США почали карати порушників цінових обмежень на російську нафту в 60 доларів за барель. Зокрема, міністерство фінансів країни 12 жовтня ввело санкції проти 2 компаній та заблокувало їхнє право власності на 2 судна, що перевозили ресурс РФ – розпочавши таким чином реалізацію свого плану щодо притягнення до відповідальності порушників обмежень.

Про це йдеться у заяві Управління з контролю за іноземними активами (OFAC) міністерства фінансів США. За ним:

• судноплавна компанія Lumber Marine SA з ОАЕ танкером SCF Primorye транспортувала нафту за ціною вище 75 доларів за барель з порту в РФ після того, як нафтова «стеля» запрацювала;
• турецька Ice Pearl Navigation Corp володіє танкером Yasa Golden Bosphorus, який перевозив нафту сорту ESPO (марка сибірської нафти. – Ред.) за ціною 80 доларів за барель.

What the “Rotterdam Plus” formula means: Viewpoint of experts of the Economic Competition Development Committee under the Ukrainian Chamber of Commerce and Industry

Author  Gennadii RIABTSEV, Leading researcher at the National Institute for Strategic Studies, member of the Public Council under the Anti-Monopoly Committee of Ukraine, Doctor of Science (Dr. Hab.) in Public Administration, Professor

For three weeks in January-February 2018, twenty-nine experts from the Economic Competition Development Committee under the Ukrainian Chamber of Commerce and Industry researched the compliance of energy coal prices used in the formation of projected wholesale electricity prices (starting from the second quarter of 2016) with the average market prices in Ukraine and average European prices. The discussion was held at the PsycheaEXPERTUS system and the Economic Competition Development Committee under the Chamber. Despite controversy and almost a scandalous nature of the so-called “Rotterdam Plus” formula, research results appeared to be quite as expected.

Bare facts

1. Implementation of Ukraine’s obligations under the Energy Community Treaty and the Ukraine-EU Association Agreement, including the implementation of Directive 2009/72/EC
   on common rules for the internal market in electricity, entitles a regulator, which in Ukraine is the National Energy and Utilities Regulation Commission (NEURC), with the duty of “fixing or approving, in accordance with transparent criteria, transmission or distribution tariffs or their methodologies” (Article 37, paragraph 1 (a)).

In doing so, the NEURC shall work “in close consultation with other relevant national authorities including competition authorities” (Article 36 of the said Directive).

2. On September 21, 2015, the Anti-Monopoly Committee of Ukraine (AMCU) submitted to the NEURC a set of recommendations mandatory for consideration, in line with which the NEURC had among other things to develop and approve the procedure for forming the projected wholesale market price for electric energy, including conditionally fixed costs of businesses producing electricity at thermal power stations. The reason the recommendations emerged was the actions spotted by the AMCU, which contained signs of competition law violations and took place due to lack of a necessary regulatory act; relations between prices of electricity and energy resources, in particular energy coal; and predictability of the wholesale price of electric energy.
3. The rules of forming the projected wholesale market price of electric energy (hereinafter referred to as the Rules) were approved at the NEURC’s open meeting after the necessary approvals were obtained from the Ministry of Energy and Coal Industry, the AMCU, and the State Regulatory Service of Ukraine.
4. According to the approved Rules, one of the components of the projected wholesale market price of electricity is the projected sales price of electricity in the wholesale electricity market, which is set by power generating companies that operate with the use of price bids. The sales price is based on the indicative price of coal.
5. The indicative price of coal is calculated based on the average market price in the European market, which is determined by the average API 2 indices on CIF ARA terms 12 months prior to the month when the price is set, taking into account the weighted average rate on the interbank market, and is aligned with the one specified in the forecast structure of thermal power plants’ fuel for the corresponding period and the caloric content of domestic coal (paragraph 3.1 of the Rules).
6. Pegging the indicative (marginal) coal price in Ukraine to the “average market price in the European market” corresponds to Clause 1.7 of Article 4 of Law of Ukraine On Prices and Pricing, stating that the main direction of the state price policy is to ensure “orientation of domestic prices on the market of goods toward the level of prices on the world market.”
7. Setting the indicative (marginal) price of coal through import parity is due to the lack of the anthracite coal resulting from the termination of its supply from enterprises located in the temporarily occupied areas of Donetsk and Luhansk regions [also referred to as ORDLO]
   and the need to import coal from other countries to ensure balance on the market.

The NEURC identified as key advantages of such approach: giving up on a non-transparent, unpredictable, manual coal pricing; pegging to generally accepted price indices; autonomy from ORDLO in the implementation by the thermal power plants of their coal accumulation plan; and an opportunity to balance operations of coal mines subordinate to the Ministry of Energy and Coal.

8. Choosing API 2 indices under CIF ARA terms as the basis for calculating the indicative coal price is due to a long period of their application (over 20 years), a wide range of participants in European energy markets, as confirmed by studies by the Argus Media agency.

Choosing API 2 indices was also due to the lack of reliable official statistics on volumes, prices and quality of coal sold in the customs territory of Ukraine.

9. The approach proposed by the NEURC to determining the indicative (marginal) coal price through import parity has been supported without comments by the Ministry of Energy and Coal Industry, the AMCU and the State Regulatory Service of Ukraine. At the same time, the AMCU considers it is progressive to peg the procedure for calculating the marginal price to the generally accepted price indicators, since before the appearance of the Rules, a non-transparent manual regulation de-facto prevailed on the electricity market.
10. The transition to determining the indicative (marginal) coal price through import parity took place during the expanded reproduction, as evidenced by GDP growth and investment in coal mining (in 2016 – by 2.3% and 82%, respectively). According to the conclusions of the Institute of Economics and Forecasting of the National Academy of Sciences of Ukraine, this has mitigated the situation that arose as a result of tariff growth.

