5 Activities related to Component 2 and Component 3 ENG

D R A F T

Concept Note 5

COMPLEMENTARY TECHNICAL ASSISTANCE TO THE EU FUNDED BUDGET SUPPORT TO UKRAINE’S ENERGY STRATEGY IMPLEMENTATION

CONCEPT NOTE ON ACTIVITIES RELATED TO COMPONENT 2 AND COMPONENT 3

Prepared by Heikki Lehtimaki Project Key Expert/Energy Poicy

Kyiv, July 2010

2

Table 1: Main Technical Proposal Assumptions and Risks Foreseen (Pages B-30 - B-32)................................................................................................................................ 3

Table 2: ESBS Project Technical Proposal vs. Analysis in June 2010 (Pages B-53 - B-62)................................................................................................................................ 4

Table 3: The ESBS Project Team Initial Assessment on Achievement of the Performance Indicators for Disbursement Since the Signing of the Financing Agreement (FA) on 19.09.2008 .................................................................................. 10

Table 4: ESBS Project INITIAL COMMENTS ON PERFORMANCE INDICATORS re: 2009 MoFE Report ..................................................................................................... 15

Table 5: Concrete ESBS Project Task Requests as Received from the Ministry of Fuel and Energy and NJSC Naftogaz of Ukraine by 23 June 2010, the Corresponding Technical Proposal (TP) Component as well as the Financing Agreement (FA) Performance Indicator Numbers and the Estimated ESBS Project Team Capability (or, Availability) on a Scale from 1 (Low) to 3 (High) ............ 25

Table 6: A: List of Priority Investments (from 2006) as Attached to the September 2008 Financing Agreement (FA), the Size of the Project (in Terms of the External Borrowing Requirement) and the Project Status as at June 2010 and B: Other Investment Elements on the FA Performance Indicator List ......................... 27

Table 7: List of Persons Met during the Inception Period of 09.03. - 06.07.2010 ...................... 29

Table 8: Review List of Major ESBS Project Component 2 and 3 Related Documents............. 33

Table 9: KE3 Personal Component 2 and Component 3 Related Inception Period Outputs ...................................................................................................................... 43

Table 10: Allocation of ESBS Project Responsibilities in Man-Days on the Basis of the TOR, KANTOR Technical Proposal, Expert Contract and a New Revised Proposal on 23.06.2010 - Calculated according to the ESBS Project Activity Codes: Heikki Lehtimaki (HL): KE3 - Energy Policy Expert Project Man-Days........................ 45

Table 11: A Proposed 6-Month Sub-sector Work Plan for KE3 - Key Energy Policy Expert......................................................................................................................... 47

3

Table 1: Main Technical Proposal Assumptions and Ri sks Foreseen (Pages B-30 - B-32)

• Main Assumptions and Risks Foreseen in the Technica l Proposal 1. The main programme stakeholders are committed to fulfilling their obligations under

the Financing Agreement for the budget support programme and are ready to share all information with the Consultant necessary to meet the project’s purpose.

2. Donor coordination mechanisms are in place and the Consultant will have access to other donor contact persons to discuss and commonly develop areas of mutual interest and/or which would maximise the effectiveness of the energy sector programme – in this regard, we note that the ToR refer to the Government having established a government-led donor coordination mechanism, with the energy sector thematic working group being co-led by the EU;

3. Progress against the indicators will be discussed in an open and frank manner, including and especially when a performance review may reveal disappointing results, and policies and strategies can be adjusted in light of the results achieved;

4. MoFE counterpart staff can act independently and are not subject to influence from any particular vested interests;

5. The project will be adequately staffed on the part of the beneficiary (in terms of both number of staff and suitability of skills and qualifications, including in information and communication technology), and personnel will be available to work with the Consultant;

6. MoFE sustains ownership of the project, supports it implementation by providing adequate office space for it and by ensuring ongoing commitment of its staff;

7. The active support and participation of other stakeholders such as the energy businesses will be forthcoming and facilitated by MoFE, ideally through existing channels of dialogue and sector coordination;

• Main Comments at the end of the Inception Period in June 2010 1. Despite some progress made, full stakeholder commitment is not yet in place; 2. Despite some progress made, full donor co-ordination is not in yet in place; ESBS

Project Team request to join the Donor meetings still pending approval; 3. Despite some progress made, full discussion is starting only now; 4. OK; 5. Despite some progress made, full mobilization not yet under way; 6. Working groups are being established (one with NJSC Naftogaz operating already),

but the office space issue is not resolved yet; 7. Up till now, this activity has been the sole responsibility of the ESBS Project Team.

4

Table 2: ESBS Project Technical Proposal vs. Analy sis in June 2010 (Pages B-53 - B-62)

ESBS Project Component 2 - Ad hoc assistance for fu lfilling the budget support indicators:

Technical Proposal and Inception Period Analysis Co mpared

Technical Proposal

December 2009

Inception Period Analysis: 06/2010

Scope and Objectives

“This work component resembles the more traditional project-based technical assistance in that it seeks to provide specialized expertise, advice and consulting assistance for particular elements of the energy reform agenda and the performance indicators under the budget support programme for implementing Ukraine’s energy strategy. However, one significant difference is that the content of the assistance is not prescribed but needs to be determined according to the express needs, priorities and requests of the beneficiary. Consequently, the scope of the tasks to be undertaken under this component cannot be unambiguously determined and defined at this stage. Nevertheless, it is clear from the activities listed under this component in the ToR that the focus should generally be on:

• Further developing and refining Ukraine’s Energy Strategy (as per Activity 2.1 in the ToR);

• Developing sub-sectoral programmes within the framework of the objectives and directions of the energy strategy (Activity 2.2);

• Carrying out studies and work in areas related to the fulfilment of the indicators for the budget support programme (Activity 2.2); and

• Recommending and drafting legislative provisions and changes consistent with the EU energy acquis and which are relevant for the implementation of the budget support programme and the fulfilment of the performance indicators (Activity 2.3).

As a result, the objective of this component will be to further develop the policies, programmes, instruments, legislation and other mechanisms for implementing the energy strategy and successfully meeting the disbursement conditions of the sector support programme. Moreover, the areas of assistance need to be identified in consultation with the beneficiary and be guided by the specification of the broad areas highlighted in the ToR.”

• Scope and Objectives are generally speaking still valid

Approach and Activities

“As mentioned above, the activities that will be undertaken under this work component will need to be determined in consultation with the beneficiary and therefore cannot be determined ex ante. Nevertheless, in order to generate and focus demand by the beneficiary, we will develop

• Duplication of efforts should be avoided;

• However, it is clear that the

5

some guiding principles or criteria in order to jointly identify areas of priority and need. These criteria or principles will include the following:

• Any revision of the Energy Strategy should be taken with a view to only removing inconsistencies with EU law and EU-Ukraine agreements, and/or to develop more specific and concrete policies for achieving the strategy’s objectives – the strategy has already been endorsed at the highest political levels and is ‘owned’ by the national authorities. Consequently, the objective is not to revise the strategy (which in any case under the philosophy of budget support is a matter for national authorities), but rather to ensure its effective implementation.

• Generally, to avoid unnecessary duplication and waste of resources, support should not be provided under the present project where technical assistance or twinning through other projects or donors is being provided in a particular area, unless there are some complementary areas of assistance – for example, although one of the indicators under the sector budget support programme relates to the expansion of the Boyarka Metrology Centre to certify oil and oil product quality, there are EC-funded feasibility studies that are being conducted for this at the present time;

• The particular area must have a certain priority or level of importance e.g. high weighting in the Financial Agreement disbursement conditions, pressing deadlines (e.g. in the context of EnC treaty commitments), little progress to date, and so on.

In order to inform the above discussion, the Consultant will need to:

• Undertake an assessment, with the assistance of MoFE staff, of current progress against the sector budget support indicators and the commitments of Ukraine under the energy MoU / road maps and other EU cooperation instruments;

• Compile a catalogue of present EC and other donor-funded projects being undertaken in the areas that impact on the sector budget support indicators; and

• Comprehensively review Ukraine’s Energy Strategy and identify areas of non-compliance with EU norms and sub-sectoral programmes.”

