16:50 06.03.2013

Director of Energy Community Secretariat Kopac: During my visit to Ukraine in March I won't miss opportunity to address most pressing issues

8 min read
Director of Energy Community Secretariat Kopac: During my visit to Ukraine in March I won't miss opportunity to address most pressing issues An exclusive interview with Director of the Secretariat of the Energy Community Janez Kopac with the Interfax-Ukraine News Agency Q.: The recent exchange of statements from both sides – the EC and Ukraine – is a clear signal that something is not working properly between Kyiv and the EC. Where is the problem? You called it "a deep misunderstanding," and the Ukrainian president has expressed his dissatisfaction with the level of cooperation. What is actually going on? What is your assessment for the cooperation with Ukraine in general? A.: Let me start by reiterating that the Secretariat is ready to assist Ukraine as a Contracting Party of the Energy Community in resolving problems as much as we possibly can. Two aspects need to be emphasised in this context: we need to be formally involved by the competent Ukrainian authorities. And we are limited to providing assistance. In this respect, perhaps the expectations are too ambitious. We are unfortunately not a body with executive, decision-making powers. Not even within the Energy Community and even less so for contractual relations between a Contracting Party and a third country. Our work is dedicated mostly to measures to transpose the agreed legislation. It is the energy experts with whom we work on daily basis. Ukraine has now been a member of the Energy Community for two years. There are more than 40 Energy Community meetings per year. Participation to all these events necessitates not only the mobilisation of the Energy and Coal Industry Ministry staff, but also several other authorities. This includes the regulatory authority, competition authority, ministry for environment, ministry for labour, energy efficiency agency statistical office, but also business community. I am happy to say that we have an excellent cooperation with the Presidential Economic Reform Team. Needless to say, Ukraine is a huge country in comparison to our other Contracting Parties. We have a full understanding that the co-ordination of the work within the Energy Community institutional setting has been, and still is, a challenging task also for the Ukrainian Energy and Coal Industry Ministry. But there is always room for improvement, which was also reflected in the Annual Implementation Report. This report does not draw a picture in black and white only, it is a very detailed and differentiated account of what Ukraine already has achieved and what still remains. Currently, we are cooperating very intensively with our partners from Ukraine on the reform of the legislation governing the electricity sector. Q.: You stated in your letter that Ukraine has not yet invited the Secretariat to become involved in bilateral discussions with Russia. At the same time, you said that the Secretariat is at Ukraine's disposal whenever Ukraine as a contracting party would wish to involve your experts into any process of settling problems related to our country. If Kyiv does invite the EC to participate in this matter what real actions can the EC Secretariat take, what can your experts really do? A.: The bulk of the work our experts do is to assist the Contracting Parties to draft their national legislation. Our experts know the acquis communautaire by heart. Although the nine Contracting Parties are very different, the problems are often quite similar. In short, having worked with the other Parties throughout the years, our experts know what the bottlenecks are and have a bundle of good practices to draw upon. I am very honest with you; we do have a long list of open issues with Ukraine. This include among other things, revision of the existing gas market model, unfair and discriminatory treatment of investors interested in producing electricity from renewable energy sources, the way that capacity is allocated for cross border trade in electricity, the transposition of the large combustion plant directive and the lack of State aid legislation. Last week we, for instance, opened a case against Ukraine for its failure to transpose the directive on the sulphur content of liquid fuels. Maybe the opening of a case is a way to start a structured dialogue with the Ukrainian authorities. Q.: As regards the South Stream project. What is your assessment of this project? How does it relate to the position of the European Commission? A.: Out of our nine Contracting Parties, we have three without a gas market. The region has a pressing need for gasification. As a result, we welcome any additional energy route and/or energy source. At the same time, no project should entirely wipe out its competitors. Irrespective of the project in question, you must be able to balance two opposing public interests, security of supply, on the one hand, and the most effective competition, on the other. Here, the rules of the Third Energy Package play a decisive role. If the South Stream will comply with the principles of the Third Package, it will be without any doubt a welcomed project. Q.: When will this project be implemented, and how can the EC really help the Ukrainian side in this regard? What mechanisms there are to protect Ukrainian interests? A.: I already made reference to the Third Energy Package. The Energy Community Contracting Parties, including Ukraine, committed to implement the Package in 2011. This implies that all the intergovernmental agreements between one of our Contracting Parties and Russia/South Stream must be benchmarked with the obligations under the Third Energy Package. The obeyance of the unbundling provisions as well as the right to access to pipelines are at the center of our assessments. We have adressed our concerns in this respect to Serbia in the past, and will insist that all shortcomings are rectified before any project is implemented. Moreover, where a Contracting Party or a company has evidence that there are concrete violations of our rules, it may address the Secretariat in a format called the dispute settlement procedure by the Energy Community Treaty. We have informed the Ministry in Kyiv about this possibility. But presently no such a case has been officially initiated by Ukraine or any of its companies. Besides I do believe that the interests of Ukraine are best protected by implementing the Energy Community Treaty – that is to say to create functioning markets, transparent and non-discriminatory rules governing its infrastructure and to transform its energy sectors into an efficient one. Q.: Ukraine recently expressed its complaints against Slovakia regarding the possibility of having equal access to the gas pipeline in connection with the reverse gas supplies. What can the EC do in this regard? A.: The EU has been doing a lot of work to improve its reverse gas flow capacities. As regards gas imports to Ukraine through Slovakia, the Secretariat, together with the Commission, in October 2012 organized a technical meeting, including the transmission system operators from both countries, aimed at facilitating reverse flow on the pipelines connecting Slovakia and Ukraine. To date, the Secretariat has not been informed about any follow-up of this meeting. Q.: A year earlier an energy company from one of the countries (we still don't know which country it is) complained to the EC because of Ukraine. Where are we now in this issue? A.: You are probably referring to several complaints we received on the manner access to transmission capacity on Ukraine's electricity interconnectors with neighbouring countries is organized. We are dealing with these complaints in the framework of our dispute settlement procedures. Complainants, if they wish so, are entitled to confidentiality, which I will respect here as well. Q.: How else, apart from providing an expert opinion on the Ukrainian legislation, can EC expert help Ukraine? What concrete actions can be taken in this regard? A.: Besides our assistance in reforming the legislation governing the energy sectors, and the enforcement of Contracting Parties' obligations, the Energy Community recently also became more involved in the coordination of investments in infrastructure. In this context, I would like to draw your attention to the Energy Community Energy Strategy. The strategy was endorsed by the ministers last October. We are together with a Task Force upgrading it now with a list of the Projects of Energy Community Interests (PECIs), among them are also some from Ukraine. Our work is very similar to the EU’s approach, which is ranking Projects of Common Interest. Parallel to it, we are developing measures that are to guarantee the realisation of the PECIs. I am very satisfied that the key international financing institutions are active members of the Task Force. However, the institutions of the Energy Community can only coordinate and support. The implementation work has to be done by Ukrainians in the first place. A.: What are you plans with regard to Ukraine? Do you plan to visit Kyiv, to talk to Ukrainian officials? Q.: I plan to visit Minister Eduard Stavytsky in March. This is part of series of visits that I am conducting as the new director of the Secretariat. Although the visit will be of a courtesy nature, I shall not miss the opportunity to address the most pressing open issues. I will also talk about Ukraine’s upcoming presidency–in–office. After Serbia, Ukraine will take over the Energy Community presidency-in–office on January 1, 2014.
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