Mobile operators can count on a simplified procedure for installing and putting into operation mobile communication base stations. Mobile phone towers will be no longer classified as buildings. There will be no need to submit a large number of declarations to the State Architectural-Construction Inspection (DABI) in order to put them into operation.
At the working meeting with the State Regulatory Services (SRS), BRDO experts succeeded to defend the decision of the deregulatory Cabinet of Ministers dated November 26, 2016 regarding simplifying this procedure, which the DABI together with the Ministry for Regional Development, Building and Housing of Ukraine tried to cancel with the help of new draft regulations.
“Proposed amendments would again introduce the need for telecommunication operators to register declarations on the beginning of construction works as well as declarations on the availability of facilities to be used in the DABI. However, this returns old corruption schemes while being contrary to requirements of p.90 of the Action Plan for deregulation of economic activities,” the head of the BRDO’s IT sector Oleksandr Kubrakov said.
BRDO draws the attention of the DABI administration to the inadmissibility of drafting regulations that carry high corruption risks and return barriers canceled previously.
We expect that draft resolutions of the Cabinet of Ministers “On amendments to the CMU Resolution No.461 and 466 dated April 13, 2011” as well as “On approval of the List of construction works, which do not require any operating documents and after completion of which facilities are not subject to put into operation” agreed at that meeting will be adopted in the version that does not contradict the current legislation and meet the Government’s deregulatory decision.
Source: www.business.ua
The retail electricity market is one of the complicated economic macrosystems in Ukraine. It affects each consumer. Every day we feel the monopoly impact of energy systems and can not refuse their services. Even if we are not satisfied. What should be done to implement the reform of this outdated system and keep technologies developing with consumers’ needs?
Recently, the Verkhovna Rada has adopted the Law “On Electricity Market”. We need a whole package of regulatory acts to make it properly functioning. As for existing regulations – they can not be called effective. We have analyzed the regulatory environment of the retail energy market. The results are presented in the Green Paper.
These results are disappointing. The effectiveness of state regulation of the market is extremely low. It is impossible to achieve the goals declared by the state in 96% of cases.
Basic principles as the basis of creating an efficient market are:
Our state regulation is not able to implement any of them. We selected the criteria to assess the effectiveness for each 19 areas of business processes on the market. This is not abstract words and slogans, but real figures and indicators.
Consumer rights? We see increased tariffs instead of the increased quality of services. As for the development and safety of the energy sector – there is no qualitative replacement of fixed assets, despite the significant depreciation of networks and constantly growing tariffs. Losses in Ukrainian electricity networks are twice as many as similar indicators in European countries. The load curve irregularity is increasing.
As for the impact on areas where competition may appear. The retail market includes electricity distribution and supply services. Distribution – this is the networks of oblenergos, they are natural monopolies. It is useless to build the same poles near them. However, the supply can be a competitive service. It is necessary to provide the effective state regulation that will allow any trader to obtain access to the market. The main thing is meeting certification requirements. By using the natural monopoly infrastructure, traders can provide services for consumers. Figuratively speaking, they can be more effective just having one computer than natural monopolies with large user service centers. It is important that consumers have the right to choose a supplier, and the price should be set by agreement of the parties. Another service is electricity metering. Both the oblenergo and the third party can install and read electric meters. These services with small prices are components of the supply market. And it is possible and necessary to create the competition on this market.
Natural monopolies should be profitable, function properly and develop. It depends on tariff setting and the regulator plays a crucial role in this context. This institution was established precisely because the electricity market is a market of natural monopolies. Unfortunately, this regulation is often ineffective – tariffs grow and the quality of service remains the same. The situation is hopeless: as of the end of 2016, the debt for electricity consumed increased by 2.5 times for four years and now it is 26.8 billion hryvnas.
Poor quality services are a clear indicator of the inefficiency of natural monopolies. One of the solutions to this problem is providing the incentive regulation. But there is an objective factor – growing tariffs. Therefore, people’s trust in the regulator and its independence from the influence of oblenergo owners is the most essential pre-condition to change the regulatory model. In these circumstances, a critical task of the regulator is the necessary control over the efficient use of funds obtained under new conditions by oblenergos. Unfortunately, the regulation is still not enough transparent and independent. As a result – we only talk about incentive tariffs while they have already proven to be effective in the world.
There is a lose-lose situation: we “eat” a small reserve that we had due to depreciated fixed assets. But every attempt to implement reforms is seen as “pushing” the interests of oligarchs.
Consumers change with the tariff increase. They become more efficient and disciplined. Basic stuff – to replace conventional lamps with energy-saving ones and use energy-efficient appliances. Even simply turn off the light when you do not need it. All this may have a significant financial effect for both households and businesses.
As a result, inefficient monopolies sell less energy, but fixed costs remain the same. The “best” consumers become prisoners of still worse monopolies. They pay more for worse services. The more autonomous consumers become, the more expensive the services of centralized energy system will be.
Own sources of energy – a global trend
This will be advantageous for both businesses and households.
If natural monopolies do not change their business model in the nearest future, they will lose their consumers. They will refuse their services because of the price.
