On July 19, 2016, the Better Regulation Delivery Office (BRDO) in cooperation with the Ukrainian Building Community held a meeting “Optimization of the procedure of connecting to electricity supply networks: concrete steps to find an agreed solution for energy transmission organizations and real estate developers”.
The Concept of connecting to electricity supply networks developed by the working group under the Verkhovna Rada Committee on Fuel and Energy Complex involving the regulator, experts, market members, people’s deputies and BRDO experts has been presented during the meeting,. According to the discussion results, working meeting participants reached a consensus concerning a compromise position, which would be aimed to avoid the abuse by monopolists, provide the simplification and optimize the procedure of connecting to electricity supply networks from the perspective of all parties.
While presenting the Concept, the BRDO Energy Sector Head Oleksii Orzhel noted that it did not solve all the problems, but its adoption was a key for small and medium business development. “Today the issue of connecting to electricity supply networks is very urgent for this business segment, and sometimes it becomes a factor that influences the failure of the plans’ implementation. Speaking about the unified rates, in particular, under the Doing Business Index, the term of connecting takes 263 days and almost 10 procedures are needed to be passed”, he noted and added that the Concept implied clear and precise rules.
Particularly, this Concept proposes two alternative options. The first one is a regional power distribution company’s regulate services upon the connecting to electricity supply networks with clearly defined terms and cost. The second one is at the initiative of the customer; he can get technical specifications for linear component (the network infrastructure from the customer’s electrical point to the regional power distribution company’s network) and implement the engineering works. Then, the cost of the respective works of electrical point creation can be adjusted by tender (customer also can participate) and a contractor’s choice on a competitive basis that will give a possibility to reduce the cost of linear component,” Oleksii Orzhel said.
Experts generally supported the presented Concept. The representative of the USAID “Leadership in the economic governance” (USAID LEV) program and the executive director of the Center for social and economic research – CASE Ukraine Dmytro Boyarchuk stated that nowadays the connection problem is painful not only for Ukrainian business, but also for the foreign one, especially for that planning to come into Ukraine.
“Our common aim is to reach a consensus in this issue and make a step towards opening investment opportunities. In this context, we support the proposals announced today and hope that it will be adopted soon,” he stressed.
Builders and investors representatives also supported the necessity to solve this problem and focused on issues of cost rates calculation and connection infrastructure.
“Creating the connection infrastructure and building the networks at the investors’ cost is nonsense. Especially taking into account that investors do not get the compensation of expenses for that. Reforming this component is a step our market has been long waiting for,” the member of the Ukrainian Building Community’s board, Director for Business Development of the real estate development “Interregional Service Company” Serhiy Petrov said.
“The situation when you pay and build 100% of all infrastructure and then transfer it to the regional power distribution company asset list is unacceptable. It is a capitalization of natural monopolies at the investor’s cost,” the member of Ukrainian Building Community, the U-TURN founding partner Serhiy Ovchinnikov said.
Generally, meeting participants were unanimous in the opinion that the current situation concerning the connection to the networks taints the state image and revolts potential investors while contributing to the non-transparent schemes. That is why the participants expressed the readiness to develop a range of initiatives regarding reforming the procedure of connecting to electricity supply networks based on the presented Concept by common business and experts efforts to solve the problem.
Next week it is planned to present the common position to other participants of the process.
