Creation of System of Control of State Assistance to Become the Key Step to Improving Competitive Environment in the Energy Industry – Experts

28 September 2016

Experts think that the key measure for improving the competitive environment in the energy industry will be creation of the system of control of the state assistance by the Anti-Monopoly Committee of Ukraine. 

It was discussed during the round table "Competition in Energy Sector as Tool to Attract Investments to Ukraine", organized by the expert Energy Reforms Coalition.

"Currently, the Anti-Monopoly Committee of Ukraine raises many questions in view of the Law "On State Assistance to Economic Entities", which became effective in August 2017, according to which the AMCU will regulate provision of the state assistance to economic entities in the energy industry. Thanks to the EU support, the AMCU made significant progress in the implementation of obligations in the sphere of competition, but the largest steps are still ahead", said the EUEA Director, Valentyna Beliakova.

"There is a very misleading opinion – when they talk about competition, they immediately talk only about the AMCU. If something is wrong with competition, then all actions should be immediately taken by the Committee. Yet I would like to note that an effective competitive environment can function only if three main components are available: the unified state policy aimed at development of competition in a particular sector, efficient market regulation, and efficient system of competition protection", the First Deputy Head at the AMCU, State Commissioner Mariya Nizhnik said. "In an ideal situation, the state has to preserve competitive neutrality. Yet, in real life the state is likely to support the state-owned enterprises. This practice takes place in many countries", State Commissioner of the Anti-Monopoly Committee of Ukraine Anna Artemenko continued.

"In the EU, support for companies is not provided if they cannot justify why they should receive subsidies. In our countries, there is the Regulator acting against non-competitive market conditions, and a principle of collective market domination is used", said Jose Manuel Hernandez, the First Secretary of the European Commission Delegation to Ukraine, when sharing his experience.

DiXi Group study "Legislation and Practice: What is (not) right with the AMCU?" confirmed that as of September 2016, the AMCU and the co-implementers (Ministry of Economic Development, Ministry of Justice of Ukraine) implemented three out of five points of the governmental plan on implementation of obligations in the sphere of competition. At the same time, the key aspect will be the Law "On State Assistance to Economic Entities" entering into force in August 2017, which vests in the AMCU a new function of regulating provision of state assistance to economic entities operating in the energy industry.

The market participants stated in their turn that currently, the gas market is the only full-fledged competitive market in Ukraine, and this success has to be developed on other energy products markets like electricity and coal. Meanwhile, transparent competitive energy markets play a key role in attracting investments to the strategically important economy sphere of the country.

"I think that our priority is the legislative problems existing not only as laws but also as other legal documents, which in fact do not provide guarantees for a private investor concerning an opportunity to invest large funds and permanently invest money in the Ukrainian energy industry. All investors ask us to tell them whether there will be legislative stability, whether the state will provide additional guarantees", said Oleksandr Ponomarenko, Director of the Department of Fuel and Energy Complex Strategy and Development and Investment Policy of the Ministry of Energy and Coal Industry of Ukraine.

Finally, the experts emphasized once again that there is a need to facilitate the process of implementation of obligations under the EU Association Agreement in the part related to competition, in particular related to creation of the complete registry of state assistance mechanisms, development of criteria for assessment and selection of the state assistance recipients.

For reference:

Implementation of Ukraine's obligations is monitored 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, there is promoting public dialog for proper implementation of the European energy and environment reforms; there is also 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 "Energy Reforms" web-site (http://enref.org/).

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