We will offer this option in the White Paper (it will be created based on the results of discussing the problems outlined in the Green Paper with business and professional association representatives): the SME should use their own energy and sell surpluses to a single network at incentive rates. Small and medium business takes 100% in many sectors. We are talking not about a single creation of facilities, but about the development of a new system, which is based on a fundamentally different logic, from the bottom upwards. The losses when supplying energy from points generating electricity to consumers will be lowered. Over time, this will reduce the production cost of Ukrainian producers.
Although the energy from renewable sources is not the most affordable option now, but the cost of its production is rapidly approaching the price of traditional energy. The time when these prices intersect is inevitably nearing.
The distributed energy and construction of networks, when it is possible to manage the demand using the latest technology, when consumers are active participants of the retail market, but not bit players with no choice – all these factors are global trends.
Changing the market structure is inevitable
In recent years, the electricity consumption is decreasing.
Large businesses consume less and less due to decline in the economy. The electricity consumption by population has been slightly increasing, but now it is relatively stable.
We predict that the consumption growth may occur as a result of replacing other types of energy resources with electrical energy by consumers or due to new major consumers in the market. For example, promoting the extensive use of electric heating and increasing a number of electric cars and other electric vehicles.
The agricultural sector uses its own resources (biogas plants, solar, wind) more actively and it moves from gas to electricity to heat poultry and cattle. In such a way, there is a mixed model: produce by themselves, but consumes energy from the central network at economical tariffs (multi-zonal meters, night consumption).
Ukraine is changing along with the world, but it quickly moves to other models of customer-network relations. The regulatory framework should be updated. The state is faced with several tasks: to provide the effective stimulation of natural monopolies, and where possible – to create opportunities for competition in the market.
It is necessary to introduce secondary legislation that would not create barriers but extend the choice for consumers. For example, the increase of tariff options. Now distribution companies provide consumers with only three options: a single tariff, day/night or zonal tariff (peak/intermediate/night tariff). There are 10 tariff options proposed in the world. If I pay in advance for three months, this is a great plus for traders. They propose lower tariffs. If I need consumption volumes in a certain time of day and do not consume at another point of time – traders also can propose better tariff conditions.
It is necessary to propose an easy entry of new players to the market, clear and transparent responsibility of market participants and no abuses by monopolies at the level of regulatory proposals. All this – to increase a number of traders and options for consumers.
It is in the interests of Ukraine to encourage small and medium businesses to produce electricity and sell the surplus to the network. It is necessary to revise and optimize a system of state support and provide a simplified procedure of selling electricity by these producers at incentive prices legislatively.
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.
For information:
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.
May 2017
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Ukraine is among the top 10 countries producing metal, but it spends over 1 billion hryvnas annually to purchase building metal structures abroad. 80% of Ukrainian metal are sold as a raw material, and only 20% are used to make finished products.
What regulatory changes should be implemented to unlock production potential of the market of metal structures and stimulate the business development? How to remove barriers to enter international markets and accelerate the harmonization of national standards with the European ones?
The state and business representatives with try to find answers and solutions to market problems as part of the Roundtable “Iron standard: metal structures between yesterday and tomorrow” on May 25, 2017.
The event will be attended by:
Hennadiy Zubko, the Vice Prime Minister, Minister of Regional Development, Construction, Housing and Utilities of Ukraine
Hugues Mingarelli, the Ambassador, Head of the EU Delegation to Ukraine
Maksim Nefyodov, the First Deputy Minister of Economic Development and Trade of Ukraine
Kseniya Lyapina, the Head of the State Regulatory Service of Ukraine
Lev Partskhaladze, the Deputy Minister of Regional Development, Construction, Housing and Utilities of Ukraine
Volodymyr Nosov, the General Director of Ukrstalkonstruktsiya
Andriy Ozeychuk, the board member of the Ukrainian Steel Construction Center
Volodymyr Adrianov, the Deputy Director of the Ukrainian Research and Design Institute of the steel constructions named after V. Shimanovsky
Oleksiy Honcharuk, the BRDO Head
Olena Shulyak, the head of the Construction sector, BRDO
Business representatives
BRDO experts conducted a rolling review of the quality of market regulation, the results of which have been presented in the analytical research – the Green Paper “Rolling review of state regulation of the market “Building metal structures”, that will be the subject of discussion at the roundtable. Research conclusions show that the powerful industry with considerable added value and huge potential for growth is currently regulated by outdated Soviet rules, which do not allow the market to develop and introduce modern technologies in construction.
Details – at www.regulation.gov.ua.
Join the dialogue! Discussion results will be used as the basis to develop particular legislative changes in the market.
Venue: Kyiv, the Ministry of Regional Development (Velyka Zhytomyrska St., 9)
Time: 10:00 – 12:00, May 25, 2017. The event’s agenda is available here.
You can register here. Details at: 063 440 47 07.
Accreditation of media representative is till 18.00 on May 24, 2017 by calling 099 256 59 56.
[email protected], 590-47-96.
For information:
The Ministry of Economic Development and Trade together with the State Regulatory Service with the assistance of the BRDO initiated the regulatory reform. The EU is supporting this process 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.
The regulation of the electricity sector does not achieve its goals in 96% of cases. The quality of electricity supply in Ukraine is 14 times worse than in the EU and losses – 2 times more, while electricity prices are constantly increasing. The Ukrainian SMEs need 281 days to connect to electricity networks and sometimes it is impossible to do.
