February 25, 2021, Kyiv – In January 2021, the increase in the debt of the market participants to GTSOU for gas withdrawn from the main gas pipeline system amounted to UAH 431 million (+ 20%). The total debt to the Company for the formed negative imbalances is UAH 1,983 million, of which UAH 1,701 million (86%) is the share of the gas distribution system operators (regional and city gas companies).

The most significant increase in the debt among regional gas companies occurred in the unchanged “leaders” of the debtor rating, namely: Donetskoblgas (UAH +243 million in January), Ternopilmiskgaz (UAH +104 million), and Melitopolgaz (UAH +13 million). This situation calls for a special legal regulation and cannot be attributed solely to some minor problems in the market.

Currently, the total debt of Donetskoblgaz and Ternopilmiskgaz is UAH 1,025 million (UAH 649 million and UAH 376 million, respectively). This is 60% of the total debt of regional gas companies. The problem is critical and requires immediate intervention of the law enforcement agencies: long-term unpaid offtake of significant volumes of gas by these regional gas companies and accumulation of the debts pose a threat to the stable operation of Gas TSO, consequently, will eventually, directly or indirectly, become a burden on the consumer’s shoulders.

GTSOU appeals to the Verkhovna Rada of Ukraine and the Profile Committee on Energy to consider urgently legislative changes that contain effective measures to influence the debtors (draft law 3800 and other initiatives that introduce special accounts with a special use regime for Gas DSOs). The introduction of special purpose accounts guarantees the targeted use of tariff income by Gas DSOs and is a systematic mechanism for solving the problem of accumulation of indebtedness for unauthorized gas offtake.

“At present the indebtedness of the market participants to GTSOU reaches almost UAH 2 billion. Just for comparison: in the current year the costs planned for inspection, diagnostics, repair and maintenance of main gas pipelines amount to UAH 7.8 billion. In other words, the debts already exceed a quarter of annual expenses required to ensure reliable and safe work of the gas transmission system. Why should the GTS pay for someone’s irresponsibility and inefficient management? I would like to draw special attention to the dynamics and volumes of debts of Ternopilmiskgaz and Donetskoblgaz. The fact that more than a half of the debts of oblgazes falls on these very enterprises gives us reasonable grounds to suppose that these companies operate gas-distributing networks inefficiently and do not use the funds for their designated purpose. After all, such conduct can lead to threats to the technogenic security of consumers”, commented Sergiy Makogon, CEO of GTSOU.

It should be recalled that Donetskoblgaz demonstrated abnormal dynamics of debt growth in the last months of 2020: UAH 366 million or 88% of the total debt was formed in November and December. The costs for production and technological needs reached 25% of gas consumption in the period, i.e. a quarter of the gas was “lost” in the oblgaz grids on its way to the end consumer. GTSOU has already turned to law enforcement authorities with a request to inspect the business activities of Donetskoblgaz, as well as to the Ministry of Energy to check the performance of the company in using state-owned networks.

No less striking is the situation with the debts of Ternopilmiskgaz. In 2020, the company systematically withdrew significant volumes of gas and did not pay for them. The negative practice also continues in 2021.

The situation reveals the need for immediate regulatory changes, primarily to protect oblgaz consumers, who pay in the tariff the costs of natural gas for production and technological needs. For example, the establishment of the practice of temporary administrations, license revocation for systemic violation of legal requirements, the introduction of special purpose accounts and the implementation of enhanced requirements for the transparency of GDSOs activities, including procurement policies.

It is worth reminding that the problem of non-payment for imbalances, generated due to the unauthorized gas withdrawal by Gas DSOs, has remained unresolved since 2015. This led to the accumulation of the bad debts to the previous operator of the GTS (JSC Ukrtransgaz) in the amount of more than UAH 44 billion for the period from 2015 to 2019. At the moment, there is a real threat to the financial stability of new independent Gas TSO due to the problems of gas offtakes, not paid for by regional gas companies. Therefore, the company calls on all branches of the government to consolidate efforts to resolve the issue for reliable, accident-free and stable operation of the Ukrainian GTS.