On 17 November 2019, the long awaited “Unbundling Law” (the Law of Ukraine “On Amendments to Certain Laws due to Unbundling of Natural Gas Transmission Activity” No. 264-IX) came into force after being passed by the Parliament on 31 October 2019.
The Unbundling Law is the key element in Ukraine's ongoing natural gas market reform. It will ensure the market’s liberalization, efficiency, transparency and further integration with neighbouring European markets.
The Unbundling Law is a milestone in the process of Ukrainian gas transmission system (GTS) unbundling. It is of vital importance in the implementation of the Resolution of the Cabinet of Ministers of Ukraine No. 840 “On Unbundling of Natural Gas Transmission Activity and Ensuring Operation of Gas Transmission System Operator” dated 18 September 2019, which outlines the governmental action plan for Naftogaz unbundling.
Our analysis of the government action plan is available in the following publication:
The key provisions and novelties introduced by the Unbundling Law are:
- the possibility for governmental institutions to transfer state-owned assets (related to GTS) into so-called ‘commercial management’ by the new gas transmission system operator (New TSO) (as per amendments to the Commercial Code);
- the possibility to transfer privately-owned assets (related to GTS) into the charter capital of the New TSO (as per amendments to the Pipeline Transport Law);
- permission for the New TSO to conduct licensed activity within one year based on the of the prior operator’s licence (as per amendments to the License Law);
- independence of the responsible ministry in exercising the corporate management over JSC Main Gas Pipelines of Ukraine (the sole shareholder of the New TSO) (as per amendments to the Cabinet of Ministers Law);
- safeguards against privatisation of the state-owned gas transmission system and New TSO (as per amendments to the Gas Market Law);
- NEURC’s supervisory role over the ministry responsible for management of GTS assets (as per amendments to the Gas Market Law);
- NEURC’s powers to resolve disputes between the New TSO and the ministry responsible for management of GTS assets (as per amendments to the NEURC Law); and
- extending permanent use rights to lands required for gas transmission (as per amendments to the Land Code).
The entry into force of the Unbundling Law is a green light for the eventual completion stage of the GTS unbundling process.
Law of Ukraine on amendments to certain laws due to unbundling of natural gas transmission activity No. No. 264-IX (version dated 31 October 2019).