy
Community legislation.
Some
of the required documents have been suspended, such as the interim
procedure for inspection of quality of as at fueling stations,
and application of law
on biological additives to the fuel.
Lengthy
approval procedures by different executive authorities and weak
interdepartmental cooperation further contribute to the delays.
Other
documents fail to be adopted altogether, which results in breach of
deadlines for approval. In particular, the draft national action
plans in energy efficiency and sustainable energy developed back in
2012 was affected. But while the deadline for an EU Regulations or
Directive becomes due in several years or more, the actions to be
made right now are also slowed down.
Thus,
the plans of the responsible ministry to develop basic laws on
accumulating the minimal reserve of oil and oil products might only
appear in 2016, while the law on emissions reduction plan for thermal
power plants, which should have been done a long time ago, might
appear this year.
In its
assessment
of Ukraine’s progress the Energy Community also points out the need
to strengthen the regulatory entity
capacity and independence, adopt legislation on protecting
competition, build high quality statistical information system.
So
what can be done to improve implementation of the energy reform?
Energy
Reforms coalition set suggested a number of initiatives and has
achieved some success.
On
September 17 the Cabinet
decree No. 864-р
updated the government’s plan for implementation of the Protocol
on the Accession of Ukraine
to the Energy
Community
Treaty.
With
the support of environmental NGOs draft
law No. 4972
was registered in the Verkhovna Rada, which implements European
procedures for environmental impact assessment. The experts also
assist in preparing submission of the new draft
law on gas market
provided by the Energy Community Secretariat to the parliament.
To
ensure better processing of decisions and accelerate joint proposals,
this effort must be coordinated within the government and between its
different departments, as well as with other interested stakeholders.
The
Cabinet decree establishes a multilateral working group that includes
representatives of responsible departments, business and civil
society.
Moreover,
such a form of interaction is necessary to fulfill the Memorandum
on Understanding
between the Energy Community Secretariat and the Ministry of Energy
and Coal signed back in February 2014.
Energy
Coalition members find it critical to change the implementation
control procedure. The regulatory impact analysis of separate laws
shall be succeeded by the measurable criteria control system. The
monthly assessment by the Energy Community Secretariat will be also
important. From the beginning of the year Ukrainian energy
specialists already publish
monthly and quarterly monitoring
reports, thus the government
can make use of two sources for independent evaluation of reforms at
the same time.
Finally,
support from the officials responsible for implementation is
necessary, and it won’t be provided by the European technical
assistance.
Obtaining
necessary knowledge on European legislation and regulatory procedures
must include training and internships of mid-ranking officials in
European institutions.
To
strengthen reform capacity, the civil society offered its own
“resuscitation package”– creation of a platform for interaction
between stakeholders, more transparent control over the reforms
implementation and targeted support of implementing entities.
Roman
Nitsovych is the manager of programs for DiXi Group, an analytical
center. This op-ed first appeared in Evropeiska Pravda and is reprinted with permission.