Bottom line

1. Before 2016, Ukraine had no methodology, based on a formulated approach, for determining the price of energy coal for the thermal power plants.
2. The application of the formula-based approach to determining the indicative (marginal) coal price allowed abandoning the non-transparent, unpredictable, manual pricing, and reduced the influence on the functioning of the electricity market of administrative and corruption-related factors.
3. The API 2 index at the ARA coal hub is a generally accepted price indicator for energy coal.
4. Pegging domestic prices of goods to price indicators recognized in Europe is feasible in view of the need to adhere to the main directions of government pricing policy and the lack of energy coal in Ukraine.
5. The use of the API 2 index of calorific value as the main quality indicator allows comparing prices of different grades of energy coal.
6. Indices of the quality of domestic coal are taken into account by the need to bring the indicative (marginal) price in line with its caloric value.
7. The use of the API 2 index on the CIF terms of supply of physical goods eliminates the negative impact of the speculative component that is present when trading in financial instruments (futures, options, derivatives) on commodity exchanges.
8. Averaging the indicative (marginal) coal price for 12 months smooths out price fluctuations caused by random factors, which makes the wholesale electricity market more predictable and stable.
9. Since, in accordance with Article 190 of the Commercial Code of Ukraine, prices “of all types of products (works, services), except for those regulated by the government,” are free and “determined by the economic entities on their own with the consent of the parties,” any indicative price that is not higher than the maximum one and not lower than the minimum one from among the reference prices available in open sources can be considered justified from the economic point of view.
10. Experts who participated in the discussion are not aware of other approaches, given price data available in open access, to determining the indicative (marginal) coal price based on generally accepted price indices. Meanwhile, the formation of the coal market in Ukraine is impossible without such benchmarks.
11. Projected wholesale market prices of electric energy, calculated by the experts of the Ukrainian Chamber of Commerce and Industry with the use of data available in open sources, are in general in compliance with those laid down in the NEURC resolutions that were the subject of the analysis.

Conclusions

1. Ukraine’s current legislation lacks definitions of the terms “average market prices,” “market prices,” as well as mechanisms for their definition.
2. Average API 2 indices on CIF ARA terms are not an “average market price on the European market,” as stated in the Rules, because trading in energy coal in Europe is conducted not only on CIF terms and not only at the indicated ports, while the API 2 index does not cover all trading operations.
3. The indicative price of energy coal, determined based on the average API 2 indices on CIF ARA terms, is not the average market price in Ukraine, since, according to the AMCU, a significant share of energy coal is sold among economic entities affiliated through relations of control. At the same time, in the opinion of the Anti-Monopoly Committee, the coal market does not exist in Ukraine, and therefore there is no average price of coal (Clauses 15, 16 of the Conclusions, p. 114 of the report on the results of the integrated study of the electric energy and coal markets, approved by the AMCU on June 1, 2016).
4. Reference coal prices available in open sources both in Ukraine and beyond are not “average market prices” because they reflect the market partly. In addition, they do not take into account the terms of contracts with real goods (the payment procedure, volumes of supplies, quality of coal, partnerships between contractors, discounts, trade within financial groups (relations of control), coal production costs, and costs of transportation from coal mines to thermal power plants). Therefore, comparing them directly with the indicative price of energy coal, which is determined based of the average API 2 indices, is wrong.

In this regard, the experts noted that it was impossible to establish compliance of the coal prices used in the formation of projected wholesale energy prices (starting from the second quarter of 2016) with the average market prices in Ukraine and average European prices.

Obviously, the issue requires further discussion. The Committee members suggested extending it and applying to the NEURC to obtain data, absent in open sources, necessary for a more detailed analysis.

The Committee invited all experts to join in the discussion on the PsycheaEXPERTUS platform. Please follow the URL to register: https://psychea.com.ua. (Under the project titled “The Economic Competition Development Committee under the Ukrainian Chamber of Commerce and Industry”).

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

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.

. . . 

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”

There is no doubt that electric traction is the future. The question is only about the pace of market transformation, which always pursues economic benefits, quality and convenience. We sat down with Volodymyr Omelyan, Ukraine’s Infrastructure Minister, to talk about how ready we are to switch to electric vehicles and what needs to be done to this end.

– The number of electric cars has been growing fast worldwide, including Ukraine. What needs to be done so that the infrastructure meets the demand? Is it about incentives, preferences or restrictions for traditional fuels? Do you expect that the market will solve these issues itself?

– In January 2018, the number of electric cars registered in Ukraine crossed a 5,000 threshold. Our dynamics hold leading positions in Europe and worldwide. Infrastructure of charging stations has been developing at an appropriate pace and so far it’s Ukrainian businesses who bear this burden.

The Infrastructure Ministry plans to enter the charging stations market to test several pilot business models. I am deeply convinced that the state cannot effectively manage businesses independently, so all pilot projects will be implemented jointly with leading international companies.

However, we are taking concrete steps to restrict the use of traditional fuel in transport. Thanks to the Ministry of Infrastructure, our country has joined the Global Fuel Economy Initiative, which includes efforts to analyze road transport emissions and develop relevant fuel saving policies.

– The more electric cars mean the lower fuel sales and the lower excise tax revenues. Besides, there are privileges on these cars’ imports. How will the deficit be covered from lower tax revenues? Now it’s almost nothing but in another five years, there will be much more electric cars.

– We deliberately move toward a lower taxation of electric vehicles to make them more affordable to the public and launch a completely new market. Moreover, it will stimulate the renewal of the country’s general car fleet, which is now the world’s second oldest, following Cuba, in the embarrassing “wear and tear” ranking.

As for the Road Fund that we created last year, it’s a viable mechanism for financing the road sector, which will be updated in line with the country’s needs and budget challenges.

– It would be expedient to use widespread electric vehicles in utility services. What steps have been scheduled in this regard? Can the purchase of electric vehicles for the needs of utility companies become a new trend? The environmental feasibility is obvious here but has there been any feasibility study?

– The Working Group under the Ministry of the Environment of Ukraine has drafted bills on stimulation of the electric transport market, which we forwarded for further elaboration to the Verkhovna Rada’s Tax and Customs Policy Committee. To stimulate demand, it is being proposed to apply a tax discount to the purchase, including on credit, of electric cars, where buyers will see an 18% return of the car’s cost, as well as a zero rate on the registration fee, which is now 3-5%.

The adoption of these bills will allow us to pave the path toward developing the electric municipal commuter transport. The working group at the Ministry of Infrastructure of Ukraine has been working out this issue. We are deeply convinced that the transition to the electric municipal commuter transport should be gradual, and by 2030, we are to see the fleet renewal with electric transport exclusively.

– What needs to be done to increase Ukraine’s investment attractiveness toward production of electric vehicles (Mercedes announced plans to build six plants in the near future. But Ukraine is not among locations for deployment of new capacities in the company’s long-term plans, for example). Is it possible to talk about production of electric vehicles in Ukraine?

– The drafts developed by the working group under the Ministry of Infrastructure of Ukraine provide for a number of incentives for the deployment of capacities to produce electric vehicles in Ukraine.

For a period of 15 years, a zero tax rate is set for the profit tax on companies engaged in the production of electric cars, buses and trucks. Also, for the period of 10 years, it is planned to establish a zero duty and exemption from value-added tax for the first delivery (import) of a number of components for the production of electric cars, buses and trucks.

– There are rich lithium deposits in Ukraine. It would be logical to plan the production of rechargeable batteries in Ukraine in order to create added value here. What do we need to do in this regard?