Energy Strategy needs updating and revision and the Government in its recent Reform Program has acknowledged the fact;

• ESBS Project Team has produced an initial verbal and quantitative evaluation of the Budget Support Performance Indicators. Docs are included in this report;

• Collection of data on other donor-funded projects is under way;

• Legal issues are dealt with separately by the Legal Expert

Outputs and Deliverables

“The outputs and deliverables will include the following:

• Reports and notes on ad hoc studies related to the budget support programme;

• Recommendations related to legislation approximation;

• Recommendations on possible improvements to

• Development of sub-sectoral programmes is under way; See other Tables in this document as per the

6

the Energy Strategy;

• Training and study tours; and

• Presentations and visibility material for workshops, etc.”

requests from the Ministry of Fuel and Energy an NJSC Naftogaz of Ukraine;

• Training issues will be covered separately by the Legal Expert.

ESBS Project Component 3 - Ad hoc assistance in rel ation to gas transit

A. Assistance regarding bankable projects for the mode rnization of Ukraine’s gas transit network:


Technical Proposal

December 2009

Inception Period Analysis:06/2010

Scope and Objectives

“In the Master Plan presented at the Joint EU-Ukraine Conference aimed at new investments for the modernisation of the Ukrainian gas transit system, Ukrainian representatives identified concrete modernisation projects aimed at ensuring sustainability, reliability and efficiency of the Ukrainian gas transit system over the coming decades. These projects cover all parts of the gas transit technical infrastructure, including reconstruction of pipelines; compressor and metering stations; communication systems; and underground storage facilities.

The objective of this activity will be to provide ad hoc assistance to develop the identified investments into bankable projects, with particular emphasis on the financial aspects of the projects.”

• Basic Scope and Objectives are still valid;

• Duplication to be avoided and coordination needed with the EU-funded, EBRD-managed new GTS feasibility study;

• NJSC Naftogaz has specifically requested ESBS assistance


“Energy projects in general and gas infrastructure projects in particular tend to be distributed and difficult to assess with a standard credit risk assessment model. Although the IFIs and other funding agencies may have staff who are highly proficient in financing issues, a certain level of understanding is required of different aspects of energy investments. This is needed not only for correctly assessing the risks involved, such as the environmental risks, counterparty risks for contracts, price risks, liquidity risks and, of course, project-related risks (construction

• See above

7

time, etc.), but also in order to assess the overall viability of gas infrastructure projects.

As the assistance to be provided for this activity will be determined on a demand-driven basis, it is not possible to be precise about the services that will be required from the Consultant, but typically we would expect the following to be made available to the beneficiary and other stakeholders (i.e. the Government of Ukraine, Naftogaz, local commercial banks, etc.) to the extent relevant:

• Valuation and modelling of projects with the aim of arriving at a bankable project cash flow;

• Due diligence;

• Financial and operational risk assessment;

• Defining a proper rate of return for different projects and in different parts of the value chain;

• Strategies for handling currency risk, if appropriate;

• Structuring of different types of energy contracts and a logical tie-in to financial risk;

• Key factors in environmental impact assessments and how to determine possible financial risk;

• Social impact to the extent that it affects financial risk;

• CO2 impact to the extent that it affects financial risk;

• Technical assistance with preparation of tender documentation; and

• Technical assistance with procurement according to EU/international standards.


“The key outputs for each assignment are expected to be regular status reports at pre-agreed intervals, any intermediate reports, working papers or calculations required as an input for completion of other related tasks, and a final report with conclusions and recommendations related to the specific task”

• Still valid

ESBS Project Component 3 - Ad hoc assistance in rel ation to gas transit

B. Assistance in preparing the loan packages under par ticular fundable projects on Ukraine’s gas transit system modernisation


Technical Proposal

December 2009

Inception Period Analysis: 06/2010

Scope and Objectives “Ukraine's master plan for the modernisation of the gas

transit system envisages a first phase of modernizing the existing transport and storage infrastructure, requiring approximately USD 3 billion over seven years, before a second phase sees new pipelines being constructed. Half

• Basic Scope and Objectives are still valid;

8

of the sum for the first phase would to go to new compressor stations, with the rest divided between improvement of pipelines, underground storage facilities, and gas metering stations at entry and exit points. Therefore, even over the first phase of the project, a significant number of individual projects are expected to be developed, which will need to be presented to IFIs, international and local commercial banks, potentially the EC’s NIF and other funding sources.

The objective of this activity will be to assist the project developer (Naftogaz) in preparing effective loan packages which can be used to obtain finance from various funding agencies to proceed with its much-needed investment.”

• Duplication to be avoided and coordination needed with the EU-funded, EBRD-managed new GTS feasibility study

• NJSC Naftogaz has specifically requested ESBS assistance


“As a minimum, it is expected that the consultant will provide support to Naftogaz in preparation of the following documentation required for the loan package:

• Business plan;

• Collateral statement;

• Cash flow budget;

• Earnings budget;

• Financial statement;

• Projection of revenue and expenses; and

• Use of funds statement.

• The consortium will provide relevant experts to support the project developers in preparing the documentation above, and presenting it in a clear and concise manner. In order to ensure that the loan packages meet the specific requirements of the lender, and that little or no further information would be required which would delay the investment decision, the Consultant will place emphasis on the following points: Coordination between the project developer (Naftogaz) and the proposed lender(s) to ensure that all information required by the latter is included in the loan package – this will also help anticipate any of the lender’s questions;

• Identifying the borrower’s key players and counterparties to the lender;

• Conveying credibility with full disclosure and transparency of information – this is a key issue which is expected to be particularly relevant for gas transit network projects and relevant Ukrainian borrowers; and

• Presentation of the loan package, both with respect to documentation and any face-to-face

• This will be mostly demand-driven

9

presentations, to ensure that all information presented is both concise and complete.

If possible, the above services will be delivered as part of a capacity building/training programme, targeting relevant project developer staff and borrowers. This will aim to ensure that the requirement for consultant input diminishes over the planned period for modernisation of the gas transit system.”


The main output will be a complete and concise loan package for each discrete project, which will include the items listed in section 2.2.4.3.2 above. In addition, a report will be provided to the counterpart summarizing the work undertaken, highlighting any barriers and bottlenecks identified, and outlining any lessons learnt and recommendations for future similar assignments.”

• See above

15.04.2010

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Table 3:

The ESBS Project Team Initial Assessment on Achievement of the Performance Indicators for Di sbursement Since

the Signing of the Financing Agreement (FA) on 19.0 9.2008

The document summarizes in a table form the ESBS Team’s assessment of the Performance Indicators included in the ESBS Programme Financing Agreement (FA). It is based on an overall assessment of achievement of the Indicators as of 01 July 2010 that will obviously be further elaborated during the next steps. The Weights applied in the Table are those of the original Financing Agreement and each Indicator performance has been assessed on a scale from 0 to 100%. The Sub-indicator Weights are Team estimates, because the Financing Agreement is not providing information on the allocation. The contribution in %-points of each Indicator is listed. On 1 July 2010, the total performance rate was estimated to be 53.1 – 54.1% against 48.8 – 49.8% as assessed on 14 April 2010. The document contains an updated assessment of the Indicators and sub-indicators and was prepared for the 3rd Meeting of the Joint Monitoring Group with the aim of promoting self-assessment by the Ukrainian party and helping the ongoing work with regard to the 2009 and the 2010 first half year’s reports.

