Hands-On Mode Is Ukrainian Contribution to Energy Forum

The regional European energy forum called Market Transformations in Power Engineering. Prospects at the Turn of the Third Millennium, organized by the World Energy Council, was opened last Tuesday in Kyiv.

Among the organizers of this respected forum, which set itself the task of generalizing world experience in solving problems of forming and developing market relations, was not only the council and the All-Ukrainian Energy Committee but also the Ukrainian Cabinet of Ministers. However, not a single representative of the latter graced the forum’s opening ceremony by his or her presence. True, Yuliya Tymoshenko was on the list of speakers and the table on the stage featured a card with the name of the vice premier in charge of the fuel and energy complex, but later even this sign of at least a “virtual” government presence of the government also vanished.

Still, it is hard to overrate the importance of this forum and the experience of other states for a Ukraine struggling desperately to solve its energy problems. Information agencies reported on the forum’s eve that the President had signed a decree on the privatization of all state-owned shares of regional energy agencies (oblenerho). However, it became known after the forum had been opened that the decree was still in the pipeline. In this connection, Volodymyr Lytvyn, chief of the Presidential Administration, specified this was caused by the aspiration “to avoid mistakes in this sensitive and complex matter.”

That same day, the already privatized regional energy agencies held a press conference in Kyiv. Chairman of the Lvivoblenerho supervisory board and deputy chairman of the electric energy wholesale market council Kostiantyn Hryhoryshyn, said, “We have approached the regional European energy forum from the absolutely non-market positions... If prices are being fixed in the manual mode by top authorities, then there is no sense talking about payment in cash.” Mr. Hryhoryshyn stressed that Ukraine would face disintegration of the energy system if it did not implement the practice of direct contracts between producers and the suppliers of electric power and adopted, instead, the energy market model proposed by Ms. Tymoshenko. According to Mr. Hryhoryshyn, the scheme she proposes essentially comes down to “the redistribution of financial flows, while the vice premier is exercising manual control of the energy sector,” UNIAN reports.

On this action-packed day, President Leonid Kuchma met industrialists and entrepreneurs from Ukraine and Russia. In the course of this meeting, Russian Deputy Minister of Defense Nikolai Mikhailov, reminded his host that the problem of paying the debts incurred by the United Energy Systems of Ukraine (UESU, formerly run by Ms. Tymoshenko) to the Russian Defense Ministry is “the most sensitive and fundamental question” which “has reached a deadlock.”

The President replied, “I also want the UESU to pay this money” ($334 million).

What do these words mean? Interfax-Ukraine headlined them as follows: “Kuchma is interested in the UESU settling its debts with the Russian Ministry of Defense.” I do not think the President’s words should be taken so literally. The Russian side informed, the agency points out, that the UESU had until recently been delivering goods to Russia as payment for the debts but the deliveries were discontinued because the Dnipropetrovsk Court of Arbitration impounded the corporation’s accounts.

The Day tried to get in touch with the UESU management in Dnipropetrovsk, but, as we were told in the anteroom, they were just holding talks with a Russian delegation. All we managed to learn was that Oleksandr Hravets, who had founded the company together with Ms. Tymoshenko, and Hennady Tymoshenko, the current vice premier’s father-in-law, no longer work there. Thus Ms. Tymoshenko’s statement that she has not been keeping track lately of her former brainchild’s financial history (although she should do so in her current post, for UESU debts create problems for this country) are perhaps not so far from the truth. Does she think all she has to do is run the energy market correctly and be sure the Dnipro will do the rest?

Meanwhile, the forum was hearing serious reports. Fuel and Energy Minister Serhiy Tulub tried to prove to The Day’s journalist behind the scenes that Ukraine is morally prepared for 100% privatization of the regional energy agencies. Chairman of the board of directors of Chernihivoblenerho Anatoly Skyba refused comment on this matter. But one of the managers of the research-cum-production firm Research into and Development of New Energy Technologies, Oleksandr Chechyk, complained to The Day that disputes over the present and future performance of the Ukrainian energy market are literally blocking any proposals aimed at reducing energy costs.