– Among innovations proposed in the draft laws we are talking about there is a zero tax rate for a period of 15 years on corporate profits of companies engaged in the production of lithium-ion and lithium polymer batteries for the automotive industry, as well as on the sale of lithium produced locally.

There are several lithium and rare earth metals deposits in Ukraine (the largest three are Polohivske, Shevchenkivske, and Stankuvatskaya deposits), but we lack own lithium ore processing technologies. Therefore, an important task is to attract a world-renowned strategic investor to Ukraine’s lithium market, the one with its own technology.

– One of the issues that remain unresolved is the disposal of electric energy storage devices. What is your vision of solving this problem in Ukraine? Is the allocation of financing for research and development in this direction being considered?

– The disposal of energy storage devices is a potentially huge market for companies which will recycle batteries, or even better, re-use devices, such as Tesla Powerwall. I do not see the need at this stage to regulate the market that is just emerging. The same applies to the allocation of funding – this is a cost-effective business, which does not require state intervention.

. . . 

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”

Only the practical application of certain documents whose drafts are currently being worked out by the Project Office could unequivocally answer how efficient certain legal acts, rules, and codes are. This would lead to harmonization of documents, take into account the views of experts and consultants, coordination of efforts of state agencies and precisely the regulator, while the Office assesses step-by-step whether this is the right direction and determines further steps…

The adviser to the Deputy Prime Minister, Volodymyr Yevdokimov, sat down with TerminaL to tell us about the work of the Energy Market Reform Project Office.

A hundred days have passed since you took up office as head of the Project Office for the implementation of the Law of Ukraine on the Electricity Market. What are your first results? What have you already accomplished?

We have solved all the organizational issues as regards the launch of the Project Office. The very launch was a real challenge as some of the participants did not support the idea of the Office being set up. Anyway, the decision has been taken, supported by the coordination center responsible for the introduction of the new electricity market. So we’ve started our work.

Together with the [National Energy and Utilities Regulation] Commission (NEURC), we’ve worked out a detailed integrated schedule for the Introduction of the new market in line with Law «On the Electricity Market.» Conditions were created for transparent debates on drafts of secondary legal acts. The PsycheaExpertus multiservice system gave the opportunity to launch an open, professional discussion of regulatory acts.

We have selected consultants in the relevant areas including wholesale and retail markets, finance, and introduction of software of the market operator [SE Energorynok] and transmission system operator [SE NEC Ukrenergo]. Of five consultants we planned to attract, we’ve selected four, in the areas I’ve mentioned. The selection procedure for the fifth consultant continues. The already selected consultants come from the Czech Republic and Slovakia. They are experts in the energy sector who directly participated in market reform in European countries.

We have come up with a philosophy of discussions and decision-making on draft regulatory acts of secondary-level legislation and other measures envisaged by the law on the electricity market. Due to the large number of regulations against shortage of time, we have gone along the path of identifying conceptual issues which we will be returning to once we’ve worked out test assessments of the new electricity market. Further improvements will be made to the rules and codes – all other regulatory acts to be implemented in the process of transition to the new market model. The process is expected to start on July 1, 2019.

Basic regulations, namely the rules and codes the Commission has approved are not perfect as of today, but we will actually feel their quality only once we move on to test assessment, that is, closer to the end of this year. Once we start doing that test assessment, we will see problems that may arise in the process, and accordingly, we will see where to move further and what changes are required to the regulations.

As an example, our Polish neighbors drastically changed the rules of the market three times within a year. Therefore, those rules of ours that have been approved do make sense, and it is necessary that market participants already start doing their work and making decisions in line with these rules.

What do you expect from foreign consultants attracted?

I now expect them to start working more actively. The thing is that since the start of their work (February 1, 2018) they really struggled to understand our realities; some consultants are in command of our language, while some need an interpreter. Now I am expecting them to work more productively on the implementation of their plan and development of relevant proposals for secondary legislation drafts.

What stands in the way of the introduction of the new energy market model?

Time is our major enemy. We have a clear action plan, we know where we are moving, we are aware of all measures needed to be taken, and we also realize that there is very little time to implement them. We seek to find the best way to take all these measures and make corresponding decisions. If some measures can be implemented in parallel lines, that’s how we’ll be doing it; while we are still trying to prioritize measures that can be taken only after relevant decisions have been taken and implemented. This is done in order to start our work in all areas of the introduction of the new electricity market law. As an example, the Commission [NEURC] has already approved the regulations (rules, codes) which were subject of debate on the part of the market participants, who had been asking for more time for finalization. At the same time, I believe that this was the right decision as it will allow the launch of other processes and measures to ensure effective reform of the industry.

Another obstacle is the rotation of Commission members, which in turn may result in a no-quorum situation ahead of an open meeting. Also, as new people will be coming there, they will need some time to see what’s happening and review the already worked-out projects.

What are the next steps toward the implementation of the law on the electricity market?

Now we have passed the first stage of development and approval of secondary legislation regulations. Next, we will have to work on other stages. The first of these is the purchase and introduction by the market operator and the transmission system operator of software and hardware required to start the necessary test assessment of the new model of the electricity market, meeting the deadlines set by the law.

The second one is infrastructural change. It’s about the unbundling of energy supply companies, corporatization of SE NEC Ukrenergo, setting up an independent transmission system operator, restructuring SE Energorynok and establishing on its base a guaranteed green energy buyer and market operator.

These are the infrastructural changes that both the government and market participants have plenty of work to be done on. The efforts will take about two to three months.

How much money has been planned for software purchases and how will the purchase take place?

Most of the budget will be spent on the transmission system operator’s software. The funding will come from the World Bank.

The software for SE Energorynok is planned to be purchased at the company’s expense. Outsourcing services are planned to be used for the purchase of finished software products already applied in European countries. The coordination center decided not to develop a software product but to buy an already working one, adapting it for the specifics of our energy industry.

The Project Office was created to coordinate joint efforts of the NEURC, the Ministry of Energy and Coal, and other specialized bodies responsible for the implementation of the law on the electricity market. How efficient are those joint efforts, in your opinion?

The main objective of creating the Coordination Center is to ensure coordination of efforts by all central executive agencies and the NEURC. The Project Office drafts the Coordination Center’s proposals for the documents required by the integrated schedule of implementation of the electricity market law provisions. I must admit that not all deadlines are being met, but the situation is not critical. I think that in two or three months we will catch up on the schedule.

Are expert opinions being duly taken into account? Are the drafts worked out being harmonized with each other?

