A DiXi Group expert about implementation of the Ukraine-EU Association Agreement: energy reform is simultaneously the most successful and the most disastrous

The fulfillment of Ukraine’s commitments under the Ukraine-EU Association Agreement was discussed at the press briefing held at the Ukrainian Crisis Media Center on 4 July. An assessment of the situation in the energy sector was provided by DiXi Group President Olena Pavlenko. Reform in the energy sector is simultaneously the most successful and the most disastrous, Olena Pavlenko said at the briefing. Among the achievements were implementation of the gas market and daily balancing of the gas market, and the attempt to monetize household subsidies. And also, ratification of Annex 27 to the Association Agreement. “This is the first most advanced agreement between Ukraine and the EU on mutual integration of markets. It says there that Ukraine must consult with the EU concerning development of certain legislative norms and abolish its legislative provisions not conformant with European norms. A part of the EU legislation – Network Codes – must be adopted without essential changes,” Olena Pavlenko said. The issues concerning unbundling of Naftogaz and liberalization of deliveries to household consumers remain unresolved. The biggest disaster was the Constitutional Court’s decision regarding independence of the National Commission for Regulation of the Energy and Utilities Sectors (NCREUS). This is a very acute issue, which should be (have been?) discussed at the Ukraine-EU Summit, Olena Pavlenko stressed. “The decision of the Constitutional Court concerned not the law on the regulatory authority in general but its specific provisions, and some of these provisions explicitly stipulate the regulator’s independence,” Olena Pavlenko said. “At the same time, the Association Agreement and EU directives concerning the electricity and gas markets clearly state that the regulatory authority for these markets must be independent. Therefore, we have a contradiction between an international agreement signed by Ukraine and a decision of the Constitutional Court. This is an alarming situation, because the more legislation concerning integration of markets Ukraine will adopt, the more attempts could be made to overrule certain norms via the Constitutional Court.” The situation with the fulfillment of commitments under the Ukraine-EU Association Agreement is described in DIXI Group’s annual monitoring report Ukraine and the Association Agreement: Endless Repair. The report states that due to elections in both Ukraine and the EU, the year 2019 will become a year of challenges in preserving the pace and quality of pro-European reforms. Unceasing monitoring and pressure from the broad public and European partners to continue reforms, ensuring continuing publicity of the government and successful completion of civil service reform could become a response to these challenges.