On 4 February 2019, the Commission for the transfer of the property complex of SE NPC Ukrenergo signed an act of transfer and acceptance of the company from the Ministry of Energy and Coal Industry of Ukraine into the authority of the Ministry of Finance of Ukraine. This means the actual completion of Ukrenergo unbundling process and ensuring independence of the transmission system operator from the activities of generation and transmission of electricity.
The transfer of Ukrenergo from the management of the Ministry of Coal Industry into the authority of the Ministry of Finance was caused by the necessity of unbundling of the control over generation companies and electricity transportation.
Thus, the largest electricity producer SE NNEGC Energoatom and PrJSC Ukrhydroenergo still fall within the competence of the Ministry of Energy and Coal Industry. In accordance with paragraph 1 of part 4 of Article 32 of the Law of Ukraine “On Electricity Market”, a single legal entity cannot simultaneously control the companies on generation/transmission and transportation of electricity. This is why Ukrenergo, as a transmission system operator (TSO) ensuring the transmission of electricity, must be subordinated to another legal entity.
This approach is envisaged by EU Directive 2009/72 Ukraine implemented in its legislation within its international obligations in relations with the Energy Community. It ensures independence of the transmission system operator (TSO) and guarantees the absence of discrimination of market participants in view of access to power grids, monitoring of the company’s financial condition and, at the same time, the absence of political pressure and interference in the company’s activity, which will in turn increase the level of investors’ confidence in both the company and the whole industry.
Ukrenergo and other market participants will continue cooperation with the Ministry of Energy and Coal Industry as a state authority developing the state policy in the electricity sector.
Subordination of a transmission system operator to the Ministry of Finance is common practice in the Netherlands, Finland, Latvia, Slovakia and Montenegro – ENTSO-E members.
“Unbundling of Ukrenergo is a mandatory step towards the certification of Ukrenergo as a transmission system operator and constitutes one of pre-requisites for the launch of a new electricity market and interconnection of the integrated power system of Ukraine with ENTSO-E,” said Vsevolod Kovalchuk, CEO of Ukrenergo.