We have foreign consultants whose main task is to process documents, harmonize them, and put forward proposals. Not all the proposals provided by consultants after they had been worked out with market participants during one month were taken by the Commission into account.

At the same time, the Project Office together with the consultants identified and discussed with market players a list of conceptual questions to the regulations approved by the NEURC, which should be further worked out together with the Commission as appropriate solutions must be found thereon. The list was voiced at the Coordination Center meeting on March 16 and published on its website. The list was supported by the meeting participants and now it will be formally forwarded to the Commission. The important issues identified relate to rules and codes, as well as other measures envisaged by the integrated schedule.

First of all, it’s about the procedure for providing support to vulnerable groups of the population, organizing the work of universal service providers who will supply electricity to households, the work of «last hope» suppliers, and other key issues of the new model of the Ukrainian electricity market, on which we will be working with the Commission. Hopefully, we will find the best solutions and continue to develop specific proposals to the regulations.

Since the Soviet times, a system has been developed of experts working in groups. As head of the project, what have you changed in this regard?

I’d like to thank STC Psychea for their great help. The PsycheaExpertus analytical system they’ve provided has turned out to be one of the active elements and tools of transparency and openness. Organizing our work, the process of review and provision of proposals via the Psychea system allowed market participants to draft their proposals quickly. Amid shortage of time, this is something extremely important. Besides, we only have a few experts: just a couple of them sift through all paperwork, submitting proposals. The system allowed these experts to do much of their work remotely, thus saving time. Therefore, as Project Office manager, I believe that PsycheaExpertus is an interesting and effective system of expert interaction, and I hope that we will be strengthening it, attracting more experts to the process. In general, our experience of employing the Psychea system has been very successful, and it is necessary to distribute it further. Moreover, I will ask STC Psychea to be involved in the process of our work on the next package of documents, so that we could apply it to work out a new list of secondary legislation with experts.

How does PsycheaExpertus influence the speed and quality of experts’ work on documents?

I have to admit that the system is new to experts and somewhat constrains them psychologically, but at the same time it gives them an opportunity to see the opinions of various participants. This is a very important aspect as there is an ongoing exchange of opinions, analytical data, reports, which allows them to prepare proposals more efficiently and in a quality manner without spending too much time on them. Efficiency and quality make sense.

Besides, we can see which experts give their proposals, who is directly involved in the discussion, so we can work directly with the experts who are actively involved in the discussion via the said system.

. . .

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

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

Interview OLESIA NATKHA

Head of the Anti-Monopoly Committee (AMC) of Ukraine Yuriy Terentyev speaks about the main role of the antitrust agency, drafting of the National Strategy for the Development of Competition, and other issues of protection of competition in the domestic market.

– The AMC is assigned the role of a powerful tool to protect economic competition. How much does this role correspond to reality? What are the main difficulties in this regard, in particular in the energy sector?

– The Anti-Monopoly Committee of Ukraine (Committee) was created according to the Constitution of Ukraine. The Law of Ukraine “On Protection of Economic Competition” states that among the Committee’s main tasks is the protection of economic competition. We don’t replace the state authorities tasked with preparing economic development programs, developing a competitive environment, expanding the competitive environment in relevant fields, and constant monitoring of issues in the relevant industries. We must deal mainly with law enforcement. But we regret to see that, compared to the antitrust agencies of other countries, the ones with a well-developed and stable information environment, where proper market data is available and reliable, where markets are mature and less susceptible to sharp fluctuations, it is much harder for us to operate. After all, we have to independently develop the entire information base on the state of the markets and competition, in order to understand and prioritize the most important issues and respond in the most effective way. If we talk about different markets and corresponding issues, we see that among them there are those with the largest weight and significance. For quite a while, the energy market has traditionally been a priority for the Anti-Monopoly Committee.

If we analyze the Committee’s activities over a long period, we will see that in our law enforcement efforts, we sometimes get onto the territory of other agencies (consumer rights protection, regulations). We annually receive almost 6,500 complaints and hand down nearly 2,500 decisions. However, such stats are not representative, because on the one hand, this testifies to public trust in the Anti-Monopoly Committee, as to the agency able to resolve certain problems of specific economic entities or individuals; while on the other hand, when comparing the AMC with foreign agencies, the latter hand down no more than a hundred decisions per year. Such a large number of decisions we issue in fact testifies to the fact that in its work, the Committee, as an instrument of competition law enforcement, is often called upon to resolve issues that lay within the scope of competence of other public authorities. When we see in the complaints we receive violations by monopolies (especially in the regions), we launch relevant cases. To better respond to such violations, we work out tools for a clearer separation of powers with the relevant state authorities (the National Energy and Utility Regulations Commission (NEURC), the State Service of Labor), by signing memorandums.

Another direction is public communication and communication with businesses, to make clear to people, which problems should be addressed to the Anti-Monopoly Committee and which should be solved with the involvement of other government agencies.

– Is there any problem with the clear distribution of authority?

– Well, such distribution exists. But it has become a long-time tradition for individuals or businesses to apply to the AMC when they consider a violation certain actions by a monopoly. In accordance with the law and the general principles of handling citizens’ claims, if our territorial offices or headquarters see in the said actions abuse of monopoly, the case is opened, an investigation is conducted, and a decision is handed down. This takes time, but if we analyze stats on such decisions, we see that their significant share is on the border of other government agencies’ authority.

It would be incorrect to claim that the AMC shouldn’t have to deal with cases in regulated markets. We also look into operations of oblenergos [regional energy distribution companies] and gas distribution companies, but we do so from a systemic perspective rather than from the point of view of some problems of a particular consumer.

It can be assumed that if complaints are submitted to the Anti-Monopoly Committee instead of the NEURC or the State Service of Labor, this is due to public trust in the AMC. But public authorities should work within their competence, and they must work effectively as a system. And it would be even more efficient and expedient if cases that are within the competence of the NEURC or the State Service of Labor be dealt with by said agencies. After all, any AMC probe takes at least six months. During this period, the violated rights of any entity could be restored in a more effective way.

– Does this great number of cases affect the quality of investigation?

– The most significant part of violations is the abuse of monopoly position (795 decisions last year) and anti-competitive actions by authorities (610 decisions). Very often, anti-competitive actions on the part of authorities are accompanied by other violations where a particular entity abuses a monopoly position through certain moves of state authorities creating preconditions for such violations.

– Sometimes, the process of challenging AMC decisions in courts drags on for years, while the company fined manages to transfer ownership to other legal entities, declaring itself bankrupt. How can this be prevented?