How to remove barriers to regulate the sector effectively? How to achieve a competitive balance under monopolized market conditions? When can Ukraine use smart energy?
The government and business representatives will work together to find answers and solutions to problems of the retail electricity market at the roundtable “Retail electricity market: regulation without thinking?” on May 18, 2017.
The event will be attended by:
Business representatives
BRDO experts conducted a rolling review of the quality of market regulation, the results of which have been presented in the analytical research – the Green Paper “Rolling review of the retail electricity market”. Research conclusions show that the existing state regulation does not achieve its goals: it is unable to ensure either the rights of consumers to transparent access to electricity networks and reasonable electricity prices or the effective operation of energy companies. Details – at www.regulation.gov.ua.
Join the dialogue! Discussion results will be used as the basis to develop particular legislative changes in the electricity market.
Venue: Kyiv, IQ Business Center (Kyiv, Bolsunovska St., 13-15)
Time: 10:00 – 12:00, May 18, 2017.
The event’s agenda is available here
You can register here.
Details at: 063 440 47 07
The Ministry of Economic Development and Trade together with the State Regulatory Service with the assistance of the BRDO are the initiators of the regulatory reform. The EU is supporting this process 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.
Photos of bare Carpathians or trucks with the round timber from southern regions became symbols of the disaster in forestry. And the argument to continue the moratorium on timber export. But will the ban save the forest?
– The moratorium was imposed to protect our nature. How effective is this tool?
– When the state protects its resources including the forest it can choose different types of restrictions. For example, licensing, quotas, export taxes or export bans. The ban is a tool that restricts the most. Although, it can be used in accordance with WTO standards but only in the case when there is a threat to national security or with the aim to save natural resources. The moratorium was imposed exactly with this argument. And now before its removing or continuing, the state must answer a range of important questions.
What did the state get from the moratorium – incomes or expenses, and how many. Did we succeed to achieve the effect of redistribution between domestic producers? Woodworkers claimed that the moratorium would allow effectively attract investments and create new quality production. But their amount does not grow for some reason.
– But why? Ukrainian Sawmills began to work last year attracting about 20 million euro investment in Rivne region…
– There are single examples, but we did not see the system growth of the sector that had to be observed after moratorium imposing. We need to find out the reason why it had happened.
There are another two important aspects. In general, the moratorium provides the strong protection effect for domestic producers, and grades the costs of these producers, which increased because of other economic reasons. But the main moment is the consumer’s effect. whether the moratorium was useful for final consumers.
The biggest consumer is the timber industry. We need to realize how much timber it consumes, which one, we need to figure out how the access to the resource will influence the sector’s growth for at least 5 or even 10 years. There are no answers to these questions just like to the questions about the moratorium impact to this! There are no figures, so what analysis and forecast we can speak about? And this is the basis to take any decisions.
– But there is an export statistics…
– It is not all that fine there. We compared the statistics of industrial timber export, our and European one, and found out significant differences. In 2015, when the moratorium on round timber export first was introduced, Ukraine declared much more firewood (fireplace log pieces) export data than Europe. But the export of raw timber is lower according to the European statistics data. And the difference between the firewood and industrial timber are those 0.55 million cubic meters, but according to another data, we had exported more firewood, according to another one it was the industrial wood… This is a raw export.
– How can these “loopholes” be possible at the border?
– The problem is that we do not still have clear definition of timber product categories. 50% from 100 commodity items do not have clear definitions… Economic entities often determine qualitative and technical characteristics of the transaction subject (timber) in their certificates. There is even no description of processed timber! Till this year, even integrally-processed timber had got into the “timber” classification until the State Forestry Agency’s Decree has been enacted. There are limits of two meters in length now. As a result, people cut industrial timber to two meters or make the cut on a beam and export like “firewood”
By the way, we can explain growing losses from illegal logging just with the uncertainty of the forest as a commodity. Compared to 2011, losses increased by 77.5%, from 49 to 87 million UAH. And only 5-7% of these cases of such poaching are reviewed by law enforcement bodies. In most cases, they even do not reach the court due to the inability to prove the crime. For the entire 2016, as many as 15 cases of illegal loggings as administrative violations were brought to court in Ukraine. Seven cases of them were returned because of wrong protocols, eight cases were considered. But nobody was brought to administrative responsibility in every case! And in 2015, punitive sanctions up to 185 UAH were accrued by results of reviewed cases. Such loggings are not considered as criminal offenses at all as articles of the Criminal Code do not determine the essential damage amount. This problem requires to adopt legislative amendments as soon as possible; impunity will only lead to the increasing number of illegal loggings.
– Did the introduction of the timber chipping system improve the situation in the sector?
– First, we need to understand that we just began to develop this system. Timber inventory was introduced only in enterprises of the State Forestry Agency, it is 73% of forest reserves. Other enterprises including state-owned defence enterprises, public utility companies, Chernobyl still do not use labels.
– Is chip compulsive for exports?
– Unfortunately, it is not. According to EU directives, certificates of conformity are necessary, but while there is no single system of timber inventory implemented in Ukraine, chips are not prescribed by laws. Although there is the draft resolution of the Cabinet of Ministers on this topic.