11

Year

# Indicator:

2008 2009 2010

Weight (%) according to the

Financing Agreement of

19.09.2008

Performance Assessment on

01.07.2010 on scale from 0 to 100%

Rounded Contribution to Total Indicators Performance, %-

points

Establish Joint monitoring group (JMG) with a view to following up fulfillment of the programme’s conditions

x N/A N/A

Adoption of the Law on State Budget 2008 and the financial regulation necessary for implementing the Budget support programme

x N/A N/A

Submit and implement a Law on Public Procurement in line with EU norms; 20% 25% 5.0

1.1. Submit for the consideration of the Verkhovna Rada of Ukraine the draft Law on Public Procurement aligned with EU norms in that area x 7% 70% 5.0 1.

1.2. Implement the new Law on Public Procurement* x x 13% 0% 0.0

Further strengthening of the capacity and independe nce of the National Electricity Regulatory Commission: 12% 30% 3.6

2.1. Submit for the consideration of the Verkhovna Rada of Ukraine the draft Law on State regulation of energy x 1% 100% 1.0

2.2. Implement the new Law on State regulation on energy* x x 2% 0% 0.0

2.

2.3. Adopt and implement the “Strategy for providing Social Protection of the Population under Condition of Increases of Prices on Energy Resources” **

x 3% 0% 0.0

2.4. Prepare draft primary and secondary legislation necessary to harmonise Ukrainian legislation with the EU Directives on electricity and gas, based on the agreed recommendations of the Twinning projects on electricity and gas market regulation. Implement the adopted legislation.

x x x 3% 65% 1.9

2.5. Gas, electricity, and heat tariffs continue to gradually move towards economically justified levels x x x 3% 25% 0.7

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Year

# Indicator:

2008 2009 2010



19.09.2008


01.07.2010 on scale from 0 to 100%


points

3. No increase in the quasi-fiscal deficit in the e nergy sector compared to 2006 5% 100% 5.0

3.1. Average cash collections at or above 95 and 85% in the electricity and gas sectors, respectively, in 2008 x 2% 100% 2.0

3.2. Average cash collections at or above 96% and 90% in the electricity and gas sectors, respectively, in 2009 and 2010 x x 3% 100% 3.0

4. Achieve concrete progress on the preparation of the integration of Ukraine into the EU energy market: 12% 50% 6.0

4.1. Submit for the consideration of the Verkhovna Rada of Ukraine the draft Law “On Principles for the Functioning of the Natural Gas Market”, aligned with the relevant EU legislation

x 3% 90% 2.5

4.2. Implement the new Law “On Principles for the Functioning of the Natural Gas Market”* x x 5% 0% 0.0

4.3. Elaborate a comprehensive Action Plan to integrate the united power system of Ukraine into the electricity trans-European networks, drawing on results of the Tacis project “Support to Ukraine’s Progressive Integration into the Electricity Trans-European Networks” and the requirements of the UCTE (Union for the Co-ordination of the Transmission of Electricity), Adoption by the Government and implementation of the approved Action Plan.

x x x 4% 90% 3.5

5. Adopt and ensure further implementation of a modernization plan for the oil and gas network (tru nk pipelines): ***

10% 60% 6.0

5.1. Adopt and implement a development plan for the safety and security monitoring system for hydrocarbon transit networks x x 2% 75% 1.2

5.2. Provide for the conduct or the proper finalization of the technical and financial audits of the oil and gas transit network infrastructure.

x x x 2% 75% 1.2

13

Year

# Indicator:

2008 2009 2010



19.09.2008


01.07.2010 on scale from 0 to 100%


points

5.3. Present for commissioning by the State Commission the gas metrology line in the Regional Metrology Centre in Boyarka. Accreditation and international legislation of the laboratories and testing stands of the gas metrology line

x x 2% 75% 1.2

5.4. Further the construction of the oil and gas metrology line in the Regional Metrology Centre in Boyarka; and the establishment of a Regional Hydrocarbons Metrology Training Centre

x x 2% 75% 1.2

5.5 Define additional sources and supply routes of oil and gas to Ukraine, including the potential for LPG and LNG, and define the additional requirements for the oil and gas transit system

x 2% 90% 1.2

6. Finalise with the international financial instit utions the financing agreements for priority infrastructure pr ojects, taking into account the list of projects defined in the Aide-Mémoire of 22 October 2006 between the European Commission of the Ministry of Fuels and Energy (Ann ex A).

x x x 5% 50 - 70% 2.5 – 3.5

7. Draft the primary and secondary legislation nece ssary to achieve harmonization with the EU Oil Directives, i ncluding the establishment of the institutional arrangements for the management of strategic oil stocks. Enforce the ado pted legislation.

x x 7% 45% 3.2

8. Design and begin construction of a pilot interna tional gas metering station at one of the entry points into th e gas transit system of Ukraine

x 12% 40% 4.8

9. Energy intensity of the economy in 2010 is reduc ed by at least 10% compared to 2005**** x 10% 100% 10.0

10. Improvement of energy efficiency of the gas com pressor stations on the gas transit system (trunk pipelines ) through their modernisation

x x 7% 100% 7.0

Total as assessed on 1 July 2010 100% n.a. 53.1 – 54.1% Total (as assessed on 15 April 2010) 48.8 – 49.8%

14

* Following adoption of the Law by the Verkhovna Rada of Ukraine ** In accordance with the Resolution of the Cabinet of Ministers of Ukraine No 408 of 13.06.207 *** In accordance with the provision of the EU-Ukraine Memorandum of Understanding on co-operation in the field of energy signed on 01.12.2005 **** In accordance with the provisions of the Energy Strategy of Ukraine until 2030

15

Table 4: ESBS Project INITIAL COMMENTS ON PERFORMAN CE INDICATORS re: 2009 MoFE Report

16 April 2009

INDICATOR COMMENTS

* Establish Joint monitoring group (JMG) with a view to following up fulfilment of the programme’s conditions

The JMG was established on 11.11.2008 by Order No. 550 of the Ministry of Fuel and Energy, but it has so far not taken a very active role. Only two technical level meetings held so far.

* Adoption of the Law on State Budget 2008 and the financial regulation necessary for implementing the Budget support programme.

1. Submit and implement a Law on Public Procurement in line with EU Norms:

1.1. Submit for the consideration of the Verkhovna Rada of Ukraine of the draft Law on Public Procurement, aligned with EU norms in that area.

Indicator reached in part. The Ministry of Economy prepared a draft for a Public Procurement Law and the law was submitted by the Government to the Verkhovna Rada (VR), where it was adopted on 11.02.2010. However, the President vetoed the law on 16.03.2010 e.g. upon the joint recommendation letter of the EU and the World Bank as well as another letter of the Ukrainian Industry Organisation (ULIE), because the law was not aligned with EU norms. The President sent the draft law back to the parliament for further modification.

Ukraine and the EU have agreed to work together towards the establishment of an independent review body for public procurement, in line with EU Directive 89/665 (as amended by Directive 2007/66), and ensure that the review body has sufficient administrative capacity to provide effective remedies. Ukraine and the EU have further agreed to work towards harmonisation of Ukrainian public procurement legislation with EU acquis, as set out in EU Directives 2004/17 and 2004/18.

The EU experts who analysed the text adopted by the VR came to the

16

conclusion that the law is not fully in line with EU standards. The main issues raised by the EU concern the appeals (review) mechanism, which is provided but does not meet the key EU requirements of impartiality and independence. This can lead to corruption. In many cases, the procurement procedures established by the law are excessively burdensome, and the thresholds too low. At the same time, the number of sectors which escape the application of the law is too large. As a consequence, many of the main objectives of the law – including the creation of a transparent mechanism of public procurement – are missed.

1.2. Implement the Law on Public Procurement

Indicator has not been reached. Since the law is not in force, it cannot be implemented. Further, it is indicated that the Ministry of Economy will start drafting the bylaws, model contracts etc. only after the law has been conclusively adopted.

2. Further strengthening of the capacity and independence of the National Electricity Regulatory Commission:

2.1. Submit for the consideration of the Verkhovna Rada of Ukraine of the draft Law on State Regulation of [the] Energy [Sector].

Indicator reached in part. It is indicated that the NERC prepared a draft for a law “On State Regulation in Energy Sector of Ukraine,” and it was submitted to the VR on 23.11. 2007 – more than two years ago – and that the draft is still being considered by the VR.