– This is a big problem related to the ineffectiveness of the process of collecting fines, as it is now laid down in the current legislation. At the moment, businesses have two months to appeal a decision of the Anti-Monopoly Committee in the courts of three instances. If they lose their case, the Committee is to once again turn to the court to ensure that the fine is paid, getting into litigation to recover the fine. The system is extremely ineffective, and the bill (No. 6723), which is currently under consideration in parliament, contains a provision making AMC decisions binding. That is, if businesses appeal against a decision by the Anti-Monopoly Committee, they do have the right to do so, but if the Committee’s decision has not been canceled in court, we would not have to get into litigation again, so that businesses could not abuse their procedural rights, preventing the Committee from recovering fines. An AMC decision, which will gain the status of the executive document, will go straight to bailiffs. This should reduce at least by half the deadline for the execution of Committee decisions.

Also, in the long run, additional liability will be introduced for founders and executives in case of them bringing to bankruptcy (insolvency) companies they control on which the AMC has imposed fines, in order to avoid their payment. A classic example of such move is the change of a single letter in the name of a legal entity behind one of the well-known gas station networks, which is a violation of the legislation on the protection of economic competition, that is, resorting to anti-competitive concerted actions.

Another interesting novelty of draft Law No. 6723 is the norm, which provides for the following: if a decision has been made and a fine imposed, the defendant has the opportunity to pay a fine within two months and in this case, to have the right for a 50% fine reduction. For us, the main thing is not to fill the budget with money from these fines, but to make every effort to make sure that businesses cease their illegal economic activity and restore order in the relevant markets that has been violated.

Now we are paying much attention to creating a high-quality base of test cases for the Anti-Monopoly Committee as a collegial body and a base of court rulings challenging our decisions.

I hope that this work will result in legal practice becoming stable, understandable and predictable, and businesses becoming more motivated once they see the position of courts in recognizing lawfulness of AMC decisions in appropriate cases. This is about convincing businesses to pay a certain, limited amount of their fine, restore the affected order on the market and just keep working in their regular mode rather than try playing with the Committee through appeals that may last years.

– Could the reason for the reluctance of businesses to pay fines lay in the excessive amount of such fines?

– If we compare the size of the fines imposed by our law with that in the European Union member states, we will see that we have the same norm applied. The fine may amount to 10% of the defendant’s turnover over the past year. If we look at the practice of enforcement, decisions on violations like abusing a monopoly position, impose fines varying from 0.2% to 1.5% of annual turnover. In our legal practice, we try to clearly follow the European practice in the first place, as it is not only about us willing to hand down quality decisions, it is also about the requirement within the Ukraine-EU Association Agreement, which contains a section on competition, providing in particular that the parties (the EU and Ukraine) recognize the need to protect competition, while Ukraine guarantees it will have an independent body responsible for the protection of competition, and that in our law enforcement, we will approach practices of the European Union. Therefore, in our actions and in our secondary regulatory framework, we certainly take into account both the precedents of the European Union and secondary legislation developed in the EU.

– Does the secondary regulatory framework on antitrust legislation need to be substantially refined in Ukraine or is it already optimal?

– We are now introducing a number of regulations to provide more clarity to businesses about warranted and unwarranted behavior. Most of all, the secondary regulatory framework is being developed in relation to concentration control. This is a classical function of the Anti-Monopoly Committee, the one explaining the creation of antitrust agencies worldwide. In different countries, there are different regimes for concentration permissions. There are cases where such permission is not required, and there are cases, as in Ukraine, where such permits are a must. Therefore, it is in this area that the main array of regulations is being developed. But these regulations actually apply not only to concentration issues – they also concern the definition of markets, definition of a dominant position, as well as definition of fines, vertical and horizontal relations… That is, it can then be applied to investigations into specific violations.

– Is it possible to accelerate the development of economic competition in Ukraine and how could this be done?

– Classical economists have said that there are efficient markets and there is a natural balance present in certain markets. There are many markets in Ukraine where we don’t lag behind, at least when it comes to consumer goods – both in terms of prices and supply. But there is another side of the coin. Usually, competition can be limited by several factors. In competition law, we’re talking about barriers to access relevant markets. When the market is closed, competition is usually limited. Speaking about advocating competition, it is primarily about reducing and eliminating barriers to market access.

For example, the law may provide that it is only state-owned enterprises that may engage in certain activities. An example of a legislative restriction is Ukrzaliznytsia [Ukrainian Railways]: the law stipulates that the rolling stock (rail cars) can be privately owned, while locomotives can only be owned by Ukrzaliznytsia. At the same time, the Ukraine-EU Association Agreement stipulates that locomotives may also be privately owned. These legislative restrictions must be lifted to allow new entities entering the market.

Another access barrier may be the need to get some license, which could cost a million, or 10 million hryvnias. Also, an access barrier may be the need to invest in infrastructure. That is, it is possible to develop competition by removing such barriers. It is impossible to force a speed-up of competition.

The issue of the growth of economic competition should be solved systemically, and not only by the Anti-Monopoly Committee, because we have rather limited possibilities. We can identify the existing barriers; if they are created artificially, for example, as a result of anti-competitive actions or abuse of a monopoly position, we can force violators to destroy these barriers. But when such barriers exist due to certain legislative requirements or as a result of the regulatory regime, we can only provide recommendations to state authorities and proposals to the Cabinet of Ministers. And we are doing so, too.

On the other hand, another well-known precedent of our competition advocacy is a comprehensive study of the energy sector. Having systemically analyzed the issues on energy markets, the Committee provided recommendations to key players – the regulator, the Ministry of Energy and Coal Industry, and SE Energorynok, to systemically fix the situation.

There are great prospects for the development of fair competition. At present, we are drafting, together with the World Bank, a document conventionally called the National Competition Development Strategy aimed at optimizing the work involving all public authorities and systemically examining access barriers in our markets and the problems that are out there in these markets, to make sure that fair competition expands both in the national and regional markets.

. . .

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

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

Interview  OLESIA NATKHA

Leading researcher at the National Institute for Strategic Studies

Gennadii RIABTSEV

Director of special projects at Scientific and Technical Center «Psychea»

Doctor of Science in Public Administration, Professor

On the ways to improve the performance of Ukraine’s Anti-Monopoly Committee

«Where there is no competition, one sleeps better, but lives worse.»

– Unknown Author

A competition policy of any state is criticized more than any other form of the government’s public interference in private affairs. Outstanding economists of the day from Friedrich Hayek to Alan Greenspan call the world of antitrust regulation «naïve,» «unrealistic» and «irrational,» while Milton Friedman generally believes that competition legislation «brings far more harm than good» and it would be better if people get rid of it. But somehow, these statements don’t fall in line with the words of English bookbinder and trade unionist Thomas Joseph Dunning: «With adequate profit, capital is very bold… [For] 300% [of the profit] there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged.»

