Or how to transform energy debts into political image

Last Saturday, the Cabinet of Ministers intended again to make a decision on reforming the energy market. Moreover, First Vice Premier Yuri Yekhanurov seems to have been appointed to arbitrate an implacable dispute between Vice Premier for the Fuel and Energy Complex (FEC) Yuliya Tymoshenko and a bloc consisting of the Fuel and Energy and Economy Ministries.

Answering The Day ’s question at the press conference following the end of the Energy Forum, Minister for Fuel and Energy Serhiy Tulub said that a work group headed by Mr. Yekhanurov was completing its study the proposals made by the two ministries. “But this is a routine situation,” he explained, “and Prime Minister Viktor Yushchenko said that the energy market model under which we are going to work would be finally discussed and adopted on Saturday.” Mr. Tulub refused to go into detail on the grounds that the participants in the discussion do not want to tell the press what their positions are before decisions have been made.

Then he gave the floor to Deputy Minister of the Economy Oleksandr Shlapak who, not being subordinated administratively to the FEC vice premier, was more forthright: “We oppose improving the energy market situation by changing the forms of ownership. We oppose changing now the rules drawn up in 1995, when the overall pattern of the energy market was being built.” He also added: “Ukraine is too poor today to afford such radical steps.”

That same day Ms. Tymoshenko was putting her ideas of the energy market into practice without waiting for the Cabinet’s final verdict. Addressing a meeting with regional energy agency (oblenerho) leaders, she announced the government instruction to hold shareholders meetings of those oblenerho where the state still owns the controlling share with an eye to making staff changes. Managers who fail to make timely payments on the energy market were threatened with reprisals. It is not ruled out that Ms. Tymoshenko became bolder and more resolute in her actions after the parliamentary majority had appointed her member of the National Bank of Ukraine board to represent Verkhovna Rada on it.

However, a counterattack came on Friday. The High Court of Arbitration reversed, on the basis of the Prosecutor General’s protest, an earlier decision to cancel the demand that United Energy Systems of Ukraine (UESU, formerly run by Ms. Tymoshenko) pay its budget debt of UAH 1.433 billion, Interfax-Ukraine reports. The corporation enjoyed tax privileges as an enterprise with foreign capital. But in April, addressing the Coordinating Committee to Combat Organized Crime, President Kuchma demanded that UESU pay its debts to the budget.

The Prosecutor General’s Office seems to have made its choice. The day before, Prosecutor General Mykhailo Potebenko announced that his office had received the materials of the National Bank audit conducted by the ad hoc parliamentary commission of inquiry, on the basis of which Western newspapers published critical articles earlier this year.

Thus current Cabinet voting on energy matters will be guided by two factors at once. It is not ruled out that prosecutors will get a carte blanche later to show their critics that they know how to work.

In these conditions, Ms. Tymoshenko can remain in a minority in the Cabinet. She needs reinforcements. So she announced on Friday that a Ukrainian delegation is soon to go to Moscow for talks on fuel and energy. In addition, the coveted period for restructuring of our natural gas debt has increased from five to ten years. It is possible that in this case the restructured debts will also include those of UESU.

Ms. Tymoshenko sounds quite militant: “I myself am not going to formally offer my resignation. If someone thinks Ukraine does not need the positive changes now underway in the fuel and energy complex, then let him sign my pink slip,” Interfax- Ukraine reports.

Ms. Tymoshenko also thinks the Arbitration Court made an unfair and unrealistic decision to exact a UAH 1.4-billion penalty from the UESU. “I am so used to being the constant object of political destruction,” she said, “that today’s renewal of the four year struggle against UESU is nothing but a miserable attempt to make me steer away from reforming the FEC.” This already outlines, in general, the probable slogan of Ms. Tymoshenko’s political comeback should she resign: a politician who wanted to put the energy market in order but was prevented from doing so.

(For more see page ECONOMY/FINANCE)