Ukraine Completes Unbundling of Gas Monopoly

Executives of state Ukrtransgaz and Magistralnye Gazoprovodi Ukrainy (MGU) have signed the acceptance-delivery certificate whereby Gas Transmission System Operator of Ukraine (GTSOU) was officially transferred to MGU, an entity owned by the ministry of finance.

In addition, GTSOU has received assets of the Ukrainian gas transmission system under a separate certificate. The acceptance-delivery certificate contains over 47 thousand items with a book value of over hryvnia 32 ($1.35)bn. The move was pre-agreed by all parties involved in the unbundling process, including Naftogaz, the state property fund and the ministries for trade, finance and energy.

This was the final stage of the process of separating the gas transmission system of Ukraine from Naftogaz and the TSO started fully independent operations January 1.

“This was the most significant reform in the energy sector in the history of independent Ukraine. Our country has complied with the requirements of the Third Energy Package and has demonstrated that it is a responsible and reliable partner for the EU. Naftogaz has ceased to be a shareholder in the GTS operator. We will be its major client and are ready to continue joint support of initiatives aimed at developing a competitive and transparent gas market,” said Naftogaz CEO Andriy Kobolyev.

The company has kept its bad debts for transport – contracts it does not expect to be paid for – separate from GTSOU so  that future potential investors in GTSOU will have more certainty about the asset. GTSOU is the entity handling the major gas transport contract with Russia, which is worth an estimated $7bn over its first five years, for a minimum 225bn m³ in total.