When Ukraine becomes a state with a developed market economy, domestic economists, like Alan Greenspan, will argue that the entire system of anti-monopoly legislation is a disorderly blend of economic irrationality and ignorance, a product of naïve and, undoubtedly, unrealistic economic theories. Then the Ukrainian president will definitely sign the «Act of Economic Freedom,» which will overturn the restrictions on the activities of private companies. But all this will be possible only if none of the participants in each of the markets in the country dictates the rules for the purchase and sale of goods and services, and prices are not set by the producer, but by Alfred Marshall with his demand and supply law.

The current competition law in Ukraine, the high quality of which is recognized in the EU and the United States, provides the Anti-Monopoly Committee of Ukraine (AMCU) with a wide range of powers aimed at improving the efficiency of the national economy. Unlike its counterparts in the post-Soviet space, our antitrust body is empowered to stop illegal actions not only by businesses, but also by executive authorities, and to assess regulatory acts in terms of their compliance with anti-monopoly legislation. Thus, the AMCU is a powerful tool for protecting economic competition, called in the National Security Strategy of Ukraine «a key condition for a new quality of economic growth.»

Despite this, there are numerous cases in the goods and services markets in Ukraine of:

– Establishment and maintenance of overpriced (monopoly) or undervalued (predatory) prices;

– Removal of goods from circulation and unjustified reduction of production of goods in demand;

– Creation of barriers to entering markets;

– Distribution of false, inaccurate or distorted information, capable of causing damage or harm; and

– Misleading consumers about the origin, properties, quality, and volumes of goods or services, incorrect comparison of manufactured and/or offered goods and services.

However, the state itself often unreasonably hinders the activities of business entities by:

– Deliberately limiting their rights to sell certain goods;

– Giving instructions on the priority supply of goods to a certain circle of buyers (in particular, the population or agricultural producers);

– Imposing restrictions on the consumers’ choice of producers (such as «Buy Ukrainian goods from Ukrainians»); and

– Unjustifiably narrowing access to participation in auctions and tenders, creating priority conditions for participation for individual market participants.

Such an intervention definitely does not contribute to the achievement of the declared objectives of competition policies.

Proving the facts of violations of the legislation on economic competition, the AMCU brings significant revenues to the budget. Last year alone, the economic effect achieved as a result of termination of violations by the Committee bodies (calculated according to the OECD methodology), exceeded UAH 1.5 billion.

However, since 2003, the state has received almost a tenth of the amount that it should have. This is partly due to the fact that the Committee’s decisions on high-profile cases are usually challenged in courts. This allows defendants pending trial to suspend both payoffs and enforcement of AMCU decisions on halting anticompetitive actions. Once seeing an opportunity to drag the investigation and/or postpone punishment, many businesses challenge any Committee’s demands (even requests for information), taking advantage of the fact that the Ukrainian courts consider appeals for years. At the same time, even a case the Committee wins does not guarantee the transfer of funds to the budget. While the Anti-Monopoly Committee appeals to the court to receive a written warrant, passes it to the State Bailiff Service and waits for its response, the fined company often has enough time to transfer all its assets to other legal entities, declaring bankruptcy. This could have been avoided if a defendant gave a court a pledge in the amount of a fine, and the AMCU orders were not suspended. It would also be great to oblige business entities to return prices of goods and services at the previous level immediately after the case is opened, as it is done in Germany.

A market economy has a serious drawback – it is unprotected from collusion due to its transparency. Because of this, both consumers and the state lose a lot of money. Not surprisingly, in most developed countries there is a severe punishment for violating the competition law. For example, in the U.S., dozens of top managers are annually sentenced to three to eight years in prison for signing cartel agreements and/or following them. Meanwhile, officials in Ukraine do not bear any responsibility for preventing the AMCU from conducting investigations. The maximum penalty for avoiding the fulfillment of Committee decisions and refusing to provide the required information (or providing incomplete or inaccurate information) is UAH 119 (seven non-taxable minimum incomes, according to Article 166-4 of the Code of Ukraine on Administrative Offenses). At the same time, the prospect of even a minor personal punishment and publicity may be sufficient to keep an official from violating the rules. Criminal liability for an individual comes only if they were forced to take part in concerted actions by force or by causing material damage (or the threat of such damage). In practice, top managers violate the law deliberately, as they can obtain a much greater personal benefit from committing unlawful actions as compared to the negative consequences that may arise after fines have been imposed on their business entities. In addition, as Ukrainian and global experience shows, agreements on price fixing, sharing of a market or production volumes are made during informal meetings and not documented. Methods and means of investigation, which the AMCU is not entitled to employ, are necessary to stop such violations.

In addition, the country’s competition authority has numerous functions that similar European structures do not have. The AMCU reputation as one of the most effective bodies has played a bad joke, imposing additional obligations on it, in particular in the field of public procurements (without any substantial staff expansion or increased budget). The indirect burden on the Committee has also grown, as other Ukrainian state agencies and individual citizens also make use of that rather effective antitrust legislation by turning to the court bypassing the AMCU.

There is a constant demand coming from higher offices that the AMCU ensure lower prices for infrastructure products (petrol, gas, electricity, and food), although their regulation is not among its functions. Moreover, prices for the vast majority of goods and services in Ukraine are free-floating and no state body has a right to establish their fixed or interval values (Article 190 of the Commercial Code of Ukraine). The Anti-Monopoly Committee is entitled to intervene in market pricing processes only in case they detect abuse of monopoly or concerted actions of economic entities (participants in a single market, a seller and an intermediary, wholesale and retail salesmen), aimed at establishing or maintaining prices that cannot be set if there is significant competition.

One of the consequences of these management problems is their «fragmentation.» Significant in this respect is a much higher (than in the EU member states) number of cases investigated by the AMCU. At the same time, several of its territorial units might not only open identical cases against the same entities simultaneously, but also assess their actions differently. At the same time, AMCU ignored the general tendencies of development of the main commodity markets both at the regional and national levels.

Unfortunately, sometimes this «blindness» of the antitrust authority is man-made and has signs of regulatory capture, that is, a situation where the authority, which may in one way or another affect the activities of business entities, gets «adjusted» to fit their interests. As a result, such a body:

– Begins to adhere to commercial and other private interests prevailing in the markets, contributing to a higher profit of certain economic entities;

– Neglects interests of consumers and the public as a whole;

– Contributes to the creation of cartels, restricts competition;

– Protects individual market participants from competitors, in particular by selective application of sanctions or carrying out audits;

– Creates or increases barriers to entering regulated markets, including by complicating procedure to obtain permits or carrying out unmotivated investigations against individual economic entities.

