The Ukrainian World Congress (UWC) acknowledges the significant progress Ukraine has demonstrated in reforming its energy sector over the past year. Particularly remarkable have been the adjustment of domestic gas prices to the European market levels, reduced dependence of the Ukrainian economy on Russian gas, and recent steps towards greater energy efficiency of households.
First, the unification of domestic gas prices by a decree of the Cabinet of Ministers of Ukraine of 27 April 2016 has been one of the most significant economic and anti-corruption reforms in Ukraine’s history. New gas tariffs, drawing on European market rates, eliminated the gap between summer and winter prices for natural gas consumers, as well as equalized tariffs for households and industrial enterprises. The reform has generated savings tantamount to 6% of GDP annually, which had previously been lost due to the artificially low domestic prices for gas and governmental subsidies to favored gas traders. In absolute terms, this innovation translated into multi-billion Ukrainian Hryvnia (UAH) savings for state coffers last year.
Second, the government has re-established a “warm” loans program, which supports the implementation of energy efficiency measures by Ukrainian households. In March alone, the program benefited over 18,000 Ukrainian families, which took out an equivalent of UAH 355 million for the insulation of homes and the installation of solid fuel boilers. Since the program started in October 2014, about 220,000 families have become its beneficiaries, having borrowed over UAH 3 billion for insulation and other energy saving needs.
Third, Ukraine has remarkably succeeded in alleviating its dependence on Russian gas imports, which halted completely in November 2015. The country has managed to meet its consumption needs through reverse gas supplies from Slovakia, Poland, and Hungary, through boosting its own gas production capacities, and through falling domestic consumption. In this context, we also note important steps by the Ukrainian authorities to allow for genuine competition in the gas supply market. Over the past two years, Ukraine has diversified its gas imports by preparing the necessary legislative ground and concluding delivery contracts with 12 suppliers.
During his speech at a side event of the 16th Winter Session of the Parliamentary Assembly of the Organization for Security and Co-operation in Europe (OSCE) on 23 February 2017 in Vienna, Austria, the UWC President Eugene Czolij recommended that OSCE member states not rely on Russian gas as a source of energy since the Russian Federation repeatedly took advantage of energy dependence as an instrument with which to pressure and intimidate not only Ukraine, but EU member states.In this regard, he called upon OSCE member states to diversify channels for receiving energy resources, and to not limit their source of energy to one country.
The UWC continues to closely monitor reforms in Ukraine’s energy sector and calls upon the Ukrainian authorities to take further steps in the implementation of the EU’s Third Energy Package and recommendations by the Energy Community. The latest report by the Energy Community Secretariat of March 27, 2017 on Ukrainian gas sector reforms can be found HERE.
“By getting closer to EU energy regulations and improving energy efficiency Ukraine will strengthen its energy security and prevent the Russian Federation from using gas as a political weapon against Ukraine,” stated the UWC President Eugene Czolij.
