Indebtedness of regional gas DSOs to Gas TSO of Ukraine for created negative imbalances is almost UAH 1 billion

November 25, 2020, Kyiv – The total debt of regional gas Distribution System Operators (DSOs) to Gas TSO of Ukraine (GTSOU) for the technological gas, offtaken from the main gas pipeline system (negative imbalances), as of October amounted to UAH 967 million , which is 5 % less than in September 2020. In total, since the beginning of the year, DSOs have created negative imbalances within their networks for the total amount of UAH 1 billion 446 million, whereas only 33% of the amount due has been paid for.

In October, DSOs created negative imbalances amounting to UAH 88 million. While some operators of gas distribution networks have partially paid off their debts for the previous periods, others continued offtaking technological gas from the GTS and not paying for it.

As of today, the leaders in debt accumulation on created negative imbalances are: Luganskoblgaz – UAH 273.4 million, Ternopilmiskgaz – UAH 195.9 million (dynamics for October +16 million UAH), Donetskoblgaz – UAH 87.3 million, Kirovogradgaz 68.5 UAH million and Kyivoblgaz – UAH 59 million. The debt of other 24 DSOs ranges from UAH 0.4 to 28.4 million (+30 million UAH). And only 12 out of 41 DSOs have no debts to GTSOU.

“Currently, the situation with regional gas companies cannot be resolved in a systemic manner and fully depends only on the good will of the market players to pay off the debts: one third of the companies steadily takes offthe technological gas from the main gaspipeline system without timely payments, and only few of them pay down debts in small installments.There are such egregious cases as Ternopilgorgaz, which has taken off the natural gas from the system for the amount of almost UAH 200 million and still has not paid a single hryvnia since the beginning of 2020,” – commented Yevhen Todorov, Commercial Director of GTSOU,– Still about one third of the regional gas companies try not to create new imbalances, although they do not pay off the previous debts. And it is only every fifth DSO that makes forecasting conscientiously,conducts balancing in a timely manner and pays off the depts in full. The low level of payment discipline of most DSOs has a significant impacton the financial condition of GTSOU and can lead to significant losses. This problem requires regulation at the legislative level, both in terms of the tariff rates of the regional DSOs, and ensuring the targeted use of the tariff revenues by the DSOs, with differentiation of the approaches to the regional gas companies that fulfill and those that fail to meet their obligations. ”

It should be noted once again that Gas TSO of Ukraine fully fulfills its obligations to market participants and pays them in time for the positive imbalances for each reporting month.

For its part, GTSOU undertakes all possible measures to collect debts and prevent their accumulation in the future. In October, GTSOU had been granted positive court decisions in the first three lawsuits against the DSOs on debt compensation amounting to UAH 237.5 million in total. At the moment another 19 similar cases are being considered by the commercial courts. Besides, on the basis of the appeal of Gas TSO of Ukraine, the NKREKP has adopted a decision on unscheduled inspection of four largest debtors, namely Kirovogradgaz, Ternopilmiskgaz, Luganskgaz, Donetskoblgaz. At the same time, GTSOU has filed an appeal to the National Police and the National Anticorruption Bureau of Ukraine in relation to Ternopilmiskgaz with a request to conduct an inspection on presence of signs of criminal offences in the actions of DSO officials and, if detected, to initiate an investigation.

The problem of settling the payments for negative imbalances requires systemic solutions. Therefore, GTSOU supports legislative (bills 3800 and 3176) and regulatory (introduction of the gas balancing neutrality fee next gas year) initiatives that will address the problem of imbalances, reduce financial risks for the state company and significantly accelerate the creation of a liquid market of natural gas in Ukraine.