The draft law on independent regulator should be adopted as soon as possible, otherwise gas market will not work – MPs and NGOs


Kyiv, December 24, 2015. The establishment of independent National Commission for State Regulation in Energy and Utilities (NCSREU) should demonopolize energy market in Ukraine and fight corruption in the sector. Without approving the draft law on independent regulator establishment, the previously adopted law on gas market will not work and reform in the energy sector will be incomplete, said MPs, civic activists and experts who worked out the draft law while being at a panel discussion at Ukraine Crisis Media Center. Olena Pavlenko, President of analytical center DiXi Group, explained that there is the government’s version of the draft law on regulator, expanded by experts and recommended for submission to the Parliament to vote in first reading. “The voting results don’t matter as much now. We, the citizens, will be satisfied with any version, because we know how to complete this draft law and make it really good. We have the final version, but we need parliamentary vote on the government’s version,” said Pavlenko. Especially taking into the fact that the law is connected to country’s European integration, said the expert.

According to Yevhen Bystrytsky, Executive Director of the International Renaissance Foundation, which supported the draft law on independent national regulator, the energy market is the most corrupt and its cost is about $ 16 billion a year. And the market, in fact, is a complex system of relations among politicians and oligarchic business. Ensuring independence of the National Commission, said Mr. Bystrytsky, requires that the appointment is made by different political forces and government institutions. “We are talking about President, Cabinet of Ministers, and Parliament. If at least these three branches of power take part, none of them can claim to gain control over the selection and appointment to the national commission,” said Bystrytsky. Only this way we can ensure NCSREU’s primary independence under the public control. In addition, independent NCSREU will contribute to the fight against corruption and, no wonder, now we can observe resistance in parliament to approve the draft law, said Bystrytsky. “If there is resistance, it means that someone needs it, and if  someone needs it, then there are elements of corruption, if there are elements of corruption, we must fight with it,” he explained why citizens support the draft law.

Oleksiy Ryabchyn, MP, Batkivshchyna faction, said that there are three possible scenarios. In particular, to vote and reject the draft law, then there will be alternative parliamentary draft laws. The second option is to send the bill to the committee for revision and make the government’s version final. The third way is to take it to the second reading and make changes. According to Ryabchyn, an important aspect of the draft law is introducing the tariff ombudsman administration, which is important for consumer protection. He believes that the only inconsistent paragraph is the issue of Nominating Committee, which will appoint seven members of the regulator, as well as the terms of their appointment and rotation. The government project implies annual replacement of several NCSREU members. “There is a consensus that the rotation should be held as soon as possible, six months after the adoption of this draft law, to update and give new functions to the committee,” said Mr. Ryabchyn. As for the procedure for appointing members of the commission, according to the government draft law, two people are appointed by the president, two – by Parliament on the Speaker’s proposal, and one person – by the Ministry of Energy, he said. “But complete monopoly of one branch, representing the president, may distort the regulator’s reputation,” said a member of inter-faction union “EuroOptymists.” The MPs suggested a different approach: give president a right to appoint one member of Nominating Committee, the Parliament – three instead of two and on the Parliament’s proposal – a definite number from each faction and not from the Speaker, and one person appointed by the Cabinet of Ministers (government). “This will prevent from domination of one political parties and the regulator will be balanced,” said Ryabchyn.

The national regulator should have not only political but also financial independence, said Natalia Katser-Buchkovska, MP, Narodnyi Front faction. She said the NCSREU budget is composed within the state budget. The draft law suggests fixing the European norm when market participants, who are controlled, pay fees and through these fees the regulator generates the budget and determines costs. “In fact, the circulation of the energy market is about 400 billion UAH, a huge part of our budget,” said Natalia Katser-Buchkovska. In addition, the regulator’s independence is important in introducing competitive market conditions and attracting investments. Only then, it will guarantee investors respect for their rights and absence of abuse,” added the MP.

The consumer suffers from NCSREU’s lack of professionalism, said Lev Pidlesetskyi, MP, Samopomich faction. The establishment of an independent and impartial regulator “will impact competition in the market. The more competition there is, the lower is the price for consumers,” he explained.