One of the factors contributing to this situation is a huge gap between salaries of top managers of business entities dominant in markets and AMCU staff (the latter are the lowest among other executive bodies).

As an example of the Anti-Monopoly Committee turning a blind eye to the apparent violations of antitrust law, one can recall the facts of simultaneous, equal prices raises and without obvious reasons for all types of petroleum products on April 11, April 22, April 27, and May 17, 2016 at 1,625 petrol stations belonging to 18 companies, which are not formally tied by control relations. Although everything indicated that these actions corresponded to the definition of «conscious parallel behavior,» the AMCU chose not to react at all.

During the economic and political crises of 2008-2011 and 2014-2016, the level of competition in domestic markets for goods and services has decreased. Main features of this period were:

– Government interference in all market processes associated with gaining profit;

– Reduction of domestic production;

– Significant rise in prices for goods and services, primarily in infrastructure;

– Level of product quality ensured only by the companies’ marketing policies;

– Low profitability of businesses, especially small and medium-sized;

– Aggressive marketing policies of businesses and wars for consumers;

– Aggravation of unfair competition, in particular through price and quality;

– Significant volatility of markets and inability of public authorities to monitor and predict changes;

– Inefficiency of the rules of the game known to businesses; and

– Readiness of businesses to make quick and intuitively unpredictable decisions.

Currently, commodity markets in Ukraine are rapidly expanding, although the global economy, on the contrary, is seeing a rapid development of the area of small, family businesses. Given these circumstances, fundamental decisions are required to change the structure of businesses, unbundling of companies operating in the regional and local markets for the processing of raw materials, transportation, storage and sale of products. Economic and administrative barriers should be eliminated or reduced to the entry of new independent players into these markets, while the development of competition there is hampered by the lack of modern capacities and logistics infrastructure, inaccessibility of bank lending, confusion, confusion, cumbersome nature and fragmentation of land and environmental legislation. It is important to guarantee non-discriminatory conditions for access to services of natural monopolies (rail and pipeline transport, electric, gas and heat networks), transshipment (whose market is almost monopolized), and storage services for products in regional and local markets, as well as direct sales from manufacturing enterprises. It is worthwhile to change the taxation system so that it not only performs a fiscal function, but also contributes to the competition development. It is necessary to increase the responsibility of authorities before market participants and of traders – before the state. Indeed, underpayment of taxes can also be regarded as a violation of antitrust laws because such companies due to such actions gain significant competitive advantages.

There is one more problem. It’s a closed-up nature and opacity of business entities, primarily those who did not unbundle extraction and processing, production and sales. The intermediary links remain half-criminal, although their operations play a decisive role in any product supplies. Traders know their intermediaries well and are well aware of how much they make. It is their money that goes to party coffers, on bribes and kickbacks – all those things that are being condemned but never ceased to exist.

One of the mechanisms for creating a real market in its western sense is the development of organized trade, including on the exchange. Then it will move to a transparent pricing system based on market quotations, formed and implemented on both organized trading platforms (electronic ones in particular), and based on direct contracts, without any instructions or rushing on the part of the state (but retaining obligatory supervision). It is worth creating internal price indicators (instead of traditionally, and thoughtlessly, copying the external ones) reflecting the real balance of demand and supply, as well as expectations for its future changes.

In order to prevent systemic violations of the antitrust law in the future, the government should not resort to crackdowns but set up clear, open, accessible, transparent, and competitive markets, reorienting the efforts of the Anti-Monopoly Committee toward:

– Econometric, not merely legal, substantiation of its actions;

– Effective use of quality information and analytical support;

– Synchronizing horizontal and vertical interaction of the AMCU’s units; and

– Formation of common methodological approaches to the assessment of actions of economic entities.

To this end, it is necessary to update market models the AMCU uses by:

– Determining main groups of economic entities – market participants – and control relations between them;

– Clarifying product boundaries of markets, in particular, taking into account consumer features of goods sold on them;

– Clarifying geographical boundaries of markets, taking into account the impact of both demand and offer;

– Defining mechanisms of interconnection between adjacent markets;

– Developing a pricing model in line with modern conditions; and

– Creating an algorithm for collecting, storing and using information on the functioning of markets and the AMCU units’ operations on them;

– Applying more actively the methods of economic and econometric analysis in revealing violations of antitrust legislation.

At the same time, politicians should ensure the political, financial and functional independence of the Anti-Monopoly Committee by:

– Guaranteeing transparency of appointments to posts, preventing facts of moving to managerial positions in regulatory bodies representatives of economic entities or persons who are in labor or other contractual relations with public-political associations;

– Prohibiting any form of interference with the AMCU operations and any pressure by state authorities and local governments, their officials, business entities and their associations, political parties, public associations, trade unions, associations of citizens and their bodies, and introducing personal liability for such attempts;

– Excluding for a certain period the establishment by former AMCU chiefs of contractual relations with business entities and/or their appointment to managerial positions in them;

– Establishing a clear procedure for discussing draft decisions, including with industry associations;

– Ruling out coordination of the AMCU’s draft decisions with other bodies of state power;

– Providing for periodic audits of the AMCU by acclaimed independent companies, with external payment for their services.

. . .

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

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

The 2nd Regional Conference SEERC 2018: energy transition and innovations organized by the International Council on Large Electrical Systems CIGRÉ in Ukraine will be held in Kyiv, on June 12-13, 2018.

The purpose of the conference is productive all stakeholders in the energy market: energy generating and energy distributing companies, producers of energy equipment and services, developers of innovative and forward-looking energy systems, Ukrainian government and international energy community as well as all those interested in formation and development of electricity market.

The New Energy Strategy of Ukraine until 2035 defines strategic areas and terms of further functioning and development of the Ukrainian energy system on its way to integration into the unified European energy system, in particular, implementation of modern globally competitive scientific researches of systems and equipment. Currently, there are successful functioning innovative infrastructure projects, there have been implemented changes as to energy resources management – during the year of 2017 there were adopted 4 laws regulating energy efficiency in Ukraine. That is why it is essential to ensure a possibility to share best practices between Ukrainian participants of the energy market and other experts, and their discussion of the fastest and most efficient ways for the European integration of the Ukrainian energy system.

What does energy Euro-integration mean for Ukraine?

