Summary
- The Energy Transparency Index has been developed to assess the actual state of information availability and quality in Ukraine’s energy sector, conduct a multidimensional analysis of transparency, identify gaps, track progress, and prepare targeted recommendations aimed at improving the transparency of Ukraine’s energy sector in line with best global practices.
Consumers are the primary direct and indirect beneficiaries of improved transparency. Better access to and quality of information improves their ability to protect their rights and promotes rational, active economic behavior. More transparent, open, and competitive markets will contribute to improved customer service and fair market pricing. The study may be of interest to companies and potential investors seeking predictable policy and regulation, an open competitive environment, lower business risks, and better relations with the government and the wider public. The Index will be helpful for government institutions responsible for information disclosure to improve their activities and regulation. Foreign partners will have better opportunities to understand Ukraine’s energy policy and markets. As a result of increased transparency, civil society, the media, and experts will have more tools at their disposal to monitor and analyze the situation in the sector and assess the effectiveness of public policy and regulation. Ultimately, greater transparency will help to reduce corruption risks in the sector.
The Energy Transparency Index has become part of Ukraine’s national reporting on the achievement of Sustainable Development Goal 7, “Affordable and Clean Energy” (SDG 7). On November 29, 2024, by the respective order of the Cabinet of Ministers1, the Index was identified as one of the indicators for achieving SDG 7 under Task 5. Promoting rational energy consumption, incentivizing energy efficiency, and raising consumer awareness of the functioning of the fuel and energy sector. Thus, the level of transparency in the sector has become an official measure of the effectiveness of state policy on the path to ensuring sustainable development in Ukraine. This recognition of the Index should encourage its use as a practical tool by public authorities, compliance with recommendations developed as a result of transparency assessments, and more effective reform in the energy sector.
A distinctive feature of the 2024 Index, as in the two previous editions, is the assessment of transparency during the martial law in Ukraine. The introduction of the legal regime of martial law has led to a significant restriction of public access to information due to national security considerations2. In addition, due to the war with the Russian Federation, the ability of administrators to fully collect, systematize, and publish data has been partially lost due to a number of unfavourable circumstances. These include personnel losses, legislative changes allowing business entities not to submit reports during the martial law3, granting authorities, state- owned enterprises, institutions, and organizations the right to suspend or restrict the operation of their information systems and public electronic registries4, abolishing the competitive selection procedure for civil service positions5, as well as other factors and force majeure circumstances related to the war. The main objectives of the third military edition of the Index are: 1) to objectively reflect and analyze the impact of the war and the martial law regime on the sector’s information openness, and 2) to determine the potential for restoring transparency even during the martial law regime.
Index-2024 covers 233 indicators, grouped into eight categories and based on specific regulatory requirements and best global practices for information disclosure. This edition of the Index has been supplemented with three new indicators related to operational balance data on the oil and liquid fuels market and the amount and cost of services on increase of the share of electricity generation from renewable energy sources (feed- in tariff). These minimal changes to the assessment framework were made in order to maintain the comparability of results and enable one to track “pure” progress in transparency compared to 2023 and answer the question of whether it is possible to improve the sector’s information transparency during wartime. At the same time, the content and basis of the Index indicators were updated based on the latest EU legislation and best European and global practices for data disclosure and reporting. The assessments obtained within the framework of the Index are the result of processing open source data on the functioning and development of the energy sector along the chain “from producer to consumer”.
Ukraine’s final score for the 2024 assessment rose to 44 (compared to 41 points in 2023). This slight progress (+3 points, or 7.3%) proves that it is possible to improve transparency in the sector even in conditions of war and martial law. The full-scale aggression of Russia and the introduction of martial law caused a sharp decline in the transparency of the energy sector – the total score fell by 24 points in 2022 and dropped to the “unacceptable” transparency zone on the Index scale. In 2024, despite mixed dynamics in individual dimensions and components of the Index, the overall score reached and slightly exceeded the 2018 baseline (43 points), but the fundamental factors influencing transparency remained unchanged.
The progress made in transparency has, among other things, led to a reduction in the number of “black boxes” in the energy sector. The “black box” index decreased by 5 percentage points, from 36% to 31%. Thus, for almost a third of the indicators, information remains closed or completely absent.
The key factors contributing to the low level of transparency remain: a directive prohibition on the disclosure of data and discretionary decisions by data administrators or reporting entities to limit the amount of public data or to stop publishing it during martial law. Both factors are of legislative in nature and are caused by respective changes in laws and regulations, through which the state has prohibited the publication of specific data or allowed to limit its disclosure. The third factor, which is synthetic in nature and not directly related to legislative changes, is a combination of destabilizing shifts caused by the war, which have resulted in the loss of the ability of data administrators (public authorities, business entities, etc.) to collect, process, and publish information (the “fog” of war).
