On September 7, 2016, the Ministry of Economic Development and Trade of Ukraine has amended the statute of Ukrtransgaz, the company responsible for the transit, transmission and storage of natural gas in Ukraine. The Ministry has thus took the control over Ukrtransgaz from NJSC Naftogaz of Ukraine, which is also subordinated to the Ministry. The Ministry has explained this decision with the need to fulfil the commitments regarding the independence of the operator of the gas transmission system from the vertically integrated Naftogaz of Ukraine, which Ukraine has made under the EU’s Third Energy Package.
VoxUkraine believes that the Ministry’s decision to transfer the control over Ukrtransgaz:
- Was made behind the closed doors and without appropriate discussion.
- Does not comply with the Action plan on the unbundling of Naftogaz, which was approved by the Government after prolonged discussions and coordination with the international partners.
- Violates the principles of the Naftogaz Corporate Governance Reform Action plan, the adoption of which was an important prerequisite for a USD 300 million EBRD loan to Naftogaz for gas purchase.
- Neglection of international contracts by the country’s leadership, poses a threat to the number of other loan agreements in the gas sector, namely to the USD 500 million World Bank loan, to the EBRD and EIB loan for the modernization of the “Urengoy-Pomary-Uzhhorod” gas pipeline for the total amount of EUR 300 million, and to the reputation of Ukraine as a reliable partner.
- Weakens the position of Naftogaz in the hearings against Russia’s Gazprom at Stockholm Arbitration Institute. The hearings will start in one weak and have required two years of preparation. The total value of claims against Gazprom amounts to USD 27 bn.
The EBRD has expressed its concern over this decision of the Ministry of Economy of Ukraine and has demanded its revocation. The Energy Community, to which Ukraine has certain obligations within the framework of the Third Energy Package, has also stated that the Ministry’s decision does not comply with Naftogaz unbundling strategy.
We believe that decisions on the transfer of control over state-owned assets have to be made in line with the best international practices, collectively, after an in-depth assessment of economic and political effects of such decisions and only after demonstrating that such decisions benefit the state and Ukrainian voters.
We believe that the government of Ukraine has to adhere to its decisions and commitments to both internal and foreign partners. If there are sufficient grounds for a change to these decisions and commitments, any amendment has to be made through appropriate procedures (e.g. by amending the Action plan) and through negotiation with the foreign partners on the modification of the international treaties.
Therefore, we call upon the government to revoke the decision of the Ministry of Economy to transfer the control over Ukrtransgas.
VoxUkraine Editorial Board
Tymofiy Mylovanov
Olena Bilan
Ilona Sologoub
Natalia Shapoval
Oleksandr Zholud
Borys Davydenko
Alex Nikolsko-Rzhevskyy
Tom Coupe
Olena Nizalova
Oleksandr Talavera
Rostyslav Averchuk
Yuriy Gorodnichenko
Denys Nizalov
Attention
The authors do not work for, consult to, own shares in or receive funding from any company or organization that would benefit from this article, and have no relevant affiliations
