Ukraine took another big step towards the European Union on April 13 when parliament passed a law on the electricity market in line with the EU’s Third Energy Package.
A total of 277 Verkhovna Rada lawmakers voted in favor of the law, with 226 votes needed for most types of legislation to pass in the Rada.
The new legislation will liberalize and expand Ukraine’s electricity market, experts told the Kyiv Post. The EU’s Third Energy Package is a set of laws that set up an internal gas and electricity market in the union.
“This law plays the crucial role in setting up a competitive and transparent electricity market in Ukraine, giving new incentives for big investments in the electricity industry of Ukraine, and therefore promoting economic growth,” according to electricity market specialists Stanislav Masevych and Oleksandr Dombrovskiy.
Alexander Paraschiv, Concorde Capital research head, added that electricity market reform was among “Ukraine’s key commitments to the European Union. With the adoption (of this law), Ukraine is closer to receiving the third and final 600 million euro tranche of the EU’s macro-financial assistance program.”
But not all experts wholeheartedly welcomed the adoption of the new law.
According to energy expert Andriy Gerus, only two players currently control Ukraine’s electricity market: the government and billionaire Rinat Akhmetov, a Donetsk native. Government-owned Energoatom, Tsentrenergo and Ukrhidroenerho produce 50-55 percent, 8-10 percent and 6-7 percent of the country’s electricity respectively, while DTEK, owned by Akhmetov, produces over 25 percent.
“Can you call a market that is 95 percent controlled by two players competitive?” Gerus asked in a Facebook post on April 13.
He said liberalizing a market with such little competition could lead to a doubling or tripling of electricity bills for ordinary Ukrainians, adding “Hr 150-250 to monthly electricity bills.”
“When people worry about having to pay Hr 50 for gas, (such an increase) could prove difficult,” Gerus said.
The new legislation has been long in the making: Ukraine started working on its new law on the electricity market at the beginning of 2015. The law took a year to plan, draft and finalize before it was submitted to parliament for voting.
But voting was delayed when former Prime Minister Arseniy Yatsenyuk was dismissed, and a new government formed under current Prime Minister Volodymyr Gorysman. The law was re-submitted to parliament in April 2016, but it was only voted on at first reading in September.
And despite the delays, some lawmakers said the law had been approved too hastily.
Samopomich Party lawmaker Viktoria Voytsitska, who is secretary of the parliament’s energy sector committee, complained that more than 80 amendments made to the law just before voting hadn’t been properly discussed.
“This ruins the parliamentary process, which has to have a fruitful, full discussion of every single amendment during the voting process,” she said.
