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Experts: In order for the National Regulator to perform its functions effectively, it is necessary to ensure its independence and rotation

Kyiv, September 29, 2017.

Within a year, from 38 points of the law on energy regulator – the Energy and Utilities National Regulatory Commission of Ukraine (NKREKP)  – 19 have been fulfilled, another 10 – partly fulfilled and 9 – not fulfilled. The unfulfilled points include the creation of a competitive commission for the selection of members to the National Regulator and, accordingly, rotation of its members, as well as provision of necessary funding to the regulator. At a round table at Ukraine Crisis Media Center, experts discussed what should be done to ensure that the Energy and Utilities National Regulatory Commission of Ukraine is truly independent and efficient.

The National Regulator can perform its functions effectively under condition of its financial, operational, and political independence. Dmytro Vovk, Chairman of the NKREKP, noted that they had resolved the issue of the agency’s financial independence for the next year. “On September 20, the Budget Committee agreed on 2018 budget, we only need the Verkhovna Rada’s decision on amendments to the Budget Code. Then, financial independence will be secured for 2018,” he explained.

In order to ensure the rotation of the National Regulator members, it is necessary that all power structures submit their nominees to the Nomination Commission. If one of the power structures does not submit their candidates on time, there may be a lack of quorum. “If the competition commission selects to the maximum within the terms specified in the law, without reducing the consideration and estimation time, only two members of the commission will be able to work over a period of up to 2 months. This is especially dangerous now, when the law on the electricity market was adopted, and about 200 legal acts must be adopted,” said Olena Pavlenko, president of DiXi Group. “In order to minimize the consequences of a lack of quorum, the Commission has already prepared three areas. The first is an earlier consideration of draft decisions necessary for the electricity market. The second – amendments were made to the regulatory framework so that the Commission’s regular decisions were long-term, and the absence of a quorum did not affect the industry over some period. The third – the process of reviewing 2018 tariffs was launched earlier. We hope that the Nominee Commission will be able to submit candidates for approval to the President in December. When they are approved, the time when there is no quorum will be minimized,” said Dmytro Vovk.

Oleksandr Dombrovskyi, MP of Ukraine (faction “Bloc Petro Poroshenko”), Acting Head of the Verkhovna Rada of Ukraine Committee on Fuel and Energy Complex, added that in case of political will consolidation there will be a chance that the authorities will timely present their candidates to the Commission. “We have an agreement with the Chairman of the Verkhovna Rada, a signed letter submitted to the faction leaders, and the hope that the factions will react accordingly, and next Tuesday we will receive their proposals on the candidates to be considered by the Committee on Fuel and Energy Complex and by the Committee on Housing and Communal Policy. In case of political will consolidation, the Verkhovna Rada will be able to vote for two candidates from the parliament next Thursday,” noted Oleksandr Dombrovskyi.

He added that the Government and the President announced their readiness to nominate their candidates. “In this situation, we really can only appeal to all players, President,  Government, and Verkhovna Rada to nominate the appropriate people to the Nomination and Selection Commission. They should do this very quickly, because the regulator has to take a number of important decisions, including the gas sector reform and implementation of the electricity market law,” noted Johannes Baur, First Counsellor and Chief of Operations Division at the Delegation of EU to Ukraine.

“I suggest that all experts should form a list of experienced, professional people who can be members of the Nomination Commission. Let us organize voting on these people in a professional expert environment so that we try to set a certain standard,” Oleksandr Dombrovskyi said.

Yevhen Bystrytskyy, Executive Director at the International Foundation “Renaissance,” noted that, in addition to the Nomination Commission, public experts should be involved in selecting the candidates to NKREKP. “They would have to assess the propensity for corruption of these candidates, as the Public Council of Integrity does. Because this crisis has already revealed that  the candidates cannot enjoy our confidence,” he explained.

Dmytro Vovk noted that for the public confidence in the National Regulator to be restored, there should be an external independent assessment of all professional decisions previously prepared by the National Commission. “For this purpose, the Commission initiated an audit of the Energy Community for assessing independence de jure and de facto as well as for assessing the specific professional decisions,” Dmytro Vovk specified.

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