Inventory systems are vital for the sector’s efficient operation in Ukraine. Forest and timber inventory. Forest inventory as a kind of census was last conducted in 1996. This work must be financed from the budget by the decision of the Cabinet of Ministers. But the funds have not been allocated all over these years. However, this inventory is the basis of a forest cadaster. And any investor we would like to engage in this sector must understand resource amounts and quality and have an access to open and checked information…
There is another severe problem related to the financing – forest reserves recovery. Forests age in most forestry enterprises is such that it must actively be “reduced” to 60 years. But de facto there is no budgeting to plant, especially in southern regions where forestry enterprises have less income than in northern regions.
– Are forestry enterprises so unprofitable?
– Every year forestry enterprises replenish the budgets of all levels with 3.2 billion UAH. However, the amounts allocated from the state budget to recover forest reserves are constantly decreasing. For example, in 2015, about 53% of funds were allocated, in 2016, this figure dropped significantly – to 8.5% of the demand, and this amount is even less in the budget of 2017 – about 5%.
– But the problem will only increase in future. What solutions are proposed?
– We consider the idea to unite 312 forestry enterprises – both rich northern enterprises and poor southern ones, then to finance new plantings in Ukraine from the general budget. But a format of this new organization is also discussed. For example, there can be difficulties when creating the corporation. Our legislation has not yet proscribed a mechanism to establish such organizations based on state enterprises, so, there can be management risks, income redistribution, dividends payment, etc. In addition, there are about 70 institutions, for example, research institutes, and 40 forestry enterprises are financed directly from the state budget. How to include them in the corporation? We believe that a public joint-stock company is the most prescribed corporation format today.
We propose to create a special state fund as a possible option to finance the forest restoration. If the forest sector brings 3.2 billion UAH in the budget annually, and it is required 1 billion UAH for the restoration, then it should be given – it makes sense.
Time will show what option – whether the forestry association or the fund creation – will be adopted.
– Are there examples of private capital desire to participate in forest plantations?
– The Forest Code recognizes private property, and we will come to that sooner or later. But now it is early to speak about it. Now there is less than 0.1% of the total area of private forests. In most countries, forest is a resource like subsoil and water, it is national one. As for the option of public-private partnership when business assumes the cost of planting and areas protection? It is hardly probable that private investors will choose such projects, which reward they will see in 50 years. Probably, it will be more interesting for investors to engage in timber processing, furniture manufacturing and so on.
And as the forest is a resource, then the government’s task is to create a system with free and clear access to this resource, from the use of which the taxes would be received. Imperfections of our legislation now lead to the fact that the forest is only a resource for certain groups of people…
What aims does the state have? To encourage the development of domestic production? Whether should the preferences be provided for domestic investors only or for everyone? The state must determine the volume produced in the market and the access for certain categories of investors.
The model with unlimited access to the resource was used in that types of businesses, which have been created over the last years. We admit that it was not improvident from the state’s side. The good news is that the access to the resource is already provided through auctions.
– Let us return to the export. Is the timber for such supplies being bought at auctions?
– Not always. The timber is prepared and then it goes to auctions. Who and with what aim buys it there – to produce or to export – is not being monitored. But the main thing is that only 30-40% are bought out from the amount offered for auctions. And then it is legislatively prescribed that the timber, which was not sold at auctions, is given to state-owned enterprises by direct agreements. In most cases, the bidders consciously increase prices to ensure that timber is not bought up, so the auction would not take place, and they can buy it independently and directly.
– So, the auctions are not an effective tool?
– It requires to be improved. It is necessary to sell all unprocessed timber through auctions. And it is essentially important to register wood as the commodity category. Now our forest is just a resource needed to be protected.
And no document prescribes what the forest is, when it was cut, in what moment it becomes a commodity, how to determine its price and how to consider it. There was the same problem in most of post-Soviet countries. But, for example, Russia solved the problem in 2014, when it prescribed timber as a commodity in the Forest Code and introduced the electronic inventory of both forests (that grow) and forests (commodity). Now the resolution of the Cabinet of Ministers on improving the timber trade is being prepared. The work on the creation of a single system of electronic inventory is being continued. It is also necessary to amend the Criminal and Forest Codes. We started the dialogue with regulators and market participants as part of the roundtable “Regulatory jungles: Is the forest a commodity or resource?”, during which we presented the analytical research of market issues and possible solutions, on Thursday. Details are on our website, join us.
In Ukraine, losses from illegal logging has increased by 77% reaching a total of 300 million hryvnas over the last 5 years. However, regardless of logging volumes, a single fine is only 170 hryvnas. In 2016, 15 cases concerning administrative offences were brought to court.
This is only one aspect of the problems related to the forest industry regulation, which representatives of government, business, community and expert circles discussed during the roundtable “Regulatory jungles: is forest a commodity or a resource?” as part of the Public dialogue “#PRODialogue” in Kyiv on April 27.
The Better Regulation Delivery Office (BRDO) conducted a comprehensive analysis of industry problems and presented it in the Green Paper “Regulation of timber market”. “50% of acts regulating the timber market carry high corruption risks due to their out-of-dateness, while 6 of 44 acts are illegal. The existing regulatory environment can not provide the state recording of forests and their use as well as can do nothing with illegal logging and does not provide effective mechanisms to protect forest and sell the timber,” the Head of the BRDO Agriculture sector Andriy Zablotskyi said.
