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Ukrainian gas pipe to become scrap metal

Author : Vasyl Filipchuk

Source : 112 Ukraine

2015 passed, like all other post-Maidan years of “successful reforms”. But nothing was done, as the gas transit remains a classic rent for those who seize on power and divide the gas sector
18:47, 18 December 2018

Open source

The European Parliament has already adopted a critical resolution on the Nord Stream 2; but it is still under construction. It is not known how much of the Russian gas will remain in the Ukrainian gas transportation system after the Nord Stream 2 launch. For sure it will not be 200 billion cubic meters at the entrance and not 120 at the output, but just enough to keep it unprofitable. And instead of the annual five billion dollars for the transit of Russian gas, in just two years, Ukraine will receive hundreds of tons of scrap metal.

But do not blame only Russia or Germany. The fact that they take care of themselves, not of us, is quite natural. Ukrainians should look at themselves; realize what we have done to preserve the strategic asset, the unique legacy that Ukraine received from the USSR, the Ukrainian gas transportation system.

The problem of gas transit appeared in the first half of the last decade, and after the Orange Revolution and the first Ukrainian-Russian gas war, it became one of the main issues in relations between Ukraine and the EU. From the EU side, it was immediately clearly articulated: we are in favor of preserving the Ukrainian GTS as the main gas pipeline. If Ukraine provides for the modernization of the "pipe", and most importantly, it will reform the industry so that the gas pumping function will be transferred to an independent operator who will provide non-discriminatory access to the gas transmission system, maintain it in good condition, which will remove any policy or corruption from the issue of gas transit. In other words, NAK Naftogaz Ukraine should be divided into three independent companies, and the GTS should be managed, like in all EU countries, by an independent operator providing market and equal conditions to all interested domestic and foreign players.

Moreover, the EU agreed to find funds for the modernization of the gas transportation system (the figure of 5 billion euros was mentioned), if Ukraine works to reform the industry. In March 2009, Prime Minister Yulia Tymoshenko signed the famous declaration in Brussels, where all these agreements were fixed. And in September of 2010, Ukraine joined the European energy community and undertook legal obligations until 2015 to separate Naftogaz by various forms of activity, to liberalize the gas market, to ensure the transfer of the gas transporting system to the management of an independent operator ...

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If the requirements of the EU Third Energy Package were really met, then the funds for modernization would be mastered, and the north streams would not have been built, and the Ukrainian GTS would continue to bring billions of profit to the Ukrainian budget. But instead of reforms, the “boys” from Naftogaz raised tariffs, bought armored Mercedes and paid themselves millions in bonuses.

Naftogaz was, and remains, a monopolist, a hole where billions quickly disappear without a trace.

2015 passed, like all other post-Maidan years of “successful reforms”, but nothing has been done, gas transit remains a classic rent for those who seizes on power and divides the gas sector.

Then why are we surprised that despite the Russian aggression and huge funds, Germans continue to build Nord Stream 2 with Russians?

Ukraine, has not fulfilled its reform obligations even in 5 years after Euromaidan ...

The gas sector reform would lead to the transfer of gas transit to the independent operator management - ideally the company under the patronage and control of the EBRD, a consortium of foreign campaigns that would be able to master the funds for modernization, and negotiate with suppliers and consumers of Russian gas.

As a result, Ukraine would have maintained its strategic resource - the GTA, huge (up to $ 5 billion annually) revenues to the budget, saved the old jobs and created new ones. Several NAK officials and their patrons would lose their rent.

But the decision was made not in favor of reforms and budget revenues, but in favor of rent. Therefore, in two years Ukraine will lose both the GTA and budget revenues.

Although, I think, our brilliant managers have already figured out what to do with it further. They will saw for scrap after commissioning the Nord Stream-2. Turkish processing companies will gladly buy Ukrainian scrap metal, and will pay commissions to intermediaries — either to the company in the USA, or in Singapore, or where another young genius of the gas business keeps his accounts. Penny to penny ...

Read original article at Vasyl Filipchuk Facebook

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