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Kinstellar Energy Digest: Ukraine. August 2018 in Review

September 2018Kinstellar Energy Digest: Ukraine

GAS STORAGE: Ukraine revises tariffs for natural gas storage

On 1 August 2018, new tariffs came into effect for the underground storage of natural gas in Ukraine. Ukraine’s National Commission for the Regulation of the Energy and Public Utilities Sectors (the “Regulator”) adopted a corresponding resolution (No. 480) on 19 June 2018, which was published with delay.

According to the above resolution, the new tariffs for underground gas storage services are calculated on a daily basis at the following rates:

  • for natural gas storage: the basic rate is UAH 0.1720 (approximately EUR 0.0053) per 1,000 cubic meters per day, with a coefficient of 1.1 that is applicable if the individual services are booked for one month;
  • for natural gas injection: the basic rate is UAH 64.40 (approximately EUR 2) per 1,000 cubic meters per day, with (i) a coefficient of 1.1 that is applicable if the individual services are booked for one month or (ii) with a coefficient of 1.2 that applies if the specific services are booked for the day ahead;
  • for natural gas withdrawal: the basic rate is UAH 67.10 (approximately EUR 2.08) per 1,000 cubic meters per day, with a coefficient of 1.1 or 1.2 applied in the same manner as for natural gas injection services.

The above tariffs are quoted VAT exclusive; their euro equivalent is calculated based on the official UAH/EUR rate as of 27 August 2018.


NEW ENERGY MARKET: Regulator gives nod to draft regulations

On 23 August 2018, the Regulator preliminary approved a number of drafts of secondary legislation that are required for functioning of the new electricity market in Ukraine.

The proposed new rules, which are currently pending public discussion, include a long-awaited procedure for the purchase of electrical energy offered at a feed-in (“green”) tariff and the procedure for the reimbursement of costs relating to the construction of linear connections to the power grid (if such connections are included in the regulatory base of assets). Other draft regulations include:

  • procedures to establish the electrical energy transmission tariff and the tariff for dispatch control services, as well as the methodology for calculating regulated prices for additional services;
  • rules for dispute settlement among business entities operating in the energy and utilities sectors;
  • changes to the Licencing Rules for Energy Distribution to allow a licensee to own electrical grids and related objects based on the right of economic management (for state and municipal property) and obliging the licensee to conduct repairs of such assets from financing that is incorporated in the tariff structure.

In addition to the proposed changes above, the Regulator also adopted in August the “Methodology for Determining Available Cross-Border Capacity (Cross-Border Electrical Networks of Ukraine)”.

Summing up the current progress in the implementation of a liberalised energy market in Ukraine, the Regulator has reported its 90% readiness in terms of the adoption of the required regulatory acts.


For further information please contact Olena Kuchynska, Partner, at

e-mail

, or Viktoriia Pysmenna, Associate, at .