Halyna Karp, Ukraine’s First Deputy Minister of Energy and Coal Industry (until April 25, 2018), shares with TerminaL her vision of the current stage of reform in the industry.

– The Ukrainian energy sector is being reformed. Last year, the Energy Strategy until 2035 was adopted. What other events from 2017 do you view positively, and which negatively?

– Undoubtedly, the adoption of the Energy Strategy of Ukraine until 2035 is the key news of the past year. At the same time, equally important was one of the most important steps in reforming and liberalizing the electricity market – the adoption of Law of Ukraine “On Electricity Market.” As a result, the process has begun of the introduction of a new model of the Ukrainian electricity market and integration of Ukraine and EU energy grids. The implementation of these processes will create conditions for competition in the electricity market, attract investment in the industry, and realize the rights of consumers to get the most attractive terms of electricity supplies.

Among the achievements of 2017 is the continued reform of the natural gas market through the implementation of Law of Ukraine “On Natural Gas Market,” in particular, in relation to the unbundling – separation of functions of the operator from those of natural gas producers and suppliers; the launch of the Ukraine-EU Energy Bridge project; the construction of a centralized spent fuel storage facility; and pilot projects to replace scarce anthracite coal.

– What do you consider your main achievement while working in the ministry?

– Our joint achievement is the formation of the regulatory base in accordance with the requirements of the EU Third Energy Package and taking steps toward the formation of market relations in the energy sector. Basic legislation has been adopted, that is, the law on the natural gas market, electricity market law, and law on the national energy and utilities regulation commission.

A number of concepts and programs have been adopted for the industry. An important achievement is also strengthening the resource base of and balancing Ukraine’s energy grid. We managed to accumulate the necessary amount of gas and coal for the heating season and ensure unhindered supplies of electricity and heat to consumers. Another important step I’ve already mentioned is the start of the construction of a centralized spent nuclear fuel storage facility, which will not only allow us to stop buying Russian services for the storage of spent nuclear fuel coming from Ukrainian nuclear power plants, but also substantially strengthen energy security and save about $200 million annually on storage. Also, throughout the year, many measures have been taken to diversify energy supplies, which contributed to the boost in energy security and overall national security of Ukraine.

Statistics for 2017 year-over-year testify to the achievements mentioned:

• Electricity output increased by almost 700 million kWh, or by 0.5%;
• Production of natural gas grew by more than 800 million cubic meters, or by 4%;
• Gas transit shipments increased by more than 11 billion cubic meters, or by 13%;
• Electricity exports grew by more than 1.2 billion kWh, or by 34%; and
• The amount of gas pumped into our underground storage facilities rose by almost 2.8 billion cubic meters.

The main thing is to keep up the pace and continue moving forward.

– What are the main problems the Ukrainian energy industry is facing, in your opinion?

– The first one is the dependence of the Ukrainian economy on import of energy resources. The key task is to achieve energy independence, which in turn is a guarantee of national security. The importance of the task is perfectly illustrated by the latest gas crisis we faced in early March as a result of Gazprom’s moves. It is realistic to achieve such energy independence by 2020 due to the growth of own natural gas extraction. In 2017, natural gas production in Ukraine increased significantly.

Another important issue is energy efficiency. The Ukrainian economy remains very energy intensive. We consume 2.5 – 3 times more energy than in most countries to produce a conditional commodity unit. Energy losses in the municipal sector remain very high due to the low energy efficiency of households. Energy costs of production are also significant, in particular, in generation and transmission of electric and thermal energy. A lot is being done in the direction of boosting energy efficiency. And this yields certain results. But the problem remains ambitious and complex. Its solution requires time and investment.

– What indicators should be applied to evaluate the effectiveness and efficiency of the ministry’s operations?

– There may be plenty of performance indicators: it’s drafting and implementing new legislation, ensuring the stability of the Ukrainian fuel and energy sector, creating a favorable investment climate, introducing modern standards of public administration, ensuring transparency and openness in the work of the Ministry of Energy and Coal, and preventing corruption risks. In all directions, the Ministry of Energy and Coal has been working systemically.

– Has the ministry changed after the new Directorates were introduced? What is missing?

– Today, it is somewhat premature to talk about changes in the ministry’s work as a result of the emergence of new Directorates. The Directorates have not yet formed their full-time staff. Staffing competitions are underway. Probably the process will last for another month or two. But a number of specialists are already working on the tasks assigned to them.

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Read the complete version of the interview in the magazine TerminaL.

Tel.:(+38 044) 263-68-39, email: terminal.psychea@gmail.com

Interview  STC “Psychea”