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Supporting energy sector reform in Ukraine

 

The project Supporting the Energy Sector Reform in Ukraine aims to help the Ukrainian authorities implement reforms in the country’s energy sector and promote its efficiency for increasing its attractiveness, competitiveness and development. The project focuses on competition, investment, responsible business conduct, anti-corruption and corporate governance of state-owned enterprises (SOEs) in the energy sector.

Carried out in the context of the OECD-Ukraine Action Plan, the project encompasses a mix of analytical and capacity-building activities to ensure relevance and support to Ukrainian institutions in reforming the energy sector. The project will run from January 2019 until December 2021. It is implemented with the financial support of the Government of Norway.

What's the issue?

Despite important reforms implemented to date by Ukraine, a great deal remains to be done to underpin and ensure an effective energy sector reform. Ukraine faces major challenges in improving energy efficiency. The energy sector represents 12.6% of the country’s GDP, yet issues regarding governance, pricing policy, bid-rigging, management and security of energy assets have continued to pose barriers to its development.

The OECD is helping Kyiv advance towards its energy goals domestically and fulfill commitments made to the EU by providing analysis, policy recommendations and capacity-building activities to enhance energy sector reform.

Main objective

Improve investment, SOE corporate governance, competition and anti-corruption practices in Ukraine’s energy sector.

Approach

The project will comprise multiple analytical inputs and capacity-building activities focusing on:

  • reviewing the architecture and governance of the energy sector
  • supporting the SOE sector reform in the energy sector
  • promoting competition in the energy sector
  • improving investments in the energy sector
  • strengthening anti-corruption measures and practices in the energy sector of Ukraine 

  Tor Martin Møller

Mr. Andreas Schaal, Director of OECD Global Relations and Mr. Tor Martin Møller, Deputy Director, Section for Russia, Eurasia and Regional Cooperation, Norwegian Ministry of Foreign Affairs

 

 

IN DEPTH REVIEW OF UKRENERGO

Building on earlier Reviews conducted by the OECD on corporate governance reform in the aviation and hydrocarbons sectors in Ukraine, the OECD is carrying out an in-depth review of the state-owned energy company Ukrenergo. The company is responsible for operational and technological control of the Integrated Power System of Ukraine and electricity transmission to the regional distribution networks.

Since 2017, Ukrenergo has been undergoing major corporate governance reforms, with its first independent supervisory board appointed in October 2018. The company was corporatised on 29 July 2019 and transformed from a unitary enterprise into a private joint-stock company with 100% of the shares owned by the Ukrainian state through the Ministry of Finance. These actions aim to ensure Ukraine’s compliance and eventual integration with the European energy market. The final report will be released in June 2020 and be followed by a full country review in 2020-2021 to evaluate Ukraine’s position relative to the SOE Guidelines.

Key publications and resources on energy reform in ukraine

 

State-Owned Enterprise Reform in the Electricity Sector in Ukraine (2020)

While important progress has been made in recent years – both at the company and state level – most corporate governance reforms remain nascent and fragile. To realise long-term and sustainable impact, reforms should be anchored in more robust legislative and policy frameworks, which would also help to avoid ad hoc changes subject to undue political interference. Furthermore, in order to be truly effective, these reforms need to be combined with improvements in the design and functioning of the newly launched electricity market. To address these challenges, the OECD Review identifies a set of 19 detailed recommendations that draw on the OECD SOE Guidelines as a point of departure and serve as a roadmap for reform going forward.

Monitoring of the Energy Strategy of Ukraine 2035

Monitoring the Energy Strategy of Ukraine 2035 (2020)
МОНІТОРИНГ РЕАЛІЗАЦІЇ ЕНЕРГЕТИЧНОЇ СТРАТЕГІЇ УКРАЇНИ НА ПЕРІОД ДО 2035 р (2020)

In 2017, the government adopted the Energy Strategy of Ukraine until 2035 (ESU 2035) as part of its efforts to promote a more systematic and holistic approach to energy sector reform.  In December 2019, a presidential decree tasked the Cabinet of Ministers with revising the current strategy. By providing an assessment and recommendations on the implementation framework of the ESU 2035, this OECD report aims to provide a benchmark to support this work, while assessing the progress that has been made towards energy strategy goals.

 

 

 

 Snapshot of Ukraine’s Energy Sector: Institutions, Governance and Policy Framework (2019)  

Snapshot of Ukraine’s Energy Sector: Institutions, Governance and Policy Framework (2019) 
Огляд енергетичного сектору України:інституції, управління та політичні засади (2019)

This report provides an overview of Ukraine’s energy sector. It presents the structure of the sector, identifying the main state and corporate actors, and clarifying roles and responsibilities, as well as reporting mechanisms. It also elucidates the relationships among actors, including government bodies, regulators, state-owned enterprises and other stakeholders. It looks at the mechanisms in place for licencing and for monitoring the energy strategy.

Eurasia-cover-SOE Reform in the Hydrocarbons Sector in Ukraine-2019

State-Owned Enterprise Reform in the Hydrocarbons Sector in Ukraine (2019)
Реформування підприємств державної форми власності в секторі вуглеводнів в Україні (2019)

This publication is the first important output of the energy sector reform project. It provides a review of SOE Reform in the Hydrocarbons sector in Ukraine, looking at the Corporate Governance of Naftogaz as a case study, and puts forward 16 detailed recommendations in line with the OECD Guidelines on Corporate Governance of SOEs (2015).

 

 Enhancing Competitiveness in Ukraine through a Sustainable Framework for Energy Service Companies (ESCOs)

Enhancing Competitiveness in Ukraine through a Sustainable Framework for Energy Service Companies (ESCOs) (2019) 
Підвищення конкурентоспроможності в Україні шляхом створення сталого законодавчого підґрунтя для роботи енергосервісних компаній (2019)

This report assesses the progress made by Ukraine in the implementation of the 2015 OECD recommendations for developing a sustainable energy savings market with ESCOs in Ukraine. 
 

  Access the International Energy Agency's online Ukraine Energy Service Companies profile 

OECD standards & benchmarking

Some of the activities are benchmarked against specific OECD standards, namely:

Working with OECD committees & working parties

Project findings will be presented to OECD committees and working parties for peer review discussion and monitoring of results. Participating committees and working parties include:

This work could potentially lead to the invitation of Ukraine to align, and eventually adhere, to some OECD instruments and bodies as appropriate. 

Contact us

For more information about the work on Ukraine, please contact:
Ms. Gabriela Miranda, Country Manager for Ukraine
gabriela.miranda@oecd.org

 EUR logo Norway

 

The OECD Review "State-Owned Enterprise Reform in the Electricity Sector in Ukraine" will be launched at a webinar on 22 June 2020, involving a broad range of government and non-governmental stakeholders and will serve as a kick-off for a country review of Ukraine against the OECD Guidelines on Corporate Governance of State-owned Enterprises to be conducted in 2020-2021, as per Ukraine’s request to become adherent.

For more details, contact the OECD Corporate Governance and Corporate Finance Secretariat

 

 

Download the key policy insights note in English

Завантажити короткий підсумок проекту ОЕСР Підтримка реформ енергетичного сектору в Україні тут (українською)

 

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