Opening the meeting, the First Deputy Minister of Economic Development and Trade of Ukraine Maksim Nefyodov emphasized the need to introduce the electronic timber management at the earliest possible time: “In the near future, we are planning to introduce the state electronic timber management as a pilot project for a year. The relevant draft Resolution of the Cabinet of Ministers has been already prepared. Regulatory rules should be effective and predictable. Without emotions, only after analyzing the data and providing the predicted impact on business.”
The above mentioned problems are compounded by an acute lack of budget financing of the sector that meets only 8% of needs. For example, in Belarus, it is 9 dollars/hectare, in Poland – 17.5 dollars/hectare and in Ukraine – just 0.3 dollars/hectare. With such funding, it will require 40 years to achieve the forest cover index at the level of 20%.
At the same time, the country still does not have any development strategy in the field of forest relations that would define priority areas of forest use for the state and businesses. The Head of the State Agency of Forest Resources of Ukraine Hrystyna Yushkevich emphasized the priority of this task. “Today, the State Agency of Forest Resources takes the first steps in creating the national forest policy of Ukraine with the expert help of Austrian colleagues. This is impossible without the quality analysis of regulatory acts and we are very grateful for BRDO’s expert help in this area,” Hrystyna Yushkevich said.
The representative of the EU Delegation to Ukraine Nicholas Burge stressed the importance of the regulatory reform: “Europe is interested in stable economic development of Ukraine and it is possible only with effective regulatory changes in the legislation, including the laws in forest industry. Our common task now is to find a balance between the value of the forest as a natural resource for future generations and the contribution of the timber market in economic growth.”
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.
80% of participants representing business circles of the Dnepropetrovsk region during the discussion are faced with unreasonable restrictions and requirements of licensing authorities. So, they lose a lot of money and time that could be used for development. However, not a single local official has been held liable for violations of the right of entrepreneurs and for the improper fulfillment of mandates.
This is the results of a survey conducted during the first regional Roundtable “Moving towards businesses: simplifying the market access” that took place in Dnipro on April 25. This event gave start to a regional campaign of the Public dialogue between the government and businesses aimed at improving the state regulation and the business climate in the country.
“The business requires clear and effective rules, only then we can expect the development. The government has already started the deregulation, and about 500 outdated and illegal acts have been abolished in six months. In a view of further development, a regional aspect of the dialogue between businesses and the government will be very important, since real reforms mean that people see their results in the regions,” the head of the economic development department at the Dnipropetrovsk Regional State Administration Volodymyr Lyalko said.
According to the representative of the European FORBIZ project in Ukraine Joshua Badakh, effective decisions are those ones developed in collaboration with all market participants: “The European experience shows that the public dialogue between the government and all stakeholders is a necessary component of an effective regulatory reform. When the state has already adopted a law, but the business can not work well according to this law, this is a bad practice. The business should be involved at the state of developing decisions.”
“We found out 661 cases of applying instruments to restrict access to markets while 943 regulatory acts contain the provisions providing these restrictions. At the same time, 379 documents in the permit system do not have any legal status at all. Under such conditions, the business is just a hostage of ineffective regulation,” the head of the BRDO’s sector for market supervision and control Volodymyr Holovatenko said.
This event became a platform for efficient dialogue between representatives of central and local authorities, business and expert circles. The participants expressed their readiness to go together towards creating clear and informed decisions. Participants concluded that the partnership of the government and businesses could be possible only based on mutual responsibility.
The Better Regulation Delivery Office joined the implementation of international clinical protocols in Ukraine. The BRDO Head Oleksiy Honcharuk said about that during a press conference organized by the Ministry of Health together with the Ministry of Justice of Ukraine and health experts.
Previous Ukrainian medical protocols are outdated, they do not meet the best world practices or duplicate other regulatory acts. The Better Regulation Delivery Office provided assistance to the Ministry of Health in developing an innovative draft order that allows our physicians to use evidence-based medicine instead of the authority-based medicine. Clinical protocols will allow to change the system according to the patient’s requirements and not the reverse. The decision of their implementation will go into effect on Friday, April 28.
“BRDO’s researches showed that the Ukrainian regulatory environment was clogged – 35% of acts were obsolete, outdated and ineffective. The Better Regulation Delivery Office together with the Ministry of Health of Ukraine developed a draft order, which is innovative from a legal point of view. This is one of the rare cases when economic entities-healthcare institutions and physicians-private entrepreneurs can directly use foreign regulation – treatment procedures,” the BRDO (Better Regulation Delivery Office) Head Oleksiy Honcharuk said.
The Deputy Minister of Health Oleksandr Linchevskyi stressed that the implementation of evidence-based clinical protocols would provide both doctors and patients as well as the health system as a whole with certain advantages. “This is the permitting order. It finally provides physicians with the right to use effective methods of diagnosis and treatment. This order is a kind of protection for doctors since it eliminates the need to treat under outdated standards. Accordingly, patients who get really high-quality medical care win. The system starts to focus on the patient’s needs, rather than to adapt to capabilities of health care institutions.”