Currently the VR Committee Ukraine for the Fuel and Energy Complex, Nuclear Policy and Nuclear Safety is working on two drafts concerning the NERC:

1. Draft Law “On State Regulation in Energy Sector of Ukraine” No. 0889 of 23.11.2007 (Initiators – Members of Parliament V. K. Bronnikov, A. P. Klyuev, M. V. Martinenko). Before this draft Law was under No. 1221 of 02.08.2006 and was accepted on 07.02.2007 as a basis;

2. Draft Law “On National Electric Energy Regulatory Commission of Ukraine” No. 1372 of 18.01.2008 (Initiator – Member of Parliament M. V. Martinenko).

The purpose of both draft laws is to establish the legal foundations of state regulation of the energy sector and provide the mechanisms for activities of the

17

concerned state body. The drafts are similar and have been drafted with the same goal in mind. They were not submitted, however, and were not adopted.

Draft law No. 0889 determines the powers of the Cabinet of Ministers (Article 5), the NERC (Article 6), and local authorities with regard to state regulation of the power sector of Ukraine. The status of the NERC is determined as the central executive authority, with broad powers and functions. The Commissioners, including the Chairman of the NERC, are state civil servants who are appointed and dismissed by the Cabinet of Ministers on the order of the Prime Minister. The nominations of the Commissioners should be coordinated with the VR. However, Article 85 of the Constitution does not give the VR powers to participate in appointing or dismissing Commissioners of the NERC.

Also, draft law No. 1221 determines the status of NERC as a state regulatory body with broad powers and functions. The Chairman and the Commissioners of the NERC are appointed and dismissed by the President on proposal of the Prime Minister. The NERC executes its powers on the basis the Constitution and other legislation, independently of state and local authorities, civil servants working for such authorities, business entities, political parties and other civic organizations and their bodies. However, Article 106 of the Constitution does not give the President powers to appoint or dismiss Commissioners of the NERC.

Indeed, Ukraine's Constitution does not address at all entities such as the NERC, which would have a special status as independent regulators.

2.2. Implement the new Law on State Regulation of [the] Energy [Sector].*

Indicator has not been reached . Since the law is not in force, it cannot be implemented. Further, it is indicated that the NERC will start drafting the necessary amendments only after the law has been conclusively adopted.

2.3. Adopt and implement the "Strategy for providing Social Protection of the Population under Condition of Increases of Prices on Energy Resources".**

Indicator has not been reached . There is no indication that the Strategy has been adopted and implemented although drafting documents are available.

In the housing sector, there is a system of privileges concerning payment for energy products, in particular electricity. The privileges are granted to certain categories of household customers on the basis of their status or profession. The amounts are determined in number of special laws. A record of privileged customers, from 2009, includes 25 categories or groups.

The privilege system is often defended as an instrument of social security, since

18

many recipients, such as was veterans and pensioners represent low-income strata of the population. Energy privileges granted on the basis of profession (police, firemen, prosecutors, military etc.), however, extends to all members of these groups, including the most high-ranking and relatively well-paid officials. In these cases, it is clear that the system of energy privileges is not justified, as it has no element of providing social security for the needy.

Energy subsidies and privileges are financed from the budget. They are not provided in a targeted (customer-oriented) but rather in a centralized manner to energy companies as compensation for losses of caused by the subsidies. This approach is of course simpler to implement in practice, but it does not encourage consumers to save. The system also often results in cash gaps, since the state does not always meet its obligation to reimburse in full the losses caused by the privileges and subsidies which household customers are entitled to enjoy.

In 2009, electricity consumed by households under the energy privilege system was compensated at the amount of 50.5 million Hryvnia (subsidies) and 405.5 million Hryvnia (privileges).

Development of a “Strategy for Promotion to Social Security of Population Under Increase of Prices for Fuels” in accordance with a Cabinet of Ministers Instruction No. 408 of 13.06.2007 was envisaged during in 2008 – 2009.

A Law “On State Social Assistance to Low-Income Families” of 01.06.2000, a Cabinet of Ministers Resolution for granting the subsidies from 1998, and various other regulations concerning energy privileges are provided in various legislative documents from different periods. Typically, these regulations are not related to each other and are not applied as a unified system of tools to provide social security to citizens.

2.4. Prepare draft primary and secondary legislation necessary to harmonise Ukrainian legislation with the EU Directives on electricity and gas, based on the agreed recommendations of the Twinning projects on electricity and gas market regulation. Implement the adopted legislation.

Indicator reached in part. It is stated that a draft law to amend the law “On the Energy Sector” was prepared and registered at the VR in March 2009 and that the draft was considered by two committees of the VR in the spring of 2009. It is not indicated how and to what extent the draft meets the goal of harmonising EU and Ukrainian energy legislation.

19

2.5. Gas, electricity, and heat tariffs continue to gradually move towards economically justified levels.

Indicator reached in part. It is indicated in the Progress Report that gas, electricity, and heat tariffs that the NERC has introduced higher tariffs for gas, electricity and heat, which would better reflect actual costs, but its efforts have been thwarted by other government bodies and even a court case initiated by trade unions. Consequently, the tariffs have not moved towards economically justified levels – instead, the gap between Ukrainian price levels and world market price levels seems to have increased.

3. No increase in the quasi-fiscal deficit in the ener gy sector compared to 2006.

3.1. Average cash collections at or above 95 % and 85 % in the electricity and gas sectors, respectively, in 2008.

Note: Progress Report for 2009 has no information r egarding this position, but the 6 months Report covered the year 2008, too. Under 3.1 in the Progress Report for the whole year of 2009, the inp ut concerning indicator 3.2 (below, for the years 2009 - 2010) is provided. Accordingly, Indicator has been reached.

However, it must be stated that the system is very complex, has cross-subsidy elements, etc. Further details are provided below:

In 2009, in order to reduce the burden on the Government budget, resolutions were passed, which banned to disconnect certain facilities from power supply, the current indebtedness of which did not exceed three months.

Cabinet of Ministers Instruction No. 520-р of 13.05.2009 “Certain Issues of Uninterruptible Power Supply, Gas, Water and Heat Supply of Military Units of Armed Forces” in fact granted the military the right to not pay in full for the electricity they consume. It means the Government was deliberately decreased the level of settlements.

The declared high level of settlements of household customers – 97.7 % – to the extent it is correct, results essentially from under-pricing of electricity. There is significant cross-subsidisation, accepted by the regulator, and other customers pay for the low price of electricity charged from households.

20

The NERC does is unable to enforce full reimbursement of losses suffered by energy companies because of cross-subsidisation and other less-than-full-cost consumption. This affects the further settlements across the whole energy system vertically and, in particular, concerns fuel consumed by the generating companies, as the fuel suppliers are unable to fully cover the cost of electricity purchased from the Wholesale Energy Market.

The volume of uncovered losses caused by supply of electricity to household customers was 461 million Hryvnia at the end of 2009.

3.2. Average cash collections at or above 96 % and 90 % in the electricity and gas sectors, respectively, in 2009 and 2010.

Indicator has been reached. It is stated that since NERC reporting does not separate payments for current consumption from arrears, the numbers are somewhat unreliable. At the same time, the percentages given vary depending on customer class, ranging from 92.33 % (gas, households) to 100.4 % (electricity, agriculture). The problem area is district heating. Generally, the situation seems to be acceptable.

4. Achieve concrete progress on the preparation of the integration of Ukraine into the EU energy market:

4.1. Submit for the consideration of the Verkhovna Rada of Ukraine of the draft Law 'On Principles for the Functioning of the Natural Gas Market', aligned with relevant EU legislation.

Indicator reached in part. It is stated that a draft law to amend the Gas Law has been in the making since the spring of 2009 and that the European Commission has reviewed by the draft in the summer of 2009. The Commission has stated that there had been "considerable progress," but sufficient compatibility with Directive 2003/55/EU could still not be confirmed. Comments were provided. The draft was submitted by the Cabinet of Ministers to the VR on 22.10.2009.

