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Fuel-energy complex of Ukraine is the absence of strategy and bureaucratic lack of any restraint

Management structure of fuel-energy complex of Ukraine is the lack of self-sufficiency

One of the problems of Ukraine at the moment of declaration of independence is the lack of self-sufficiency of governing bodies in the energy sphere. All strategic decisions in the USSR in this area were carried out on well fulfilled procedure. There was the Committee on fuel-energy complex at Academy of Sciences and Council of Ministers. This body worked out the strategy of the development of energy industry of the USSR. Thus the Academy of Sciences played the leading role at a stage of the development of strategy. Depending on objectives, the relevant profile institutes, the ministries and departments participated in the development. In the beginning the science gave the offers, after that the restrictions were made by the State Planning Committee. And only after that the design and branch institutes started to develop the schemes of branches development.

Ukraine had no such system. Our ministries and departments were created generally for realization of the orders received from above, for the reporting on work. Therefore the creation of system of strategic management of fuel-energy complex was a state priority. 20 years have passed, but such system isn't created in Ukraine. Today the scheme of responsibility and a role of separate structures aren't determined by many directions at the ministry. Every year the controllability is lost. There are no system and experience, but people with very big ambitions try to be engaged in management.

“Bad advices” of the western advisers


The second serious problem for Ukraine is the large number of external advisers. Still in the early nineties they started to say what good, positive experience the West has, argued that our exclusive models became outdated and the private property is much more effective. Along with it, they offered the system of measures somewhat quicker to introduce this western experience.

I faced the introduction of the first model of the wholesale market of the electric power in 1994-1995 – I provided the scientific support on introduction of this model. Ukraine paid1 million pounds to English firm developer at that time. The representative of this firm argued that after its introduction, the huge investments will come thanks to which we completely reconstruct our out-of-date power.
17 years have passed after the introduction of this model. During this time we completed three blocks at nuclear stations, made something in hydropower engineering, but it was made on credit money under state guarantees, or at direct budgetary financing. Here is such “investment boom”.

In energy we started to copy blindly another's experience, without understanding, whether we can use it. The model of the wholesale market was introduced in 1996 and the relative order with calculations came only in 2001. But thus huge debts collected. The state arrived in an original way –24 billion hryvnas of the private energy companies debts were written off. But nobody is going to write off the debts from the population. There is no logic, but, there is such impression that nobody is already interested in it.

Privatization of fuel-energy complex’ objects at the population expense

Processes of privatization passed very “interesting” too. The profit receiving and effective owner should be the sense of privatization. When the first oblenergos were on sale, the tariff joined additional 17 % actually that owners bought these companies. And someone calls it as investments into the state economy! There were also more interesting schemes when the corporate services of subsidiaries laid down on prime cost of energy and the money were taken out through these schemes, though it is forbidden under the law and the penalties were imposed on such companies.

Privatization issues in the sphere of energy should be regulated by the state completely. It is forbidden to privatize by definition these two sectors as nuclear and hydropower engineering. All can be privatized are the thermal power plants. But it is possible under several conditions. There should be very many companies to create the competitive environment. But who and with whom competes in the market today? Only one private vertically integrated company DTEK of Rinat Ahmetov is actually on the market except the state companies.

Passions on the Ukrainian energy strategy

Some hope about order establishing in branch appeared in 2001 when L.Kuchma signed the decree about the creation of Ukraine’s Energy strategy. A curious detail –the surnames of the officials participating in the development of strategy were specified in the decree, but owing to features of the Ukrainian policy, any of them didn't remain on the post in a year. The strategy was accepted in 2006 and was developed during 5 years. If in 1997 we developed “The comprehensive program of energy conservation” for a year, so there were such terms here.

This strategy wasn't only carried out, but was carried out exactly the opposite. Also the decision to develop new energy strategy was made. If it was developed by specialized institutes before, so now it was entrusted to “Effective management” Fund. Thus, the private structure, unknown to experts in the field of energy, carries out such major problem.

As a result the strategy, in which three key positions are registered, is created. The first is a privatization with the thesis about huge investments. The second thesis is a new market model. And the third is the development of unconventional energy sources.

Thus big advantages of unconventional sources are declared without any concrete proofs, but their very small share in energy production structure is thus specified. It is explainable - when this share is small, the capital investments necessary for introduction of these technologies are not so strongly evident.

Theatre of absurdity: we transfer heat station to coal because we will use gas.

The inconsistency of our energy policy strikes. That we say that everything transfer to coal - such statements sounded at the highest level. But what does it mean to transfer the heat station to coal, for example, in Kiev? Firstly, where should we place a coal economy, where to put the treatment facilities to this coal? How many money will this reorganization cost? How all boiler rooms in the cities to transfer to coal? We shout that we will develop only coal, but thus we speak for some reason– we will extract the shale gas, gas of coal fields, we will develop a shelf, we will construct the terminal for gas transportation in the liquefied form. But if we have so much gas where should put it if we have only a coal energy everywhere?

It is because at some moment one of the groups of influence, when there is a possibility, quickly declares, makes the decisions favorable to it and then the same is done by other group. And we have such “motley crew”. And when they calculate and see how many it is necessary to invest in any of these projects, so the statements for new options of “White stream” already begin. Instead of reaching the normal arrangements with Russia, we constantly think out these “games” to ourselves.

Statements from a position of force and the Moldavian substation

Even in 2001 I wrote the article “Why the bypass gas pipelines are necessary to Russia” in the magazine “Analytical policy of Ukraine”. It was 10 years ago when there was no Nord Stream yet. Also proved it so – if Ukraine will try to talk to Russia further from a force position in the sense that “you have no way out all the same - we sit on a pipe”, so it will end badly. As a result, Russia constructed the bypass gas pipeline in the shortest terms.

For comparison of activity scales, Ukraine couldn't solve the following problem for long time. Historically it was developed that Odessa region is supplied with the substation located on the Moldavian state district power plant in the territory of Moldova. We were compelled to sell the electric power on two cents and to buy on four cents to the Moldavians for long time. What was a problem – Ukrenergo couldn't give out the land acquisition to substation construction …

One more example is Burshtyn state district power plant which provides a part of Europe with energy. Here was the problem of allocation of lands for new gold dumps for many years. It led to a situation when the station could work no more than two years. The money was given already to local government. The government takes the money, promises that everything will be solved, but after that doesn’t give the permission on new gold dumps all the same.

While the Ukrainian authorities won't understand that it is necessary to create clear structure of strategic management instead of populist statements and games in official interests, the situation in energy industry of Ukraine will remain at same “level”. But, obviously, nobody is interested in creation of such structure because then it would be necessary to bear responsibility for a disorder and absence of system strategy in the sphere of fuel-energy complex.

Viewed : 1559   Commented: 2

Author: Mikhail Mikhaylov

Publication date : 02 July 2012 17:15

Source: The world and we

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