Medical protocols are just a part of ineffective and outdated regulation in the health sector. The BRDO initiated a review of Sanitary Regulations and Standards, most of which should be abolished since they became outdated, are illegal or duplicate the requirements of other acts. We are working on reducing the use and seeking to abolish the concept of “conclusions of sanitary-epidemiological examination” in an ideal scenario.
In addition, a resolution of the Cabinet of Ministers, which will simplify the access to medical practice activities for doctors without reducing their quality requirements, is drafted now.
Source: delo.ua
The head of the BRDO’s Energy sector Oleksiy Orzhel is speaking about a new law on electricity market and its impact on competition on the Ukrainian market.
The adopted draft law #4493 on electricity market of Ukraine looks like a market draft law, but is it possible to introduce efficient competition on the electricity market in today’s Ukrainian realities?
As for its form, we see the implementation of the third energy package. The creation of a new competitive market along with an increased amount of participants are announced to allow consumers to choose one or another electricity generator on the basis of the best price and quality of service.
The adoption of this draft law saved the sector from of the collapse of payments, which had to happen already on July 1, 2017. This date has been indicated in the current law #663 “On Main Principles of the Functioning of the Electricity Market” as a term to close down the SE “Energorynok”. The SE “Energorynok” purchases all electricity from all producers and averages the price reducing the impact of large prices, including the thermal generation, through the nuclear power generation. In the two years since 2013, when the law #663 was adopted, the competitive environment had to be created. But none of the requirements of the law have been met – the exchange didn’t started to work and there is no market of bilateral contracts, so with closing down the SE “Energorynok”, we would get a vacuum of relationships in the electrical energy sector. Having the date of its “last working day”, this enterprise have been already faced with the fact that it couldn’t attract the necessary credits for cash gaps between generation and consumers that threatens the energy security.
There were two options – either keeping the law #663 in force postponing the closing date, or adopting a new law. Politically, in terms of the form and content, it would be better to adopt a new law, especially as it meets all the requirements of the third energy package.
If the President signs the draft law #4493 on electricity market of Ukraine, the full implementation of the market will start on July 1, 2019. What do they need to do during these two years?
We should develop and implement all the secondary legislation, prepare codes of grids (Ukrenergo and Oblenergo), create additional legal entities that will perform calculations and, finally, launch the exchange and the interface of bilateral contracts. Also we need to purchase key assets and information systems, where both generating companies and consumers should register in.
In these two years, several areas of the market should be created. Generating companies are interested to find large consumers with a significant and predictable demand level and make bilateral contracts. And the energy for consumers who have unequal consumption schedules will be bought at the exchange, where prices will be set a day in advance. Theoretically, people may buy directly at the exchange, but it is difficult, therefore, they will deal mostly with traders (universal service providers).
So, theoretically, the more players are among suppliers, the lower the price is.
However, it won’t be less expensive than it is now. The experience of Europe where the start of power exchanges’ operation led to the growth of tariffs from 30 to 70 percent depending on the structure of each market and the consumption profile confirms this fact. But there are no countries where these reforms led to the reduction in tariffs in the early stages of implementation.
Returning to the “pre-exchange” level and even reducing in some situations took place only over three or four years, when more efficient generations entered the market.
Who will benefit from the new rules in Ukraine?
Positive developments in the first stage are possible only for large businesses. The sector of industry will get rid of the burden of cross-subsidization. Today, this is 45 billion hryvnas paid for the population by the economy and production. Theoretically, because of this, our industry sector can become more competitive on the world market. In addition, the largest production will start using direct contracts, that is, it can choose suppliers.
For example, the average tariff for the first voltage class is 1.49 hryvnas, and the tariff of the Energoatom National Nuclear Energy Generating Company is 48 kopecks (it is also necessary to add tariff components of the SE Energorynok, transportation and distribution costs, but the price under direct contracts will still be much lower than consumers have now).
By signing the direct contract with Energoatom regarding the tariffs of 60 kopecks, the enterprise will have significant savings
Small and medium business failed to come up with direct contracts and the generation is not interested in dealing with such a wide range of small consumers. It will buy energy at the exchange, but this energy will be more expensive than the large-scale industry will receive and pay for the trader’s services.
The population loses twice. According to the NKREKP’s decision, they should try to eliminate cross-subsidization during these two years, that is, to increase the price for the population to make it equal to the tariffs for the industry sector. This have been carried out for two years and the amount of subsidies was reduced from 30% in 2014 to 25.87% now, but it is still extremely large – 45.8 billion hryvnas. Thus, only the elimination of cross-subsidization will raise the tariffs for the population almost by one and a half or two times, and this is without counting the prime cost of electricity. In addition, starting from mid-2019 after launching the exchange, the next increase should be expected. While this reform led to the increase by 30-70% in stable Europe, experts will not give a forecast in our difficult situation.
How will they set the tariffs for the population that, in fact, pays once a month, but the exchange is setting the price every day?
Chances are high that the regional power distribution company (oblenergo) will provide services to the majority of the population in the same way as before. They will purchase at the exchange and average the price, but… there will be less energy, which is inexpensive, and more “space for maneuvers” to raise prices for generation that will satisfy the peak consumption on the market.
Besides, creating the exchange also requires investments. According to estimates, the cost of moving to a new market is about 600 million euros. End consumers also pay for this and obtain the increased price.
