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PM on Government's program: The new policy of energy independence - diversification, market tariffs, benefits for the most vulnerable
10.12.2014 | 10:51
Information and Communication Department of the Secretariat of the CMU

The policy of energy independence, declared in the action program of the Government, provides the diversification of energy supply, increase of nuclear power capacity, market tariffs in the energy sector providing benefits for the most vulnerable segments of the population, Prime Minister of Ukraine Arseniy Yatsenyuk stated, presenting the action program of the Government at a meeting of the Cabinet on Tuesday, 9 December.

"In 2014, it was attempted to freeze Ukraine, disconnect her from the gas supply, stop coal supply and disable her from passing the winter period," he said, recalling that 60% of natural gas from Russia Ukraine has already displaced by gas from the EU Member States, "We need to fully diversify sources of energy."

Arseniy Yatsenyuk stressed, in particular, the need for implementation of the Third Energy Package, including restructuring of NJSC Naftogaz Ukrainy. Public joint stock companies Main gas pipelines of Ukraine” and “Underground gas storage facilities of Ukraine” are being established. Within the law passed by the Parliament, 49% of the shares in these companies can be owned by foreign investors from the European Union and the United States: "Therefore, the Government announces a public competition to attract investors into the modernization of the Ukrainian gas transportation system and operation of the Ukrainian gas storage facilities."

In addition, the Cabinet of Ministers puts the task of integration of the entire Ukrainian power system into the European power network ENTSO-E.

The action program of the Government also provides completion of two units at the Khmelnitsky NPP, power distribution increase at the South Ukraine, Zaporzhia, Khmelnitsk and Rivne NPPs. "Also, along with the European Bank for Reconstruction and Development, European Investment Bank, we will complete new power lines, new networks that will allow to free up capacity and provide appropriate transportation capacity of nuclear power plants," he said.

The Government, according to Arseniy Yatsenyuk, aims to further diversify energy supply, purchase energy throughout the global market and expand cooperation with Westinghouse as to the acquisition of nuclear fuel for Ukrainian nuclear power plants." "For several years we have been trying to build a LNG-terminal, but in order to build a terminal, you must first obtain permission for the passage through the Bosphorus. Therefore, the Government aims to get permission first, and then build the terminal, so it was not locked. That is why we continue to negotiate with our Turkish partners about the possibility of obtaining the passage through the Bosphorus for our LNG-tankers," the Prime Minister informed.

According to him, the program of the Government envisages to raise all energy-related prices and tariffs to the market level while ensuring benefits and subsidies for the most vulnerable segments of the population: "We have to pay the real and market price for energy resources. Otherwise, Naftogaz's deficit will remain above the national budget deficit forever. It’s wrong when the whole country is working for Naftogaz Ukrainy, which this-year deficit amounted to UAH110 billion, compared to the state budget deficit of UAH68 billion."

As for domestic production of oil and gas, the Prime Minister reiterated that the principle of production sharing is being applied: "We are moving from quasi-joint activities to the classical world principle of production sharing.

The Government proposes to change the approaches to the taxation of energy companies, "We will offer a hybrid approach to the Parliament in the taxation of energy companies, which should attract new investors. A new investor, who has gained access to investment and begins to drill a well, have to pay less. An investor who has started mining should pay as provided globally: rent and revenues from selling sale relevant energy products."

Arseniy Yatsenyuk also reminded that the Ukrainian side had filed two lawsuits to the Stockholm Arbitration Court against the Russian company Gazprom: "The claims of price revision and the revision of the transit agreement will be completed. Many of the procedures have been performed. We hope that the final verdict of the Stockholm Arbitration Court will be within the next year."

The Prime Minister said that the interim agreement on gas supply signed at the tripartite level Ukraine-EU-Russia, will finish its action on March 31: "There are two options: either to agree without trial, what we managed to do this time by signing a temporary agreement or the court will make a final decision as to the Russian company Gazprom.

Arseniy Yatsenyuk also stressed the need for implementation of energy efficiency programs, including new construction standards as well as standards in the reconstruction and construction of new housing.


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