Янез Копач і Сергій Макогон
Janez Kopač: Unauthorized gas offtakes undermine financial and operational stability of national Gas Transmission System Operator

On Monday, May 17, а meeting of the top management of Gas TSO of Ukraine with Janez Kopač ,Director of the European Energy Community Secretariat (EC) was held, during which the parties discussed the opportunities, external and internal challenges for development of the Ukrainian gas market and Ukrainian GTS.

The participants discussed, among other things, the terms of certification, corporate reform and strengthening of international cooperation, key European gas market developments. In particular, they considered Serbia’s violation of European law requirements during the construction of the second line of the Turkish Stream gas pipeline, including the requirements of Directive 2009/73/EC, disregarding the position of the Energy Community Secretariat.

Besides, the parties also paid attention to the issues related to GTSOU domestic market activities. Among the key destabilizing risks is the accumulation of debts by gas DSOs (Oblgazes and Miskgases – regional and city gas distribution companies) for the gas withdrawn from the main gas pipeline system for their own production and technological needs (PTN). It should be recalled that, the accumulation of indebtedness began in 2020 and significantly increased during February-March 2021. Currently, gas DSOs have to pay almost UAH 10 billion to GTSOU.

Director of the EC Secretariat stressed that ensuring stable supply of energy resources is an essential factor for economic development of the EU partner countries.

“At the Energy Community Secretariat we believe that ensuring stable and continuous energy supply is essential for economic development within our member countries.  In Ukraine, the unprecedented unauthorized offtakes of gas undermine the financial and operational stability of the national Gas Transmission Operator, which has a potential to trigger the whole chain of problems in the entire system. We urge the Ukrainian Parliament to decisively address this issue and prevent the possible debt accumulation by Oblgazes/DSOs in the future,” said Janez Kopač.

For his part, Sergiy Makogon emphasized the need to introduce an effective mechanism to solve the problem of the accumulation of debts for unauthorized gas offtakes.

“This is indeed a serious problem that requires an immediate legislative solution,” said Sergiy Makogon, Chief Executive Officer of GTSOU. ”The unauthorized gas offtakes are in effect a mechanism of wealth transfer from the public purse into the private pockets of DSOs’ owners. We have been working with the Government, the energy committee of the Verkhovna Rada, as well as our international partners, such as IMF, World Bank, USAID, and others to identify the most effective solution. And we support the introduction of special accounts, as proposed in the draft legislation 3800. The payments from the end consumers of gas will be transferred directly into the special accounts from which automatic payments will be made to cover the costs of gas delivery from GTSOU to the DSOs, ensuring the prevention of future debt accumulation”.