When should we expect new investors?
Not earlier than 5-6 years. This is because our rules should be in force at least three or five years to allow us having large companies entering our market. Will this law work or face with the same result as the previous law #663?
Investors want to see a stable system where the adopted rules are implemented. In addition, the energy production is a capital-intensive sector, in which the creation of new generations takes several years and returns will be available in seven to twelve years.
Another point: a new player enters the state oligopolistic market. The base power load is put onto the state (Energoatom, Ukrhidro and Tsentrenergo), while as for the marginal aspect, there is a large concentration of one particular player, the DTEK, which has 70% of the thermal generation market.
Moreover, both the DTEK and the state do not have investment expenses in the structure of their tariffs, since key assets have been established in Soviet times. They include the costs of fuels and maintenance as well as operating costs, and investors should add the return on investment into their tariffs.
It is hardly possible to compete in these two segments with the existing concentration and under such conditions.
What will we see in the coming years?
The renewable energy will be developed, because it is provided with state stimulation guarantees until 2030 by the adopted law. This is good since it stimulates the introduction of new fuel-free generation, which when entering the competitive market will eventually decrease the prices. Due to incentives, we will try to achieve the goal of 11% in renewable energy, while its share in the national generation volume is 1%.
The renewable energy will be developed, because it is provided with state stimulation guarantees until 2030 by the adopted law
When will the cost-cutting happen?
When new generations start to compete with the existing ones, when there are more players on the supply market and they are interested in a large number of participants with low consumption volumes. The energy regulator and the anti-monopoly committee play an essential role in achieving this goal, and this role is providing the competition instead of explaining higher prices for electricity with “market” mechanisms.
By Ivan Golovnya
Investment development of new territories starts with land plots allocation. This is an important procedure, but it is also time-consuming and often carries corruption risks. To complete it, an applicant and a land surveyor should possess extraordinary perseverance and keep an equal mind. Local authorities may delay considering the documents or refuse to approve them at any stage of the procedure. This may happen at stages of getting a permit to develop the documentation, its finalizing, expert reviewing, approving, registering a land plot or registering property rights to it.
In total, an applicant or a land surveyor should make 17 direct contacts with different individuals from the beginning to the end of the procedure. If we sum up all stages of land allocation, we will have a period of 8.5 months. In some regions, such procedures can take 2.5-3 years.
The main cause of this situation is the fact that the law doesn’t specify a full list of grounds for refusal and doesn’t provide for the duty of local authorities to justify it referring to provisions of the legislation for every stage of the documents review.
However, land allocation issues are not a strictly legal problem – it is a set of organizational, technological and technical problems. One of the reasons for this situation is a lack of standardized requirements for land survey works.
BRDO experts together with the Land Surveyors forum (Zemres) conducted a survey among experts in the field of land resources. It showed that the market requires a standard of land allocation projects and step-by-step transition to the completely electronic document management.
The standards of land surveying documents are really required, and 92.4% of respondents said about that. 80.3% of respondents believe that the implementation of standards will reduce a number of comments on land surveying documents from the State Service of Ukraine for Geodesy, Cartography & Cadastre. Another 72.5% of respondents believe that the content of land allocation projects should be optimized. Most of them supported the exclusion of following documents:
85.5% of respondents supported the optimization of land surveying document review methods. Most respondents (24.7%) consider it necessary to stop the pilot project on approval of land allocation projects under the principle of extraterritoriality, and another 21.1% believe that several types of reviewing land surveying documents should be canceled.
Detailed analytics of the survey.
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After conducting the survey, the meeting of representatives of the Land Union of Ukraine, the Association of Land Surveying Experts of Ukraine, the Better Regulation Delivery Office, the Land Management Faculty of the National University of Life and Environmental Sciences of Ukraine, the Faculty of geoinformation systems and territory management of the Kyiv National University of Construction and Architecture as well as practitioners-surveyors was held.
According to the results of the meeting, the following decisions have been adopted:
So, the work on solving land surveying problems is rapidly moving into high gear and becoming more organized and systematic. We invite all experts concerned to cooperation.
Now, first of all, we are working on issues related to the preparation and verification of land allocation projects. Please, send your proposals on solving the following problems at [email protected] and [email protected] :
When importing equipment and physical media, importers pay not only taxes and fees to the state, but also contributions to authorized collective management organizations (CMO). Currently, in Ukraine, there are two organizations of this type that receive contributions from 33 types of devices, including TVs, mobile phones, tablets, flash memory cards, hard drives and so on.
These contributions are an additional burden for official importers of household appliances, which can not compete with the so-called “grey import”, because these contributions add value to the goods that falls on consumers. And most importantly – in recent years, experts have many doubts regarding the way these funds are allocated by CMOs and what they are used for.
The experts of the BRDO’s ICT sector together with the Ministry of Economic Development presented a draft resolution of the Cabinet of Ministers, which proposes to reduce the list of equipment subject to paying contributions significantly, at the roundtable “Effectiveness and possible revision of the regulation of contributions on equipment prices”.
According to BRDO experts, today contributions are delivered with the view of further remuneration payments to authors, performers, and producers of phonograms for reproduction at home. This issue is regulated by Article 42 of the Law of Ukraine “On Copyright and Related Rights” and the CMU’s Resolution #992 dated 27/06/2003.
