Reforms for Implementation of Association Agreement in Energy and Environment Spheres Slowed Down in Summer – Experts

07 September 2016

Experts mention the absence of significant progress in the area of Ukraine’s implementation of the EU Association Agreement in the energy and environment spheres in June-August 2016.

This was discussed during a briefing called “Association Agreement: Reform(less) Summer” organized by representatives of the DiXi Group think tank, Civil Network OPORA, All-Ukrainian NGO “Energy Association of Ukraine”, Resource and Analysis Center “Society and Environment”, European Ukrainian Energy Agency, Scientific-Technical Center “Psycheа”, “Transenerhokonsaltynh” LLC and “Naftohazbudinformatyka” LLC.

 Ukraine’s implementation of the Association Agreement in the spheres of energy and environment was monitored within the framework of six working groups, namely: Gas, Electricity Industry and Nuclear Safety, Environment and Renewable Energy, Energy Efficiency and Social Affairs, Oil, Business Climate.

Participants of the group that analyzed reforms in the gas sphere believe that, with some exceptions, summer months did not bring about a breakthrough in reforms.

“During the last three months, a movement toward creation of a really competitive natural gas market in Ukraine significantly slowed down, and until today, all the required legislative amendments have not been implemented in full. The law “On National Commission for State Regulation in the Spheres of Energy and Utility Services” was not adopted. Resolution No. 496 “On Separation of Activities Related to Transportation and Storage (Pumping, Withdrawal) of Natural Gas” was adopted, which outlined the plan of restructuring NJSC Naftogaz of Ukraine, but practical implementation of this plan was postponed until enactment of decisions in the Stockholm arbitration… In general, the government needs a more systematic approach to implementation of a new market model,” said Leonid Unihovskyi, General Director of Naftohazbudinformatyka.

“After the beginning of the Verkhovna Rada sessions, we expect the end of the calm period and acceleration of the rate of transformations. More specifically, it refers to adoption of the basic laws in the spheres of electricity, protection of environment, energy efficiency, de-regulation, and improvement of the business climate,” DIXI GROUP Projects Manager Roman Nitsovych added.

Hopes for acceleration of reforms were also expressed by representatives of the group that studied the electricity industry sphere. Svitlana Holikova, an independent expert, Head of TransEnerhoConsulting, mentioned, “The energy induction and the public in July were waiting for adoption of the laws “On Electricity Market” and “On National Commission for State Regulation in the Spheres of Energy and Utility Services”, but this did not happen. Now, their further fate will depend on political agreements and voting this autumn”.

When looking at the process of implementation of the environmental provisions of the Agreement from the moment it was signed, experts mention that none of the reforms launched in the environmental sphere was completed. “The reforms are mostly at the stage of planning/drafting of a normative legal document, and the main achievement remains to be the developed and adopted plans of implementation for each directive/rules,” said Natalia Andrusevych, Chair of the Board of the Resource and Analysis Center “Society and Environment”.

The RAC “Society and Environment” also emphasized there is a need to include in the State Environmental Policy Strategy that is being revised now the respective benchmark indicators until 2030. Regarding the implementation of horizontal environmental legislation, it should be said that two basic draft laws that were adopted in the first reading in July – on EIA and on SEA – at present are being prepared for the second reading, and – in experts’ opinion – need to be harmonized with the applicable procedures of designing and receiving permits for construction, overcoming corruption risks, and inclusion of urban development documents in the sphere of SEA application.

In the energy efficiency sphere, the process of harmonization of the national legislation with the requirement of the EU standards is rather slow. In experts’ opinion, the declared reform goals in the energy conservation sphere demonstrate sporadic positive results, and sometimes they are replaced with populist statements of politicians and officials at all levels.

“In the part related to energy conservation and energy efficiency, there is a significant gap, namely in the area of implementation of the key Directives, which fact is confirmed in the report on priority reform for the first six months of 2016, published by the National Reform Council in July. In the Verkhovna Rada of Ukraine, the governmental bill “On Energy Efficiency of Buildings” was registered, and the bill “On Commercial Accounting of Utility Services” submitted by members of the parliament. These draft laws are important steps on the way to introducing energy saving measures on a countrywide scale, yet they need to be finalized in the part related to including the proposals of independent experts and specialists in the respective sphere,” said Tetiana Boiko, Coordinator of Utility and Energy Programs of the Civil Network "Opora".

According to the Director of Special Projects of the Scientific-Technical Center “Psycheа”, Hennadii Riabtsev, with regard to implementation of Ukraine’s international obligations in the oil and petroleum products market, the government was not active during the reporting period.

“This can be partly explained by the changes in leadership of the responsible state authorities that are still in progress, and the remote deadlines for implementation of the identified tasks… Significant concerns are raised by the absence of the signs of consistency in the process of development and implementation of the state policy in this sphere when in the activities of every new government the previous solutions are almost never used… One can also see the absence of appropriate coordination in activities of the governmental bodies, which results in creation of a large number of working groups that do not interact with one another. Among their members, there are usually no oil market experts, and this leads to numerous mistakes, among other things, in the implementation plans,” Hennadii Riabtsev said.

In the context of improvement of the business climate in summer, the priority areas of governmental activities, in specialists’ opinion, were the steps toward the increase of transparency and decrease of corruption. However, the most important draft laws aimed at creating favorable conditions for development and clear-cut rules for conducting business have yet to be adopted.

“Regarding the business climate, a significant progress was reported as to the increased transparency in customs offices, in public procurements, and disclosure of information in extractive industries. In August, a Single Window system was launched in Ukrainian customs offices, the ProZorro procurement system became fully operational, and the government initiated creation of the Investment Promotion Office. At the same time, the most expected laws were never adopted – No. 4493 “On Electricity Market of Ukraine” and No. 2966-д “On NCSREU”, said Valentyna Beliakova, Director of the European Ukrainian Energy Agency.

Finally, the experts emphasized once again the need to accelerate the process of implementation of commitments under the EU Association Agreement, especially in the part related to creation of the legislative framework of implementation of specific activities.

For reference:

The monitoring is done within the framework of the Project "Increase the Civil Society Influence in Monitoring and Policy Dialog Regarding Reforms in the Energy and Related Sectors in Accordance with the Implementation of the Association Agreement" carried out with the financial support of the European Union.

Among the key objectives of the project is promoting public dialog for proper implementation of the European energy and environment reforms, as well as informing the Ukrainian society about the importance and potential benefits of European reforms in the energy and environment sectors.

Monitoring reports on carrying out the Association Agreement by Ukraine in the energy and environment sectors for June-August 2016 can be found and downloaded on the website of "Energy Reforms".

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