Consortium after Tuzla
The opposition and the parliamentary majority have opened another front line of relentless confrontation. As the Verkhovna Rada Fuel Committee was in session, the two sides took diametrically opposite attitudes toward the way the International Gas Transit Consortium should be set up. The Our Ukraine bloc announced it was necessary to invite Western consumers of Russian gas to join the consortium negotiations from the outset. Failing that, Our Ukraine intends to obstruct the establishment of a new gas transit facility. Meanwhile, the Cabinet of Ministers has invited only the Russian side to take part in drafting the consortium’s concept.
It looks like Verkhovna Rada had no option but intervene in the process of international consortium establishment. It is planned that the government will report to lawmakers tomorrow on how it pictures the prospects of the Ukrainian gas transit system. Thus this process is bound to get politicized. The opposition demands that all the consortium-related intergovernmental agreements be subject to VR ratification. It is in this way that Our Ukraine is going to influence the government’s position and, if necessary, slow down the establishment of the consortium. Our Ukraine plans to put the mandatory ratification proposal to a parliamentary vote as early as Thursday, November 13. However, to do so, this faction will have to disentangle parliamentary procedures and stop whipping up passions over the Donetsk scandal.
Oleksandr Hudyma, Our Ukraine representative in the Verkhovna Rada Fuel Committee, has stated openly that the opposition would like to see the consortium establishment deferred by at least a year, until after the presidential elections. In his words, it is the next president and the new cabinet that must deal with attracting investment in the gas transit system. Mr. Hudyma is drafting a bill whereby 49% of the Ukrainian gas transit system’s stock would be sold to a pool of foreign investors. It is supposed that the pool will be equitably shared by gas suppliers (Russia, Turkmenistan, Kazakhstan, and Uzbekistan) as well as the largest gas consumers (Germany, France, and Italy). It is quite easy to suggest that the Russians will be resisting this option by putting all kinds of pressure on Ukrainian politicians.
The Cabinet and the majority factions picture the future of the Ukrainian gas pipeline differently. An interdepartmental task force, guided by the Ministry for Fuel and Energy, has come up with what it considers the most promising pattern: the gas transit system should be leased out for a long term. It also considers it unviable to invest the consortium with operator’s functions and the right to manage gas supplies. Privatization is out of the question. Chairman of the parliamentary Fuel Committee, Andriy Kliuyev, has already said he is going to opt for leasing-out and has recommended the Cabinet to speed up the feasibility study of this project. Fuel and Energy Minister Serhiy Yermilov announced that the feasibility report is being prepared by Ukrainian and Russian experts. It is planned to invite German representatives after the business plan is drawn up. Then, according to the minister, Central Asian gas suppliers as well as French and Italian companies on the receiving end will be invited to join the consortium.
Obviously, the future of the Ukrainian gas transit system depends on the outcome of the political confrontation in Verkhovna Rada. It is so far not known what political or economic concessions Moscow can opt for in exchange for being granted a privileged status in the newly-formed consortium — especially now, after the Tuzla crisis. In any case, the consortium problem seems to become another front line in Russian-Ukrainian relations and, as it has unfortunately happened before more than once, inside Ukraine.