• Conscious Energy Efficient Society
• Independence of the fuel and energy complex
• Introduction of a modern management system
• Increased investment attractiveness of Ukraine’s energy sector

Among the issues to be discussed:

• Future perspective of the South-Eastern energy market
• The issue of electricity metering in the Region
• New issues in energy trading
• New connections between energy systems (aerial lines and cables, underwater cables, high-voltage direct currents)
• Impact of energy demand on market conditions
• Examples of energy system shutdown (ice storms, flooding and wind storms, cyberattacks, physical attack, fires, earthquakes)
• Managing resistance challenges with due consideration of new network codes, preparatory programs, examples of successful practice
• Technical and non-technical innovations in the power sector
• Projects for Micro and Smart grids
• Adjustment of demand side
• Introduction of electric vehicles
• Innovations in the process management system
• New business models
• Smart energy supply systems and many others

Within the framework of the conference there will be a thematic exhibition, as well as academic and student forums.

More about the event on the official site — http://forum2018.cigre.org.ua/

Reference

International council on large electric systems in Ukraine CIGRÉ is a public organization, covering their technical, economic, environmental, organizational issues in the field of electricity, as also questions about environmental protection. Its main task is to exchange technical knowledge and information between engineering staff and technical experts from all countries in the field of generation and transmission of high voltage electricity. CIGRE was founded in 1921 and for more than 90 years, it has united engineers and specialists representing electric systems and electrical engineering in many countries of the world. Currently, the association includes about 1000 collective and more than 10,000 individual members from 90 countries around the world.

SEERC  is a regional association of CIGRE members of the countries of South-Eastern Europe including Ukraine, Austria, Bosnia and Herzegovina, Greece, Italy, Kosovo, Macedonia, Romania, Serbia, Slovakia, Slovenia, Turkey, Hungary, Croatia, Czech Republic, Montenegro.

SUPPORTED BY: Cabinet of Ministers of Ukraine, Committee of the Verkhovna Rada of Ukraine on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, Ministry of Energy and Coal Mining of Ukraine, Ministry of Foreign Affairs, Ministry of Economic Development and Trade of Ukraine, Energy and Utilities National Regulatory Commission of Ukraine, Kyiv city state administration, National power company “Ukrenergo”, Hydro generating company PJSC “Ukrhydroenergo”, National nuclear energy generating company “NNEGC “Energoatom”, The International Exhibition Centre.

HOSTED BY

CIGRE International council on large electric systems in Ukraine /CIGRE National Committee in Ukraine/

General partner — the National Power Company «Ukrenergo».

Partners — The Largest Hydrogenerating Company of Ukraine «Ukrhydroenergo», Branch reserve-investment fund energy development, the National Nuclear Power Company “NNEGC Energoatom”, energy generating companies Donbasenergo and DTEK, Scientific and Technology Company ENPASELECTRO, European suppliers of energy equipment and technology, in particular world-famous manufacturers such as General Electric, ABB, Zaporozhtransformator.

Information partners of the event: American Chamber of Commerce in Ukraine, STC Psyche (magazine TerminaL), Ukrainian Energy UA-Energy.

Event Event Provider — Event Envoy LLC.

28 ноября мировые цены на нефть продолжают снижаться на мнительных страхах о перспективах сделки по сокращению добычи нефти ОПЕК+, а также на отраслевых новостях из США.

Стоимость февральских фьючерсов на североморскую нефтяную смесь марки Brent снижалась на 0,27%, до 63,21 доллара за баррель. Цена январских фьючерсов на нефть марки WTI опускалась на 0,53%, до 57,8 доллара за баррель.

Представители нефтедобывающих государств соберутся в Вене 30 ноября, чтобы обсудить планы относительно дальнейших объемов производства нефти. В преддверии встречи, 29 ноября, пройдет заседание министерского комитета по мониторингу выполнения сделки ОПЕК+ и корректировки его условий, в который входят представители только шести стран соглашения: Саудовской Аравии, Венесуэлы, Кувейта, Алжира, Омана и России.

ОПЕК и ряд не входящих в организацию стран договорились в конце 2016 года в Вене о сокращении своей добычи нефти суммарно на 1,8 миллиона баррелей в сутки с октябрьского уровня, из которых 300 тысяч приходятся на Россию. Соглашение было заключено на первое полугодие 2017 года с возможностью продления. В мае срок его действия был продлен на девять месяцев — до конца марта 2018 года.

Ожидания, что срок действия соглашения об ограничении добычи будет продлен еще на девять месяцев, поддерживали нефтяной рынок в последнее время.

Однако, некоторые эксперты высказывают сомнение, что страны ОПЕК+ могут отложить решение о дальнейшем ограничении добычи до февральского заседания. В частности эксперты компании AvaTrade высказали мнение, что  ОПЕК и Россия могут и не договориться ранее февраля о продлении соглашения.

Давление на стоимость марки WTI оказывают новости о восстановлении работы трубопровода Keystone компании TransCanada после ремонта. Ранее TransCanada сообщила, что собрала 44,4 тысячи галлонов (около 1 тысячи баррелей) нефти после разлива на трубопроводе Keystone в американском штате Южная Дакота. Объем утечки оценивается в 5 тысяч баррелей нефти. Часть трубопровода Keystone от Хардисти в канадской Альберте до Кушинга (Оклахома, США) и от Хардисти до Вуд-Ривера и Патоки (Иллинойс, США) была перекрыта на прошлой неделе.

На утренней сессии торгов цены на нефть эталонных марок меняются  разнонаправленно и завершают неделю в минусе впервые с начала октября на слабых прогнозах спроса и росте предложения.

Стоимость январских фьючерсов на нефть Brent на лондонской бирже ICE 0,33% — до $61,16 за баррель. Цена фьючерса на нефть WTI на декабрь на электронных торгах Нью-йоркской товарной биржи (NYMEX) выросла 0,24% — до $55,27 за баррель.

К закрытию предыдущей сессии Brent подешевела на 0,82% — до $61,36 за баррель, а стоимость WTI снизилась на 0,34% — до $55,14 за баррель.

По мнению экспертов, краткосрочный рост цены WTI связан с сообщением компании TransCanada о приостановке работы нефтепровода Keystone из-за аварии в Южной Дакоте.

Основным фактором же давления на нефтяные котировки является прогноз о снижении роста спроса на нефть от Международного энергетического агентства (МЭА). Эксперты агентства понизили прогнозы на 2017-2018 гг. на 100 тыс. баррелей в сутки, и теперь ожидают повышения спроса на 1,5 млн б/с в этом и на 1,3 млн б/с в следующем.

Также рынок ждет предстоящего заседания ОПЕК, которое состоится 30 ноября в Вене и на котором будут присутствовать партнеры картеля по соглашению об ограничении добычи.

Тем временем в США добыча на прошлой неделе выросла на 25 тыс. баррелей, до 9,65 млн баррелей, что повышает опасения по поводу увеличения предложения на американском рынке.