4.2. Implement the new 'On Principles for the Functioning of the Natural Gas Market'.*

Indicator has not been reached . Since the law is not in force, it cannot be implemented. Further, it is indicated that the NERC will start drafting the necessary amendments in three months after the law has been adopted. The only exception to this is a piece of secondary legislation identified as "Procedure For Accessing Unified Gas Transmission System of Ukraine," which should be

21

completed in December 2010.

4.3. Elaborate a comprehensive Action Plan to integrate the united power system of Ukraine into the electricity trans-European networks, drawing on the results of the TACIS project "Support to Ukraine's Progressive Integration into the Electricity Trans-European Networks" and the requirements of the UCTE (Union for the Co-ordination of the Transmission of Electricity). Adoption by the Government and implementation of the approved Action Plan.

Indicator reached in part. The EU-funded CESI study was completed in March 2008. It is stated in the Progress Report that since early 2009. a plan for organisational and technical actions by Ukrenergo – adopted by the Ministry of Fuel and Energy – has been implemented to make it possible for Ukraine to join the UCTE. Also a “Programme of Organisational and Technical Actions to Prepare and Upgrade the UPS of Ukraine Generating Equipment to Meet the UCTE Requirements with Regard to Primary and Secondary Regulation,” adopted in 2008, was elaborated.

However, in August 2009 it was established that due to unsatisfactory progress in the implementation of the above-mentioned action plan and the programme, a new priority programme should be drafted. This was done, and the document was adopted in October 2009. This document has not so far been made available.

5. Adopt and ensure further implementation of a modernisation plan for the oil and gas transit network (trunk pipelines):***

5.1. Adopt and implement a development plan for the safety and security monitoring system for the hydrocarbon transit networks.

Indicator reached in part. The progress report discusses various leakage determination systems operated or planned by JSC Ukrtransnafta. No comprehensive development plan of a safety and security monitoring system – assuming that this would be a national document developed by the responsible government authorities – is mentioned. However, there are several sector related EU-financed projects under way.

5.2. Provide for the conduct or the proper finalisation of the technical and financial audits of the oil and gas transit network infrastructure.

Indicator reached in part . The Progress Report states that an audit of the financial reporting of NJSC Naftogaz of Ukraine for 2008 was published on 29.08.2009. However, in-depth internationally recognized financial audits are missing.

Nothing is mentioned about the gas transit system. Regarding technical audit of

22

the gas transit network, the work of an EU-funded project “Reforming of Operational System for Operation of Transit Gas Transport Network of Ukraine” in 2002 – 2006 is referred to (GTS-3). The authors of the text state that in their opinion Ukraine's gas transit network is in satisfactory technical condition. There is no statement about technical audit of the oil transit system.

5.3. Present for commissioning by the State Commission the gas metrology line in the Regional Metrology Centre of Boyarka. Accreditation and international legalisation of the laboratories and testing stands of the gas metrology line.

Indicator been reached in part. The Progress Report discusses various stages of progress and events – including delays and reasons for delays – concerning the Metrology Centre in Boyarka, but nothing is stated about commissioning of the gas metrology line.

EU-financed accreditation project is under way.

The inauguration of the Boyarka Metrology Centre took place in December 2006, but there is still no gas “tie-in”.

5.4. Further the construction project of the oil and oil products metrology line in the Regional Metrology Centre in Boyarka, and the establishment of a Regional Hydrocarbons Metrology Training Centre.

Indicator has been reached in part . It is stated that an EU-funded project called “Feasibility Study for the Expansion of Services of Gas Metrology Centre in Boyarka to the Sphere of Oil, Oil Products and Condensed Gas Metrology, Satellite Monitoring to Optimisation and Supervision of Transit Hydrocarbon Flows and Assurance of Training Infrastructure”, implemented by a consortium headed by the Dutch firm Tebodin, was registered 17.12.2009, and the activities of the project have started. However, e.g. land plot related problems exist.

5.5. Define additional sources and supply routes of oil and gas to Ukraine, including the potential for LPG and LNG, and define the additional requirements for tt1e oil and gas transit system.

Indicator has been reached in part . The Progress Report discusses various projects and plans to diversify the supply of hydrocarbons to Ukraine in detail. This include e.g. following pipeline studies:

• Odessa-Brody-Plock (crude oil)

• SARMATIA tender open until end of April 2010 on the EIA of the Polish section of the Odessa-Brody-Plock-Gdansk pipeline extension

• White Stream (natural gas)

• Ukrainian GTS-3 (natural gas)

23

• CIS oil and gas pipeline norms standardization & harmonization

• 23 March 2009 Brussels Ukrainian GTS Declaration on arranging financing for the rehabilitation of GTS (natural gas)

• Technical Coordination Unit (TCU) between Ukraine, EU and the IFIs is going to organize an EIA related tender on Ukrainian GTS later in 2010 under the supervision of the EBRD.

While it remains unclear to what extent such plans are realistic and feasible, the activities required have been partially undertaken.

6. Finalise with the international financial instituti ons the financing agreements for priority

infrastructure projects, taking into account the li st of projects defined in the Aide-Memoire of 22 October 2006 between the European Commission and the Ministry of Fuel and Energy (Annex A).

Indicator reached in part. The Progress Report discusses various financing ventures of priority infrastructure projects concerning oil and gas transport, power supply and energy efficiency.

The List of Projects with NJSC Naftogaz of Ukraine, SC Ukrtransgas and JSC Ukrtransnafta, SE NEC Ukrenergo, JSC Krymenergo, JSC Ukrhidroenergo and JSC Donbass-energo originates from October 2006.

Out of the 17 projects, the Pivdenny oil terminal expansion and some electricity transmission related projects have made some progress in the form of feasibility studies and provisional arranging for financing

Most of the projects have not reached a concrete investment stage.

Some IFI loan packages (e.g. EBRD – JSC Ukrtransnafta expired due to inadequate Due Diligence and/or loan pre-conditions having not been met.

7. Draft the primary and secondary legislation necessary to achieve harmonisation with the EU Oil Directives, including the establishment of the institutional arrangements for the management of strategic oil stocks. Enforce the adopted legislation.

Indicator reached in part. The Progress Report states that the Ministry of Fuel and Energy has drafted the text of an Instruction of the Cabinet of Ministers “On Approval of Concept for Creation and Functioning in Ukraine of Oil and Oil Products Minimal Reserves System for the Period until 2020,” which should harmonise Ukrainian legislation with EU oil stocks directives (Directives 68/414/EU and 98/93/EU) and that the Instruction was adopted on 08.12.2009. It remains unclear whether the Instruction sufficiently harmonises Ukrainian legislation with that of the EU requires.

Reportedly, the Instruction has not been implemented.

24

8. Design and begin construction of a pilot international gas metering station at one of the entry points into the gas transit system of Ukraine .

Indicator has not been reached . The Progress Report provides a number of reasons for not moving forward with regard to the pilot gas metering station. While the metering station may, in the end, not be necessary or even useful, it is at this stage clear that the indicator has not been met. The reasons include e.g.

• The original pilot project was supposed to include Development and Design of a Cross-Border Gas Metering Station (GMS) on the Soyuz and Orenburg-Novopskov Gas Pipelines in Luhansk Region on 24.11.2006

• Gazprom (RU) has made a note that according to the existing contract, the settlement for the natural gas delivered to Ukraine will be made exclusively on the reading of the existing GMS on the Russian territory

• Financing of the investment is open

• No consent obtained so far from European customers to buy gas on the Eastern border of Ukraine

9. Energy intensity of the economy In 2010 is reduced by at least 10 % compared to 2005.****

Indicator has been reached. The Progress Report provides calculations to prove that the energy intensity of Ukraine's national economy is decreasing and will be ca. 20 % less in 2010, compared to 2005. Assuming that the data and calculations are correct, this would represent significant progress. Of course, the main reason for the decrease in energy consumption in Ukraine is general decrease in economic activity, caused by the world-wide economic crisis.

