Ukraine Is to Accelerate the Reforms and to Restrict the Populists’ Influence

November 29, 2018

28 November 2018, Washington DC

In order to retain international confidence and investors' interest for the economy development, Ukraine should accelerate the reforms it has started, and restrict the populists' influence on these developments.

This message was shared by the participants of the Conference "The State of Ukraine's Energy Sector", which was held in Atlantic Council Headquarters (Washington DC) and was devoted to role of Ukraine in the global energy processes.

"The energy sector is the driver of the economy and the guardian of the national security and no one can conduct experiments with it, thus, it is very important to restrict the influence of populists, especially on the eve of the election when their fantasies are off the scale. Ukraine has got neither time nor financial capacity to be an instrument in achieving personal interests or ambitions" — observed Mr. Omelchenko.

From the experts' perspective, the major concern is the delay in unbundling that is the creation of an independent operator of Gas Transportation System.

Nowadays, the Government of Ukraine has a passive stance in reforming the gas sector, thus, the reforming is slowing down and Nafogaz is taking a stronger position as a monopolist.

According to Mr. Omelchenko, the reforming priorities for Ukraine in the next three years are as follows: creating competitive electricity, gas, coal markets; providing favourable environment for investments; transition to auctions to determine the tariffs for the renewables, creating the effective system of subsidies for the socially unprotected citizens.

"The remoteness of the election process from the country's economic life will make the state stronger," — said Edward Chow, Chief Researcher at the Center for Strategic and International Studies.

According to the chief expert of the Eurasian Center under the Atlantic Council of the United States Anders Aslund, — "Particularly before the election, political discussions on energy reforms will begin and populists will do so."

The Razumkov Centre jointly with other developers of the Energy Strategy of Ukraine till 2035 have outlined Ukraine's energy mix change over the next 15 years. The share of the RES in the energy mix will reportedly increase by five — up to 25%. The share of coal is projected to drop by 2.5 times — to around 13%. Although the coal gradually becomes less significant as it is being substituted by RES, its part would still remain essential in the Ukrainian energy industry by 2035, mainly, in the thermal generation, which performs, among other things, an important capacity manoeuvring (balancing) function. The share of gas and nuclear energy in primary energy consumption will stick to the current level of 30% and 25%, respectively. Also, the oil products share will significantly be reduced — up to 7%.

In the next 20 years the country economy would not have a boost to develop normally without the nuclear generation, thus, according to both American and Ukrainian experts, it is essential to ensure the sustainable development of this sector.