Energy 14 November, 2017 11:00 am   
COMMENTS: Mateusz Gibała

Creating a TSO branch within Ukrtransgaz is a positive step towards unbundling

Establishing a business unit with TSO functions at Ukrtransgaz that will be further transferred to PJSC Mahistralni Gazoprovody Ukrainy (MGU) assists the TSO unbundling model chosen by the Ukrainian government. Director of the Energy Community Secretariat Janez Kopač said that during his presentation of the Secretariat’s Annual Implementation Report at the meeting of the Ukrainian parliament’s Energy Committee on 9 November.
“I urged the management of Naftogaz more than a year ago to help the government to create a transmission system operator. Inside existing Ukrtransgaz it is possible to create a business unit where you concentrate transmission operator’s functions. Ukraine decided to establish a new legal entity as the transmission system operator because existing Ukrtransgaz has all those claims from Firtash, from Kolomoiskiy and others, and you never know what is the legal inheritance of it. This new entity shall be MGU and all TSO activities shall be transferred into it. Naftogaz decided recently, to establish a business unit with some TSO functions, and for me this is a positive step because it can be simply transferred to MGU, he explained.

Mr. Kopač also highlighted that Ukrtransgaz branch is not a substitute for the new TSO: “Don’t think of this branch as a future transmission operator, it can only be transferred into MGU.

The Director of the Energy Community Secretariat noted that Ukraine had successfully transposed the Third Energy Package to its legislation, while implementation was still an issue. According to Janez Kopač, another stumbling block, besides the unbundling, is the liberalization of the household segment.

“In the wholesale market, there is almost perfect competition. There are more than 20 traders active in Ukraine and Naftogaz is among them as well. But in retail market, there is monopoly. Monopoly was imposed by so-called public service obligations act adopted by the government. This act was needed not to have too much shock in introduction of liberalized market for households. But on the other side, this act was complete postponement of any market liberalization in the retail gas market.”

Mr. Kopač also told about a draft PSO act suggested recently to the Ukrainian side by the Energy Community Secretariat and the World Bank. The document stipulates gradual refusal from government control. At the first stage, at least one third of gas produced by Ukrgazvydobuvannya shall be sold on the free market, while other two thirds in the first step can be reserved for the regulated segment, i.e. households and district heating companies. Then, Ukrgazvydobuvannya shall progressively increase the share of its gas sold on the free market. At the same time, all potential competitors need to get access to the data about consumers in the retail market. Otherwise there will be no competition.

“There were some attempts of some individuals to change the supplier, but they couldn’t do it, because the competitive supplier could not approach that customer directly,” Janez Kopač said.