The Verkhovna Rada prefers MP Khlapuk’s alternative law on the corporate governance of the Gas Transmission System Operator (TSO) over the government’s draft law (DL).
The Parliament rejected the government’s DL #9311 on the corporate governance reform of the Gas TSO. As we reported in Issues 3 and 4 of this newsletter, the government’s bill does not fully meet Ukraine’s obligations under the IMF’s new EFF Arrangement. The government’s bill did not get enough votes at any stage of voting in the Verkhovna Rada.
Instead, alternative DL #9311-1 received 231 votes and was sent for revision to be subsequently submitted for a vote in Parliament. This bill was proposed by MP Maksym Khlapuk (a member of the Ukrainian Chapter of the Parliamentary Network of the World Bank and IMF) and MP Yaroslav Zhelezniak (Co-Chair of the same Network). It was drafted by Ukraine’s leading corporate governance professionals Oleksandr Lysenko and Andriy Boytsun.
In its letter to the Parliament’s Energy Committee, the Energy Community Secretariat said that this bill was better than all the others and noted its advantages over the government’s version.
As reported earlier, DL #9311-1 corrects the shortcomings of the government’s version.
It is revised to help Ukraine meet its commitments under the Memorandum with the IMF, including the structural benchmark on the Gas TSO, as well as help maintain the certification of the Gas TSO as an independent gas transmission system operator issued by the Energy Community Secretariat.
The DL #8401 on tax policy and administration won’t be adopted before the beginning of July. MPs have already submitted 937 amendments to the DL for the second reading and we expect even more, because June 12 is the last day when MPs can submit amendments. That’s why it’s impossible to prepare the DL for voting earlier. Moreover, we expect that the consideration in Parliament will take several plenary days.
The Budget Committee of the Verkhovna Rada considered and recommended in the first reading of DL #9346 prepared under the Structural Benchmarks #2 and #7 of the Memorandum with the IMF.
World Bank priorities development
Verkhovna Rada adopted DL #5322 on prohibition of abuse in the wholesale energy market under the REMIT. Consideration of the bill lasted three hours because of so-called “amendments spam” – the large number of submitted amendments with the aim to delay voting.
The Parliamentary Committee on Economic Development recommended in the first reading the DL #9330 on strengthening the institutional independence of the Antimonopoly Committee of Ukraine. According to the explanatory note, the DL was designed according to the requirements of Article 256 of the EU-Ukraine Association Agreement.
The DL #9330 critically cut version of the DL #5431 which was adopted in the first reading in July 2021. The EU authorities have several significant negative remarks. The representative of the Delegation of the EU to Ukraine attended the recent meeting of the Economic Committee and the discussion of the DL #9330 that is an unprecedented case.
Other key economic issues
President Volodymyr Zelensky supports tax reform, which will reduce VAT, income tax, and personal income tax rates to 10 percent, but after the full-scale war. Mr. Zelensky announced this position on the “10-10-10” tax reform during a press conference on June 6. He explained that the draft law on tax reform wasn’t submitted to Parliament because of the ongoing war and agreements with the IMF.
The second reading of the DL #9342 with changes in payments to Ukrainian defenders is delayed until July 2023. The recent status in consideration process of the DL, its key provisions and expected impact on the state budget we covered in last week’s issue.
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