The connection to electricity networks takes on average 281 days for representatives of SMEs in Ukraine. According to the “Getting electricity” index, Ukraine currently takes the 130th place of 188 countries in the Doing Business ranking. Due to ineffective regulation of this sector, it is impossible to connect to networks this year. The Better Regulation Delivery Office (BRDO) estimated that this situation might lead to decreasing Ukraine’s positions that would be the last in the rating in terms of this index in 2017.
Representatives of government, business, public and expert circles discussed the problems of regulation of the retail electricity market at the Roundtable “Retail electricity market: regulation without thinking?” as part of the Public dialogue #PRODialogue on May 18.
“One in four of 94 legislative acts defining the rules of the market, which is about 152 billion hryvnas, is illegal or outdated. The state regulation of the electricity sector does not achieve its goals in 96% of cases. The market should operate under system standards and instruments, the impact of which can be mathematically calculated independently of lobbying preferences,” the head of the BRDO Energy sector Oleksiy Orzhel said when presenting the rolling review results for the retail electricity market in terms of its efficiency, corruption risks, ease of doing business and practicability.
The research showed that the quality of electricity in Ukraine is 14 times worse than in the EU and losses – 2 times more. The current legislation can not ensure the balance of interests in the retail electricity market, provide easy access to electricity supply and reasonable electricity prices for consumers as well as the efficiency of energy companies.
The Head of the State Regulatory Service Kseniya Lyapina believe: “The current situation on the market is the evidence that there is still a lack of an appropriate model of interaction. Attempts on making selective changes – to regulate or improve some areas – do not solve the problems, since they do not bring a new quality in the process. It is necessary to use a comprehensive system approach considering the balance of interests of all market participants and the quality assessment of regulation. Only such solutions will give businesses the opportunity to develop, and thus will allow the Ukrainian economy to grow.”
The Deputy Minister of Energy and Coal Industry of Ukraine on European Integration Natalya Boyko stressed the importance of joint efforts to reform the sector and expressed support for the proposed approach: “We support the BRDO’s initiative, according to which effective decisions should be based on accurate calculations. It is possible to implement the development strategy of the energy sector towards competitive market relations in a quality manner only being able to assess the regulatory impact.”
In view of the adoption of the Law “On Electricity Market” by the Verkhovna Rada of Ukraine and the need to implement almost 50 regulations that should be applied to the fullest within 2 years, the analysis conducted by the BRDO creates the basis for using a comprehensive and system approach to the development of secondary legislation.
The Chairman of the Subcommittee on electricity and energy transportation of the VRU Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety Lev Pidlisetsky also emphasized this aspect: “Finally, the law on electricity market can be considered adopted de jure, but the hard work will be ahead. In fact, we need to re-create the retail electricity market and define all the mechanisms clearly. Today there is only the obligation of consumers to accept the quality and prices established for them. We have to achieve the situation when each consumer can choose service provider. It is possible only in case of constructive participation of all market participants.”
About 100 representatives of related ministries, business, community and expert circles attended this event. The discussion results will be studied and used to form the basis for legislative changes in the electricity market.
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The Ministry of Economic Development and Trade together with the State Regulatory Service initiated public consultations as an essential element of the regulatory reform to make the rules for businesses more effective and clear and the process of their adoption – transparent and public. The independent BRDO analytical center is organizing public consultations and developing analytical materials in the framework of the EU4Business/FORBIZ initiative.
The Public Dialogue between the government and businesses is aimed at improving the state regulation and the business climate in the country.