At the same time, there are many questions regarding the implementation of provisions on these contributions and payments to authors. In particular:
This situation leads to lawsuits between CMOs and importers as well as does not allow to have a picture of the effectiveness of contributions. Moreover, the principle, under which authors and performers get the money received from contributions, is unclear.
The Better Regulation Delivery Office proposes to suspend the collection of payments to regulate this aspect better and develop an effective and transparent mechanism of contributions. According to the BRDO experts, the main problem is not related to copyright fees, since they are also paid in ⅔ of European countries. The main problem – whether these funds reach owners or not, whether they feed the Ukrainian music and film production industry, which desperately requires support today, or not.
Ukraine annually loses hundreds of hectares of forest. Losses from illegal logging have increased by 77% reaching a total of 300 million hryvnas over 6 years. At the same time, there is still no strategy of the forest policy development in the country, forests and their rational use are not controlled and the regulatory environment of this sector has many gaps.
How to save Ukrainian forests from total destruction? How to put an end to illegal logging? How to achieve a balance of government’s and business interests?
The government and businesses will try to find answers to these questions and solutions to forest industry problems at the roundtable “Regulatory jungles: is forest a commodity or a resource?” on April 27, 2017.
The event will be attended by:
A goal of the roundtable is to find a balance between economic, environmental and social functions of Ukrainian forests and identify solutions to problematic issues with the involvement of all stakeholders in the forest sector – the government, businesses and the public.
The BRDO Office conducted a detailed analysis of industry problems and it is presented in the Green Paper “Timber market regulation”. In particular, the study shows that over 50% of acts regulating the timber market are outdated and obsolete, and 6 of 44 acts are illegal. Most of the regulations, including the Forest Code, have been adopted in the 90s, and they do not allow the market to develop and create high risks of corruption. Thus, the existing regulation can do nothing with illegal logging and does not provide effective mechanisms to protect forest and sell the timber.
Get involved in the dialogue! The results of the discussion will form a basis for specific legislative changes in the market.
The representatives of ministries and agencies, business associations, business, groups of experts and scientist, the public and the media are invited to attend the event.
The place and time of the event: Kyiv, Club of the Cabinet of Ministers (7, Institutskaya St.), 10.00 – 12.00.
Click on the link to register.
The BRDO has been successfully cooperating with the Ministry of Health of Ukraine in many initiatives related to creating better business regulation for a long time. However, one of the problem, which the Ministry of Health asked our Office to deal with, was a real challenge for us: this is a problem of outdated and imperfect Ukrainian healthcare protocols.
REALITIES OF UKRAINIAN PROTOCOLS
Nowadays, physicians have to treat their patients according to “unified clinical protocols of medical care” – the documents describing how to cure a particular disease. Disadvantages of Ukrainian protocols are:
Of course, doctors speaking a foreign language are able to read in what way a particular disease is cured in developed countries. However, no legal act provides for their right to apply modern methods of treatment, which are used in the Western world but do not meet the requirements of Ukrainian protocols. Moreover, Article 14-1 of Fundamentals of Health Legislation of Ukraine explicitly prohibits this right.
ACCESS TO THE BEST INTERNATIONAL PRACTICES
The obvious solution to the above mentioned problems could be the updating of Ukrainian protocols. We hope that the Ministry of Health together with the specialists of the Academy of Medical Sciences of Ukraine and other leading Ukrainian experts will be able to implement this step.
However, unfortunately, this approach does not solve the problem in the near term and, probably, even in the medium-term perspective. The updating of protocols requires a considerable amount of time, efforts and money. At the same time, the life and health of patients require the immediate response to this problem.
Therefore, a prompt response to the defined problem was the decision of the Ministry of Health to officially grant Ukrainian physicians the right to directly use foreign treatment protocols, which will be selected by the Ministry of Health (and that will provide the access to them). This order will be published in the coming days.
Foreign protocols selected by the Ministry of Health will have the same status of “clinical protocols” (according to Article 14-1 of Fundamentals of Health Legislation of Ukraine) as existing national standardized clinical protocols.
On the one hand, this approach protects physicians who will apply foreign protocols. After all, they will apply not just the foreign experience, but also the document that has a status of sectoral standard in the healthcare system.
On the other hand, there can be a situation (and most likely, it will appear again and again), when a foreign protocol conflicts with its Ukrainian analogue. Which protocol should a physician choose?
Physicians themselves will provide an answer to this question in each particular case – they will have a legal possibility to choose a foreign protocol. This possibility of physicians will become their duty when there is no Ukrainian protocol on certain disease, but there is a foreign protocol translated into Ukrainian by the Ministry of Health.
Moreover, the use of foreign protocols (if there are their Ukrainian analogues) is possible just with a written informed advance consent of patients.
RISK ASSESSMENT
It should be understood that a permission to apply foreign protocols affect interests (including the economic ones) of an extremely wide range of healthcare market participants. And these interests not always coincide with concerns for public health. Therefore, anticipating a round of criticism, it should be mentioned that developers of the draft order of the Ministry of Health, which allows to use foreign protocols, are fully aware that:
Good health to you!