10. Improvement of energy efficiency of the gas trunk pipelines through their modernisation.

Indicator has been reached. The Progress Report states that during the past five years JSC Ukrtransgas has installed 14 Ukrainian-made gas turbine engines, with an average efficiency of 33 %. These investments improve the energy efficiency of the gas trunk pipelines. Whether this amounts to sufficient investment and how much room there would be for still more investment remains to be seen.

* Following adoption of the law by the VR. ** In accordance with the Resolution of the Cabinet of Ministers of Ukraine No 408 of 13.06.2007 *** In accordance with the provision of the EU-Ukraine Memorandum of Understanding on co-operation in the field of energy signed on 01.12.2005 **** In accordance with the provision of the Energy Strategy of Ukraine until 2030

25

Table 5: Concrete ESBS Project Task Requests as R eceived from the Ministry of Fuel and Energy and NJSC Naftogaz of Ukraine by 23 June 2010, the Corresponding Technical Proposal (TP) Component as well as the Financing Agreement (FA) Performance Indicator Numb ers and the Estimated ESBS Project Team Capability (or, Availab ility) on a Scale from 1 (Low) to 3 (High)

Dated Task Request to the ESBP Project Team

TP Component + FA Performance Indicator Number and Estimated

ESBS Capability/Availability

From the Ministry of Fuel and Energy of Ukraine: #

1. Familiarization with experience on and implementation of Nitroxen Oxides (NOx) and Sulphuric Oxides (SOx) removal from power plant flue gases and development of pilot projects for Ukrainian coal under Directive 2001/80/EU (17.05.2010);

• Component: • Indicator: • Capability:

2.2 n.a.

1

2. Familiarization with experience related to development of shale and other alternative (“unconventional”) gases (17.05.2010);


2.2 5.5

2

3. Familiarization with experience related to electric energy balancing market (17.05.2010);


2.2 4.3

2

4. Assessment of modern technologies related to burning anthracite in power plants (17.05.2010);


2.2 n.a.

1

5. Familiarization with experience related to burning bituminous coal with dry ash disposal (17.05.2010);


2.2 n.a.

1

6. Experimental pilot work for burning low-grade coal and coal enrichment waste on fluidized bed boiler unit of power unit #4 with capacity of 210 MW of Starobesheva power plant to select optimal technologies (TSKSH) (17.05.2010);


2.2 n.a.

1

7. English technical study (17.05.2010); • Component: • Indicator: • Capability:

1 n.a.

3

8. Review of the sectoral programmes within “the Energy Strategy of Ukraine until the Period of 2030” in terms of its compliance with the EU requirements – with an implementation schedule and concrete ideas of economic incentives for its fulfillment (18.05.2010);


2.2 n.a.

3

9. Development and application of globally accepted methodologies in the further development of the Energy Strategy 2030 (18.05.2010) and


2.2 n.a.

3

10. Further development of the Single Buyer market concept and balancing of the electricity market in line with the EU practices. Study tours to EU area are requested to further support the implementation of this task (18.05.2010);

• Components: • Indicator: • Capability:

2.2/2.5 4.3

3

26

From NJSC Naftogaz of Ukraine:

1. Consulting support to preparation of the Terms of Reference for development of the feasibility study related to the implementation of “Supply of LNG into Ukraine and Construction of Regasification Terminal” (Performance Indicator Item 5.5) (08.06.2010);


2.2 5.5

3

2. Analytical and Expert Evaluation of Completion and Expansion of Metrological Centre in Boyarka in terms of Natural Gas Metrology and Commissioning (Performance Indicator Item 5) (08.06.2010)


2.2 5.3

2

3. Special Assistance for Modernization of Gas Transport System of Ukraine (Performance Indicator Item 5) (08.06.2010)

• Component: • Indicators: • Capability:

3.1 5.2/5.5/6.0

3 4. Analysis and Experience for Implementation of EU Directive

2003/55/EU in European Countries and Provision of Proposals for Practical Implementation of this Directive with regard to NJSC “Naftogaz of Ukraine” (Performance Indicator Item 2.4) (08.06.2010).

• Component • Indicators: • Capability:

2.4 2.4/4.

2 3

5. Proposals to Component 1 “Training/Study Visits” and workshops-trainings (08.06.2010)


1 n.a.

3

27

Table 6: A: List of Priority Investments (from 20 06) as Attached to the September 2008 Financing Agreement (FA), the Size of the Proj ect (in Terms of the External Borrowing Requirement) and the Project Sta tus as at June 2010 and B: Other Investment Elements on the FA Performance Indicator List

Investment Project Title

2006 Est. Borrowing

Requirement, UAH mio,

Status of the

Project in June 2010

A. Financing Agreement Performance Indicator #6 Pri ority List of Investments (Total Weight: 5%)

NJSC Naftogaz of Ukraine: 1. Construction of the 3rd Phase of the Oil and Gas

Metrology Centre in Boyarka 539,120 • In study phase

SC Ukrtransgas: 2. Construction of incoming control gas measuring units 398,000 • Suspended 3. Gas pipeline Soyuz: Improvement of compressor

stations energy efficiency of the gas transport system of Ukraine

927,500 • In study phase

4. Gas pipeline Urengoy – Pomary – Uzhgorod: Improvement of compressor stations energy efficiency of the gas transport system of Ukraine


5. Comprehensive reconstruction of UGSF Ugerske (XIV-XV)


Total 3 036,420 JSC Ukrtransnafta:

6. Oil metering stations 102,010 • In study phase 7. Modernization of crude oil pipeline Brody – State Border 456,520 • In study phase 8. Microprocessor based automated control systems

(AMSIP) 92,920 • In study phase

9. Modernization of communication network (fiber optics) 59,085 • In study phase 10. Development and implementation of enterprise

resources management system (ERP) 34,087 • In study phase

11. Construction of a floating roof oil tank at the Pivdenny oil terminal (120 000 m³)

• Some investments have been made

Total 865,822 SE NEC Ukrenergo:

12. Construction of 750 kV transmission line Rivne NPP – Kyivska substation

1 715,700 • In progress

13. Construction of 330 kV transmission line Novoodeska – Artsyz

438,200 • In progress

Total 2 153,900 JSC Krymenergo:

14. Rehabilitation of power supply network Krymenergo 900,000 • In study phase JSC Ukrhydroenergo:

15. Construction of Kanivska pumped-storage hydropower plant

1 700,000 • In study phase

JSC Donbassenergo: 16. Slovyanska thermal power plant: Reconstruction of the

1st stage and construction of two-boiler single-turbine unit 125 MW with boilers TSKSH


17. Starobeshevska thermal power plant: Technical re-equipping of #7 power generating unit


28

Investment Project Title

2006 Est. Borrowing

Requirement, UAH mio,

Status of the

Project in June 2010

Total 594,000 B. Other Financing Agreement Investment Related Per formance Indicators (Total

Weight: 29%) 18. Oil and gas trunk pipelines modernization projects (10%)

a. Safety and security monitoring systems (2%) • In progress b. Technical & financial audits of oil & gas transit lines

(2%) • Studies

produced c. Boyarka Gas Metrology station commissioning (2%) • In progress d. Boyarka Metrology station expansion to cover oil

(2%) • In study phase

e. Oil, gas, LNG, LPG supply routes & transit systems (2%)

• In study phase

19. Design and construction of a gas metering station at one of the entry points into the Ukrainian GTS (12%) = Indicator #8

• Suspended & will be excluded from the Indicators list

20. Improvement of energy efficiency of the gas compressor stations on GTS through modernization (7%)

• Some investments have been made

C. Summary • Some power generation and transmission related investments are making progress;

• Several projects awaiting EBRD or World Bank loan approvals later this year or early in 2011;

• Oil and gas transit related investments delayed/suspended; • However, the new NJSC Naftogaz Gas Purchase, Infrastructure Development and

Sector Reform loan project (which has passed concept review) will go to the EBRD Board on 14 September 2010;

• Some IFI loan agreements cancelled due to the fact that the client has not met loan conditions;

• Better documentation and appropriate Due Diligence expected with EU Technical Assistance now;

• Sovereign loan guarantees are expected from Ukraine; • Renewable Energy and Energy Efficiency related investments missing, but are anyhow

being studied; • Covered more widely under the NAER Financing Agreement;

• If/when Performance Indicator #8 (with a weight of 12%) will be excluded from the Performance Indicators List, a decision will be needed either to find a corresponding investment project or to re-allocate the remaining weights among other Indicators.

29

Table 7: List of Persons Met during the Inception P eriod of 09.03. - 06.07.2010

Name Date Organization 1. Esa Nieminen, Team Leader

(2006) 14.03.2010 EU-financed Gas Transit System (GTS-3)

project 2. Nataliya Kostichena, Director 16.03.2010 Ukrenergoconsulting 3. Olga Simak, Sector Manager 16.03.2010 European Union Delegation to Ukraine 4. Sergey Titenko, Chairman 25.03.2010 National Electricity Regulatory Commission

(NERC) 5. Olga Osadcha, Head of Price

Dept. 25.03.2010 National Electricity Regulatory Commission

(NERC) 6. Valeriy Tsaplin, Head of

Planning Dept. 25.03.2010 National Electricity Regulatory Commission

(NERC) 7. Vladislav Popovich, Head of IT

Dept. 25.03.2010 National Electricity Regulatory Commission

(NERC) 8. Vladimir Semenets, Head of Oil

& Gas 25.03.2010 National Electricity Regulatory Commission

(NERC) 9. Victoriya Morozoa, Head of

Legal Dept. 25.03.2010 National Electricity Regulatory Commission

(NERC) 10. Olena Tarantseova, Expert,

Plan. Dept. 25.03.2010 National Electricity Regulatory Commission

(NERC) 11. Andriy Shulga, Deputy Director 25.03.2010 Ministry of Fuel and Energy, International

Department 12. Elena Tanchuk, Leading

Specialist 25.03.2010 Ministry of Fuel and Energy, Intl Department +

JMG 13. Lemlem Said Issa, Twinning

Advisor 30.03.2010 EU - ENPI Project on Gas Regulation in NERC

14. Marek Grecki, Area Manager, CEE

31.03.2010 General Electric (GE) Oil & Gas/New Units Div., Warsaw

15. Shami Puri, Advisor on Coal Environ.

06.04.2010 EU Coal Sector Policy Support Programme

16. Olga Simak, Sector Manager 07.04.2010 European Union Delegation to Ukraine 17. Viktoriya Kolosova, Director 14.04.2010 Ministry of Finance, Directorate for IFI

Cooperation 18. Svetlana Suprun, Deputy

Director 14.04.2010 Ministry of Finance, Directorate for IFI

Cooperation 19. Alexei Kosharnyi, Director 14.04.2010 Ministry of Finance, Technical Assistance

Directorate 20. Galina Komnatskaya, Expert 14.04.2010 Ministry of Finance, Gov. Finance Support

Division 21. Oleksey Rozhkov, Deputy Head 15.04.2010 Ministry of Economy, EU Co-operation

Department 22. Maya Koshman, Head of Unit 15.04.2010 Ministry of Economy, Neighbourhood Policy

Department 23. Vladimir Kharlamov, Energy

Specialist 15.04.2010 Ministry of Economy

24. Elena Tepliuk, Budget Specialist

15.04.2010 Ministry of Economy

25. Wojtek Mlodziejewski, Team Leader


26. Iryna Chernysh, Deputy Team Leader


27. Rolf Petry, Advisor 19.04.2010 EU Coal Sector Policy Support Programme 28. Victoria Siryachenko, Country

Officer 19.04.2010 The World Bank (IBRD)

30

Name Date Organization 29. Dmytro Glazkov, Energy Oper.

Officer 19.04.2010 The World Bank, Sustainable Development

Department 30. Oleksandr Tron, Head of

Department 19.04.2010 NAER, Economic Policy Department

31. Pavel Iakovlev, Senior Specialist

20.04.2010 NAER, International Legal Support Division

32. Mariya Malaya, Head of Department

20.04.2010 NAER, Legal Ensuring Department

33. Sergii Gorbachov, Project Manager

20.04.2010 KfW Bankengruppe

34. Vaclav Bartuska, Ambassador 27.04.2010 Ministry for Foreign Affairs of the Czech Republic., Prague

35. Jean-Marie Devos, Secretary General

27.04.2010 EUROGAS, Brussels

36. Viacheslav Kniaznytskyi, Ambassador

27.04.2010 Ministry for Foreign Affairs of Ukraine

37. Andrey Konoplyanik, Doctor 27.04.2010 Adv. to the Board of OJSC Gazprombank, Moscow

38. Tore Emanuelsson, Head of Rep.

27.04.2010 Rep. office of the European Investment Bank (EIB)

39. Oleksandr Sushko, Research Director

27.04.2010 Institute for Euro-Atlantic Cooperation

40. Monica Bland, Economic Officer 27.04.2010 Emb. of the United States of America to Ukraine 41. Volodmyr Makukha, Deputy

Minister 30.04.2010 Ministry of Fuel and Energy

42. Olga Grachova, Director 30.04.2010 Ministry of Fuel and Energy, Finance & Econ, Department

43. Andrey Velitchenko, Head of Unit

30.04.2010 Ministry of Fuel and Energy, Inform.-Analytical. Dept.

44. Lyudmila Rybachek, Specialist 30.04.2010 Ministry of Fuel and Energy, Finance & Ec. Department

45. Svetlana Pavlenko, Specialist 30.04.2010 Ministry of Fuel and Energy, Legal Department 46. Grigoriy Plachkov, Head of Unit 30.04.2010 Ministry of Fuel and Energy, Strategic Policy

Department 47. Elena Tanchuk, Leading

Specialist 30.04.2010 Ministry of Fuel and Energy, Intl. Department +

JMG 48. Aleksei Novitsky, Member of

the Board 04.05.2010 Gasum Ltd (Fortum/Gazprom/E.On

Ruhrgas/Finnish gov.) 49. Tom Pippingsköld, Finance &

Ec. Dir. 05.05.2010 Fingrid plc (Finnish TSO), Helsinki

50. Heikki Reponen, Head of CEE Unit

06.05.2010 STUK Finnish Radiation & Nuclear Safety Authority

51. Oksana Maschenko, Head of Division

14.05.2010 NJSC Naftogaz of Ukraine, International Department

52. Olga Snizhko, Deputy Head of Division

14.05.2010 NJSC Naftogaz of Ukraine, International Department

53. Hans Rhein, Head of Oper. Section 3

17.05.2010 European Union Delegation to Ukraine

54. Olga Simak, Sector Manager 17.05.2010 European Union Delegation to Ukraine 55. Andriy Bandura, Sector

Manager 17.05.2010 European Union Delegation to Ukraine

56. Oleksandr Klitko, Sector Manager

17.05.2010 European Union Delegation to Ukraine

57. Boris Stogniy, Head of Department

20.05.2010 Energy Sector of the Presidium of NASU

31

Name Date Organization 58. Valeiry Zvarych, Scientific

Secretary 20.05.2010 Energy Sector of the Presidium of NASU

59. Igor Karp, Academician 20.05.2010 National Academy of Sciences of Ukraine (NASU)

60. Mykhaylo Kulyk, Academician / Director

20.05.2010 NASU / The Institute of General Energy

61. Sergey Bevz, Advisor 21.05.2010 Advisor to the Chairman of OJSC Ukrhydroenergo

62. Alona Ponomareva, Princip. Inv. Officer

21.05.2010 International Finance Corporation (IFC)

63. Oleksandr Todiichuk, Director 28.05.2010 International I. Lundin Energy Center 64. Niall Cullens, First Secretary 28.05.2010 British Embassy 65. Svitlana Yavorska, Head of

Projects S. 28.05.2010 British Embassy

66. Mykhailo Gonchar, Director 28.05.2010 NOMOS Institute, Kyiv Office 67. Anders Åslund, Senior Fellow 31.05.2010 Peterson Inst. for Intl. Economics, Washington,

D.C. 68. Johnny Åkerholm, President

and CEO 31.05.2010 Nordic Investment Bank (NIB), Helsinki

69. Dirk Buschle, Legal Counsel 01.06.2010 Energy Community Secretariat (ECS), Vienna 70. Mykhaylo Kulyk, Director /

Academician 02.06.2010 The Institute of General Energy / NASU

71. Sergey Dubovskyi, Power S. Specialist

02.06.2010 The Institute of General Energy / NASU

72. Olga Snizhko, Deputy Head of Division

02.06.2010 NJSC Naftogaz of Ukraine

73. Vitaliy Pogoriliy, Director 02.06.2010 NJSC Naftogaz of Ukraine / Boyarka Metrology Center

74. Pekka Salminen, Project Manager

02.06.2010 World Bank, Ukraine Hydropower & transm, Wash. DC

75. Gary Stuggins, Team Leader 08.06.2010 World Bank, Ukraine Energy Program, Washington DC

76. Franz Gerner, Project Manager 08.06.2010 World Bank, Ukraine GTS Modernisation, Washington

77. Dmytro Glazkov, Energy Oper. Officer

08.06.2010 World Bank, Sustainable Development Dept. , Kyiv

78. Pekka Salminen, Project Manager

08.06.2010 World Bank, Ukraine Hydropower & transm, Wash. DC

79. Joanna Hofman, Ambassador 16.06.2010 Embassy of Poland to Finland, Helsinki 80. Mauri Valtonen, Senior Energy

Adviser 16.06.2010 Ministry of Empl. and the Economy, Gas

Coordination G. 81. Paavo Lipponen, Ex-Prime

Minister 16.06.2010 Environmental Advisor to Nord Stream AG,

Helsinki 82. Matthias Warnig, Managing

Director 16.06.2010 Nord Stream AG, Zug

83. Sebastian Sass, Head of EU Rep.

16.06.2010 Nord Stream AG, Brussels

84. Tom Tonnessen, Site Manager 16.06.2010 EUPEC Pipecoating Finland Oy / Nord Stream, Kotka

85. Jatta Pekkanen, Deputy Site Manager

16.06.2010 EUPEC Pipecoating Finland Oy / Nord Stream, Kotka

86. Antero Jännes, Managing Director

16.06.2010 Gasum Ltd (Fortum/Gazprom/E.On Ruhrgas/Finnish gov.)

87. Risto Virtanen, Deputy Mayor of Kotka

16.06.2010 City of Kotka, Business Development / Port Authority

32

Name Date Organization 88. Valeriy I. Tsaplin, Head of

Planning 18.06.2010 National Electricity Regulatory Commission of

Ukraine 89. Mykhailo Borisov, Head of

Department 18.06.2010 Ministry of Fuel and Energy of Ukraine, Str.

Planning 90. Jean-Arnold Vinois, Head of

Unit 24.06.2010 EU Commission/ DG ENER, E. Policy & Security

of Supply 91. Marcel Kramer, Chairman of the

Board 24.06.2010 South Stream Project, Zug (from 1 October

2010) 92. Karolina Cegir, Gas Expert 24.06.2010 Energy Community Secretariat, Vienna 93. Jean.Marie Devos, Secretary

General 24.06.2010 EUROGAS, Brussels

94. Jan Klein Wolterink, Director Oil & Gas

24.06.2010 TEBODIN Consultants & Engineers, The Hague

95. Sergey Martinov, Business Analyst

24.06.2010 OMV Gas & Power GmbH, Vienna

96. David Balmert, Consultant 24.06.2010 KEMA Consulting GmbH, Bonn 97. C Platzer-Zirulia, Assistant to

the Board 24.06.2010 TAG Trans Austria Gasleitung GmbH, Vienna

98. Per Jorgensen, Director 24.06.2010 RAMBOLL Oil & Gas, Virum 99. Benjamin Schlesinger,

President 24.06.2010 Galway Group LP Energy Advisors, Bethesda,

Maryland 100. Peter Boychev, Head of Department

24.06.2010 NAFTA a.s., Bratislava

101.Jacques Rottenberg, Manager 24.06.2010 Elengy, Paris 102. Philippe Garnier, Strategy Officer

24.06.2010 GRTgaz, Paris

103.Veronique Charlot, Marketing 24.06.2010 Societe du Terminal Methanier de Fos Cavaou, Levallois-P.

104. Antero Jännes, Managing Director

24.06.2010 Gasum Ltd (Fortum/Gazprom/E.On Ruhrgas/Finnish gov.)

105. Bogdan Klyuk, Deputy Director, R&D

30.06.2010 NJSC Ukrtransgas

106. Esa Nieminen, Team Leader 06.07.2010 Harmonisation of Oil and Gas Transit Inogate Project

108. Anna Minakova, Team Leader 06.07.2010 Safety & Security of Gas Transit Inogate Project, SWECO

109. Volodomyr Rudenko, Head of Dept.

07.07.2010 Ministry of Fuel and Energy, Strategy & Forecasting Dept.

33

Table 8: Review List of Major ESBS Project Compone nt 2 and 3 Related Documents

Title of the Document Date Author/Publisher/Issuer

Relevance to ESBS project

on a Scale from 1 to

3 Component 2: General Energy

Strategy, Policy, Methodology and Macroeconomic Development

Related Documents

1. Energy Strategy of Ukraine for the Period until 2030

2006 Ministry of Fuel and Energy of Ukraine, Kyiv

3

2. Ukraine: Energy Policy Review 2006 2006 International Energy Agency (IEA), Paris

3

3. Lights out? Outlook for Energy in Eastern Europe and the Former Soviet Union

2010 The World Bank, Washington, D.C.

3

4. Energetika Ukrainy 2005 – 2008 2009 Ministry of Fuel and Energy of Ukraine, Kyiv

2

5. Priority Investments in Ukraine’s Fuel and Energy Complex

2009 Ministry of Fuel and Energy of Ukraine, Kyiv

3

6. Energy Strategy of Ukraine for the Period up to 2030: Problems of Content and Implementation; Zerkalo Nedeli No 20

27.05.-02.06.2006

Sergey Yermilov, Director of Institute for Ecology and Energy Saving Problems

3

7. Analysis of Main Provisions of “Energy Strategy of Ukraine for the Period till 2030”

2006 G. Geletukha, T. Geleznaya, National Academy of Sciences of Ukraine (NASU)

3

8. Joint EU – Ukraine Memorandum of Understanding on Energy Co-operation in 2006

01.12.2005 Ministry of Fuel and Energy of Ukraine and the EC Commission

3

9. Joint EU - Ukraine Report on Implementation of the EU - Ukraine Memorandum of Understanding on Energy Co-operation in 2007


3

10. Third Joint EU - Ukraine Report on Implementation of the EU - Ukraine Memorandum of Understanding on Energy Co-operation in 2008


3

11. Fourth Joint EU - Ukraine Report on Implementation of the EU - Ukraine Memorandum of Understanding on Energy Co-operation in 2009


3

12. On the market development of energy resources within the framework of Ukraine’s Energy Strategy until 2030 (Presidential Decree N 681/2009)

05.06.2009/ 27.08.2009

National Security and Defense Council of Ukraine

3

34




3 13. The Energy Community Treaty:

Integrating Energy Markets across Europe; ECT Informational document for the Ministry of Fuel and Energy of Ukraine

Undated Energy Community Secretariat

2

14. Regulatory and Legal Capacity Strengthening of Energy Regulation in NERC; Final Report of Twinning Projects

20.04.2009 Italian Regulatory Authority for Electricity and Gas (AEEG), E-Control, ERU, Studiare Sviluppo

3

15. