Competition on energy market needs to develop in accordance with European requirements – Head of Antimonopoly Committee of Ukraine

Competition on energy market needs to develop in accordance with European requirements – Head of Antimonopoly Committee of Ukraine
November 11, 2015.

Kyiv, November 11, 2015. “Competition on energy market needs to develop taking into account European experience, the Antimonopoly Committee of Ukraine needs to be the moderator of this process,” said Yuriy Terentyev, Head of Antimonopoly Committee of Ukraine (AMCU) speaking at a press briefing at Ukraine Crisis Media Center in the framework of the Ukraine Reforms Communications Taskforce project.

“Situation in the energy sector that Ukraine is facing is not unique in the international context. European countries were also solving the problems of energy market development similar to ours in 1990s and in mid 2000s,” said AMCU Head. “The abovementioned problems included high concentration, complicated access to the market for new players, low integration among various market elements, lack of transparent information that creates lack of trust towards pricing etc. That’s why when we speak about the AMCU we do not need to re-invent the wheel so to say: the standards for market development already do exist. A more complicated task is to implement these standards taking into account our peculiarities. At the moment we see four priorities in our activities on the energy market. We aim at establishing bilateral relations between the actors – they will become basic. The price is to be formed based on transparent costs, regulator is to exercise legal transparent regulation and as a result competition on the energy market will stimulate economic growth,” he added.

The AMCU initiated a comprehensive research of the energy market in June 2015 focusing on the monopoly status in the sector. The Committee has received the necessary information for the analysis and plans to publish the research closer to the end of the year. Moreover the AMCU started a case in September 2015 on abuse of monopoly status by energy company DTEK as well as advised the National Energy and Utilities Regulatory Commission (NEURC) on removing drawbacks in the wholesale pricing mechanism for electricity.

In parallel to the above processes rules of the game change in various segments of the energy market. The Law “On gas market” came into force in October, the draft law “On electric energy market” is currently discussed. Serhiy Tsyvkach, co-chairman of the Competition Development Foundation, noted that in case it is adopted the document is to drastically change the market rules. Thus bilateral short- and long-term agreements between consumers and suppliers of electricity are to be introduced. “It will enhance competition. It will free the market from additional regulative function on the part of the NEURC, they will not be setting prices on electric power according to the new system. However, on the other hand these prices need to become economically feasible,” emphasized the expert. He also said that implementation of the above mentioned changes will require working out a series of legal documents it is advised to start drafting them today.

Oleksandr Melnychenko, co-chairman of the Competition Development Foundation, emphasized that as both changes in question and the ACMU powers are so important it is crucial to ensure that the process of drafting the changes is transparent and open. “It is important that the ACMU demonstrates openness and readiness to work in a transparent way, that it takes the leadership in reforming strategically important economic sectors,” said the co-chairman of the Competition Development Foundation.

 

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