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Unbundling

The Ukraine Natural Gas Market Reforms taken as a commitment in the Association with the EU include the gas transmission system operator unbundling into an independent structure. The new GTS Operator will be separated not only from the current single shareholder – Naftogaz Group but also from any impact of the gas or electricity producers and suppliers, in particular, through the state authorities.

To apply the Association with the EU, the Government has developed the Restructuring Plan of the Naftogaz of Ukraine with a final goal to unbundle natural gas transmission and storage activities (Resolution of the Cabinet of Ministers of Ukraine from July 1, 2016, No. 496). Later, as part of the implementation of Unbundling Plan, the Cabinet of Ministers of Ukraine decided to found the Main Gas Pipelines of Ukraine PJSC by the Resolution of the Cabinet of Ministers of Ukraine of November 9, 2016 No. 800.

The Supervised Board of the Main gas pipelines of Ukraine (MGPU) started its work on July 24, 2018. Soon after Supervisory Board of Naftogaz of Ukraine has reached an agreement with the Supervisory Board of MGPU on a roadmap of cooperation towards the unbundling of Ukraine's gas transmission function. Under the agreed Memorandum of Understanding, the unbundling process is to be finalized at the beginning of 2020, after the existing transit contract with Gazprom expires

To accelerate the unbundling process, Naftogaz of Ukraine engaged the international consulting company PricewaterhouseCoopers (PWC) to implement the Project transparently and efficiently according to the Government's directive.

 

 

KEY FACTS 

1. Why Ukraine have to unbundle the gas transmission Operator?

2. Key milestones

3. Consorcium

4. Gas TSO of Ukraine – Branch and LLC. What is the difference?

5. How the unbundling of the Gas TSO of Ukraine will be performed – last decision of the CMU

6. Service Level Agreement (SLA). How does JSC Ukrtransgaz and LLC Gas TSO of Ukraine cooperate?

7. MGU - the role of the company in the process of unbundling of the GTS operator

8. How did the TSO management system and organizational structure changed

 

 

 

Roadmap of the unbundling 2018-2020

2018

2019

January 1, 2020

- Separation of the SSO Branch

- Registration of the GTS TSO, LLC

 

 

- Extension of TSO Branch with the TSO functions

- Start of the cooperation with the EU Gas Consortium: Gasunie, GRTgaz, Snam, Eustream, Fluxys

- Experts of the Consortium joined the TSO Branch

- Transfer of the business processes and people to extended TSO Branch

- Conditional certification of the new company

- Agreement between the MGU and UTG

 

- Expiration of the valid contract with Gazprom

- Automatic transfer of the new company to the MGPU

- Start of work of the new independent TSO

 

 

 

Status of implementation of unbundling in 4 main operation areas:

As of 16.05.2019

  1. Separation of the Storage System Operator of Ukraine Branch - 75%
  2. Extension of the Gas Transmission Operator Branch - 30%
  3. Legal unbundling of the Gas System Transmission Operator of Ukraine- 35%
  4. Third Party actions to complete the unbundling process

 

  1. Separation of the Storage System Operator of Ukraine Branch - 75%

Storage System Operator will provide natural gas storage services and ensure the efficient and uninterruptible operation of 11 underground gas storage facilities (UGS). After the end of the transformation, the Storage System Operator will cooperate with both the Gas System Transmission Operator and other companies under transparent and market-based conditions.

Status

Assignment

 

Done

December 2018

SSO Branch registered: people and necessary assets transferred

 

Done

Gas stock audit

 

In process

Testing of the internal rules of interaction between the TSO and SSO branches

 

In process

Unbundling of IT-system and automatization system of TSO and SSO

 

Is scheduled

Interaction Agreement between TSO and SSO

 

In process

Development of the information platform of SSO

  

  1. 2. Expansion and optimization of Branch “Operator of Gas Transmission System of Ukraine” (GTS) – 70 %

A prototype of the future independent TSO is created, all functions optimized and centralized, people and necessary resources transferred to ensure full readiness for the legal unbundling.

Status

Assignment

 

Done

Integration of basic production units -  Linear production departments of main gas trunk pipelines

 

Done

Agreement on providing consultancy support with five leading European Operators: Snam, GRTgaz, eustream, Fluxys, GASUNIE

 

Done

Optimization and centralization of functions: accounting, people management, procurement, etc.

 

Done

Development of internal policies/procedures for the expanded TSO Branch

 

Done

Transfer of people to Operator of Gas Transmission System Operator of Ukraine LLC

 

In process

Unbundling and preparation for the IT-systems transfer

     
 

It is scheduled before 01.2020

Transfer of assets to Gas Transmission System Operator of Ukraine LLC

 

  1. Legal unbundling of Gas Transmission System Operator of Ukraine - 35%

Unbundling process in line with the requirements of Ukrainian and European regulation and preparation for the certification of the TSO to start operation on 1.01.2020.

Status

Assignment

 

Done

Registration of the Gas Transmission System Operator of Ukraine LLC

 

Done

Service Level Agreement (SLA) between Gas Transmission System Operator of Ukraine LLC and Ukrtransgaz JSC from 01.07.2019 to 31.12.2019

 

Done

Structure and staff payroll

 

Done

The draft of the Action Plan for the transfer of assets and contracts for 2019

 

In process

 Discussion of the certification process with the National State Energy and Utilities Regulation Commission

 

In process

 Submission of application for the conditional certification

 

In process

Transfer of 10.400 employees to Gas Transmission System Operator of Ukraine LLC

 

Is scheduled

Preparation for the cooperation between UTG and LLC under the SLA Agreement starting from 01.07.2019

 

Is scheduled

Finalizing the list of assets

 

In process

Development of internal regulations

 

Is scheduled

Unbundling of IT-system and processes

 

Is scheduled

Concession agreement with interested parties

   

  1. Third Party actions to complete the unbundling process

Status

Assignment

 

Is scheduled

The Cabinet of Ministers of Ukraine defines the final model of unbundling and the legal entity that will be certified

 

Is scheduled

The National State Energy and Utilities Regulation Commission, Operator, gas system distribution companies – search for an optimal solution for the unauthorised take-offs problem

 

Is scheduled

The National State Energy and Utilities Regulation Commission –  tariffs that cover operating expenses of the Operator and take into account the principle of neutrality

 

Is scheduled

The Parliament of Ukraine  – approval of the Law of Ukraine on Concession