JV Poltava Petroleum Company, an enterprise with foreign investments operating in Ukraine for over 27 years, persistently calls upon the Government and the Verkhovna Rada of Ukraine to prevent illegal interference with the operation of the Ukrainian natural gas market.
Resolutions of the Cabinet of Ministers of Ukraine No. 1433, 1435 dated 30 December 2021 and No. 19 dated 12 January 2022 introduced mechanisms for selective regulation of gas prices. JV PPC believes that these Resolutions are contrary to the current legislation, in particular, the Law of Ukraine “On Natural Gas Market”, which enshrines the principle of non-interference of the state in the operation of the natural gas market. These Resolutions mandate the sale of up to 20% of natural gas produced by private companies at a regulated price for the period from 1 January to 30 April 2022, with a restriction on the market prices of the products only for private gas producing companies.
Draft Law “On Amending the Law of Ukraine “On Natural Gas Market” No. 6426-1 dated 14 December 2021 proposes to introduce governmental regulation of the natural gas market and to set regulated prices for gas, which bring to naught the prospects for the development of the industry, is contrary to international legal obligations of Ukraine, and jeopardizes the existence of a free natural gas market in Ukraine.
JV PPC would like to draw the attention of the Government and People’s Deputies to the fact that artificial regulation of the natural gas market will create the conditions for an energy crisis in Ukraine rather than solve the problems of end consumers, which, in turn, will aggravate the economic crisis.
The introduction of governmental regulation of natural gas prices would reduce revenues across all budget levels, particularly rents calculated based on import parity. The mechanisms for control over the natural gas market proposed by Draft Law No. 6426-1 will negatively affect the dynamics of natural gas production by private enterprises and will lead to an outflow of direct investments, which, in turn, will result in a reduction in tax revenues, job cuts in the sector and related industries, and will also consolidate the image of Ukraine as a country with unstable regulatory policies and nontransparent condition of doing business, which will be an alarming signal for investors.
We believe that the introduction of direct state subsidies for producers of socially important categories of goods will be able to stabilize prices and overcome the negative consequences of the energy crisis.
We therefore urge the rejection of Draft Law No. 6426-1 and call for an end to the introduction of fixed natural gas prices and discriminatory business practices in the natural gas market.
JV PPC remains committed to Ukraine as a reliable and responsible partner for international investors.