CHAMBER NEWS:

New rules introduced to natural gas market

The On Natural Gas Market Act of Ukraine No.329-VIII signed by Ukrainian President Petro Poroshenko last week, is a framework law for the sector that establishes qualitatively new rules for doing business on this market.

Chamber experts, who have been actively working on systemic reform of Ukraine’s gas market since 2013, welcome the implementation of the principle of freedom of choice in selecting the natural gas supplier and the principle of market pricing. One considerable achievement is the functional separation of transportation segments from gas extraction and sales, which will increase competitiveness and introduce the clear rules for all market players. This is aimed at creating a transparent, competitive and effective gas market in accordance with the obligations undertaken by Ukraine under the Treaty of Establishing of Energy Community. Increasing competition between gas suppliers will set the market price for gas and will stipulate the efficient use of natural gas, minimizing unnecessary expenditures.

In its turn, market pricing will significantly simplify investments into the gas market in Ukraine.

However, Chamber experts also believe that certain articles of this Act still need to be improved, in particular:

— provisions on gas reserve stocks for gas suppliers, which provide the Cabinet of Ministers of Ukraine with the right of manual regulation of the market that could lead to government interference with the activities of private companies.

— licensing of natural gas supply. This sector was recently deregulated, while the Act introduces such a requirement again.

Adoption of the new Gas Market Act was one of the priorities of the Chamber Energy Committee outlined in the Chamber White Paper on Reforms in the Oil and Gas Sector.

New program of Regional Business Development

As part of the Regional Business Development program, Ukrainian and American business leaders met with U.S. Ambassador to Ukraine Geoffrey R. Pyatt and Chamber President Andy Hunder at a roundtable in the central Ukrainian city of Vinnytsia.

The meeting, organized in cooperation with the Vinnytsia Chamber of Commerce, gathered representatives of the largest companies operating in the region. Among those represented: UkrProduct Group, Bar machine works, Lityn meat processing plant, Bayer LTD as well as PlazmaTek, and Bunge Ukraine.

The Regional Business Development program fosters efficient dialogue between the business community and local authorities, and aims to increase investment regionally.

The U.S. Ambassador traveled to the region as part of the America Days program, which promotes American art, history, culture and education. He had the opportunity to speak with business representatives about reforms, as well as about ways to attract foreign businesses to the region. “Giving local authorities the opportunities to have a stronger influence on their tax base will strengthen the local economy. Vinnytsia continues to demonstrate how an effective municipality works with its e-governance and technology initiatives, making it a potential place for investment.”

Andy Hunder, the Chamber President, emphasized that “it is not a coincidence we chose Vinnytsya for the launch of our Program. We note that the local government is implementing leading information technologies in the governance process. Vinnytsia is one of the national leaders in e-governance development. We know that the regional government is ready for dialogue, and the Chamber will be glad to facilitate it, representing the consolidated position of the business community on a variety of issues.”