Naftogaz shares recent concerns of some members of the Ukrainian parliament regarding the absence of clear plans on the future development of Ukraine’s gas transmission system (GTS). This task was supposed to be performed by the new TSO envisaged by the unbundling plan which was adopted by the government in July 2016. However, since a number of ministries have significantly delayed the plan's implementation, no conditions have been created for this work. Naftogaz will therefore step in to make sure the GTS modernization plan is developed.

According to Item 2 of the approved unbundling plan, the Ministry of Energy and Coal Industry of Ukraine was supposed to ensure that the corporate governance structure of the new TSO is established in line with its corporate governance action plan by the beginning of October 2016. This included the appointment of a supervisory board (consisting mostly of independent directors) and a competent management. This management's responsibility would be to elaborate the development plan for Ukraine’s GTS, including its modernization. Unfortunately, the government has not started carrying out the new TSO’s corporate governance plan.

“As Ukrtransgaz shareholder, Naftogaz continues to ensure proper funding for all necessary activities to maintain secure operation of the system. We were expecting for the appointment of the new operator management, however this process is stalled. We agree that further delaying the development of the system's modernization plan is unacceptable", said Andriy Kobolyev, CEO of Naftogaz.

The management of the new operator was also supposed to start performing the standard European TSO functions currently done by neither Ukrtransgaz nor Naftogaz. Realization of these functions can be initiated prior to an award on the transit contract claim currently considered by the tribunal in Stockholm.

Naftogaz has engaged the Polish division of PwC to manage the unbundling project. The company has hands-on experience of unbundling according to EU regulations in Poland, Germany and Greece. Within this project, Naftogaz intends to facilitate the practical launch of the unbundling process.

CABINET OF MINISTERS OF UKRAINE RESOLUTION “On Unbundling of Gas Transmission and Storage (Injection, Withdrawal) Activities”.