Ukraine has enough energy stocks to get through the winter, even if Russia decides to stop delivering coal to the country, Ukraine's Energy and Coal Industry Ministry and sector experts agree.
But experts say Ukraine remains anything but independent from Russia energy-wise, and its energy sector needs to change.
Alexei Miller, the head of Russia’s state-controlled energy giant Gazprom, announced on Nov. 25 that the company would no longer supply Ukraine with gas, as Naftogaz had already used up all the gas supplies it had paid for in advance.
Later that day, Ukrainian Prime Minister Arseniy Yatsenyuk at an open meeting of the cabinet said that Russia had got it all “mixed up,” as “it was not them who stopped gas supplies, but we who stopped buying it.”
“The government decided to order Naftogaz to stop purchasing Russian gas,” Yatsenyuk said.
He also said that Ukraine has decreased gas consumption by 20 percent this year.
The announcement that Russia was shutting the valve on gas supplies to Ukraine came after other news that also brought Ukraine’s energy sector into the spotlight – Russian-occupied Crimea was left without power on Nov. 21, when saboteurs destroyed pylons carrying electricity from the mainland to the peninsula.
The deliberate blackout raised fears that Russia could retaliate against the Ukrainian energy sector, in particular by restricting vital coal supplies to the county’s thermal energy plants.
Energy Minister Volodymyr Demchyshyn, speaking in the Ukraine crisis media center on Nov. 23, said that as far as he knew, Russia didn’t plan to halt coal supplies to Ukraine. Nor has anything yet influenced coal supplies coming into Ukraine from the Russian-occupied territories in the Donbas.“We’re at war, so, yes, one way or another we will have to decide on the issue of coal supplies,” Demchyshyn said, adding that right now Ukraine can’t completely give up using Russian coal. “We can import only two thirds of the coal we consume through our ports; their capacity is just not sufficient.”
According to Dennis Sakva, an energy analyst at Dragon Capital, what Ukraine needs now is to diversify all of its energy supplies – including coal and nuclear fuel – to become more energy independent from Russia.
Alex Ryabchyn, a member of parliament with Yulia Tymoshenko’s Batkivshchyna Party and head of an energy subcommittee in the legislature, agreed. However, he said Ukraine’s main problem was that it was focused on where to buy fuel, instead of how to consume less of it.
“We consume a tremendous amount of resources wastefully. Our economy’s energy consumption is much higher than in European countries,” Ryabchyn told the Kyiv Post.
He said the Ukrainian authorities’ main goals should be to decrease energy consumption and to fix tax legislation to support Ukrainian gas producers. Local companies that produce gas have to pay 70 percent tax, leaving them no money to invest in new gas wells.
As for energy efficiency, Ryabchyn said Ukraine’s government had to switch its attention from giving out subsidies to heat-insulating buildings – installing new windows and insulating roofs.
The Energy Ministry also needs a team of experts on renewable energy sources, such as wind, solar and biomass, according to Ryabchyn.
In addition, Sakva said the Ukrainian energy sector needs an “independent state regulating body that would not be solving political problems, but would focus on consumers’ interests.”
He called the national commission that performs state regulating in the energy sector and public utilities (NERC) “too politicized” and “subject to government influence.”
Demchyshyn voiced the same view, adding that his ministry has already designed a draft law on NERC and tabled it in parliament.
“We need an independent, strong and professional regulator, we need to grant it authority, and provide it with transparent financing, so that it won’t be controlled by anyone,” he said.
According to Ryabchyn, Ukraine’s energy sector remains one of the most corrupt, even though Yatsenyuk has praised Ukraine’s efforts to root out graft. He accused the government of not doing enough to reform the sector.
“This just isn’t a priority for the Ukrainian government,” Ryabchyn told the Kyiv Post. “All of the government’s activities are incidental. But this is low-hanging fruit. (Reforms) can be done quickly and easily.”
Kyiv Post staff writer Alyona Zhuk can be reached at [email protected]
