Reform Index №183-184: changes to the deposit guarantee system and the law on energy storage facilities

Reform Index №183-184: changes to the deposit guarantee system and the law on energy storage facilities

Photo: / DmitryPoch
7 June 2022

The Reform Index is +0.8 points for the period from March 28 to April 24, 2022*, with values ranging from -5.0 to +5.0. In the previous round, the index was +1.3 points.  

At the start of the full-scale war on February 24, 2022, the structure of the Index was changed: we changed the frequency of the Index releases from bi-weekly to quad-weekly. In August 2023, we conducted an audit, during which we decided to return to the previous period, in connection with which issues #181-187 were retrospectively recalculated and divided into two-week periods (the table with the results of the recalculation is provided here). So, events that appeared after February 27, 2022 were moved to biweekly issues that correspond to the date of their approval. Due to this, the numbering of issues from 181 to 210 also changed.

For the four weeks ending April 24, we spotted seven regulations that could be called reforms (please note that we do not assess laws in effect only during martial law). However, experts gave +2.0 points to only one law, namely the law on changes to the deposit guarantee system.

Chart 1. Reform Index Dynamics

Chart 2. Reform Index and its components in the current round

Oschadbank will become part of the deposit guarantee system, +2.0 points

In April 2022, the President signed law 2180-IX stipulating that the state-owned Oschadbank would operate within the overall deposit guarantee system. The bank’s joining of the Deposit Guarantee Fund for private individuals was scheduled for 2001, but it was repeatedly postponed. Before the law was adopted, Oschadbank had been the only institution guaranteeing depositors a refund of their full deposit if withdrawn from the market. This created a distortion in the banking market, making the state-owned bank more attractive than private institutions.

The law introduces two other changes, namely guarantees from the state during martial law and three months after that of full reimbursement of deposits to Ukrainians if the bank is withdrawn from the market and an increase in the guaranteed amount from UAH 200,000 to UAH 600,000 after the end of martial law. We have not provided an assessment of these two changes in the Reform Index since the first change is provisional, and the second one is not a game-changer.

Information about the Reforms Index project, the list of Index experts and the database of the regulations assessed are available here.

Law on developing energy storage facilities, +1.0 points

Law 2046-IX introduces a new type of activity in the electricity market to improve the energy system’s flexibility and ensure the accumulation of surplus energy. It is designed to align with EU legislation and further enhance the synchronization of Ukraine’s energy system with the European one.

Developing energy storage capacity is especially important when using green energy (solar, wind), whose production depends on weather conditions.

Energy storage activities will be subject to licensing, except when energy producers store the energy of their own production and within specified limits (the amount of energy being stored must not exceed the maximum amount of energy supply by this producer).

The law prohibits transmission and distribution system operators from owning, operating, and exploiting energy storage facilities except when such facilities are elements fully integrated within the operator network and permitted by the National Commission for State Regulation of Energy and Public Utilities.

Chart 3. Value of Reform Index components and number of events

Reform Index from VoxUkraine aims to provide a comprehensive assessment of reform efforts by Ukraine’s authorities. The Index is based on expert assessments of changes in the regulatory environment in five areas: Governance, Public Finance, Monetary system, Business Environment, Energy.

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