For more than a third of the 2024 Index indicators (79 out of 233), legislative restrictions on publicity remain in place. In particular, directive prohibition on data disclosure affected 26 indicators (11.2%), and 53 indicators (22.7%) are subject to a discretionary decision by administrators based on the powers granted to them for the period of martial law. Thus, legislative and regulatory factors will be key in restoring the sector’s information transparency after the end of the martial law regime and even during its duration.
The assessment demonstrated different dynamics of transparency across the Index categories. Progress was made in six categories: “Natural Monopolies” (+3 points), “Supply” (+3 points), “Reliability and security” (+12 points), “Consumption” (+6 points), “Policy” (+8 points), and “Public Authorities” (+5 points). At the same time, two other categories (“Balances” and “Reporting”) saw a decline. As a result of higher scores, two categories (“Consumption” and “ Public Authorities”) moved into the “medium” transparency zone, while all other categories remained in the two bottom zones of the Index scale with the worst transparency – 3 categories each in the zones of “insufficient” and “unacceptable” transparency, respectively. In addition, information openness declined for 4 of the 24 subcategories of the Index, remained at previous year’s level for 9 subcategories, and improved in 11. Such mixed dynamics indicate the advisability of applying a selective/targeted approach to restoring transparency in the sector, taking into account the potential threats stemming from data disclosure.
The Index enables to assess transparency by five energy markets and cross-sectoral issues. After several years of gradual improvement between 2018 and 2021, mainly due to the development of the regulatory framework, the transparency of energy markets has significantly decreased due to the war and remains low. In particular, among the 79 indicators for which there have been legislative restrictions on publication, 53 indicators (or 67%) are sectoral in nature. At the same time, due to the low base of comparison provided by the 2023 Index assessment, 4 out of 5 markets saw an improvement in transparency within the range of 1-6 points (electricity, gas, oil and liquid fuel, and heat markets). Only the score for the steam coal market remained at 2023 level.
The 2024 Index continued the practice of assessing transparency of public authorities that are responsible for policymaking in energy and related areas, are involved in regulating the sector, and are data administrators. They were evaluated via individual indicators related to their activities and spheres of responsibility. Compared to the previous study, four out of six public authorities — the Regulator (the NEURC, +8 points), the Ministry of Energy (+5 points), the Antimonopoly Committee (+1 point), and the State Agency on Energy Efficiency and Energy Saving (+5 points)—showed some progress. Meanwhile, the scores for other two institutions assessed either continued to decline (State Statistics Service) or remained unchanged (Ministry of Environment). Among the main factors behind this trend are legislative restrictions introduced under martial law, as well as the partial loss of capacity of individual administrators to collect, process, and publish data.
- The “black boxes” and shortcomings in information disclosure identified during the assessment provided the basis for specific recommendations to authorities and companies, which are set out at the end of each section of this report. Given the specific impact of the war and the martial law regime on the sector’s information transparency, the recommendations based on the study’s findings are divided into three groups: 1) general (irrespective of the martial law regime); 2) recommendations for the martial law period, allowing to partially improve the transparency of the sector while avoiding increased risks to national security; 3) recommendations for restoring transparency in the energy sector after the termination or repeal of martial law.
- After more than three years of full-scale war, and in light of the future recovery of Ukraine’s economy and energy sector, it is advisable to rethink approaches to data disclosure for security reasons. In particular, the relevant state authorities should develop clear criteria and an approach for assessing the level of sensitivity/risk/threat of information, as well as determine the possibilities and conditions for its disclosure or partial disclosure. Potential criteria and approaches have been proposed by the think tank DiXi Group in a separate study10. It is also advisable to implement the currently inactive so-called “three- component test” provided for in Article 6 of the Law of Ukraine “On Access to Public Information,” which defines a set of conditions for restricting access to public information. To this end, a clear mechanism should be developed for assessing and justifying the set of conditions defined by this law.
Even if information is identified as sensitive/risky/ threatening to national security, it is advisable to apply methods to minimize its sensitivity/riskiness/ threatening nature. In particular, data may be disclosed in modified formats: in aggregate form (in space or time), with a certain time lag, with reduced frequency of disclosure, without the part of the data that poses a threat to security, or in another way that will ensure the disclosure or partial disclosure of information that is in the public interest.
As part of the third military edition of the Index, scenario calculations were made for the potential restoration of information transparency in Ukraine’s energy sector. In particular, taking into account the recommendations, which can be implemented even during the period of martial law , will allow achieving a quick effect and significantly improving the transparency of the sector – from the current level of 44 points (D-, insufficient transparency) to 69 points (C+, medium transparency). In particular, the implementation of the recommendations during martial law will improve transparency in all eight categories and in all five energy markets.
For more details on the results of the study, including a table of indicators containing assessments and comments for each indicator of the Index, please refer to the analysis below or visit the website of the Ukraine Energy Transparency Index.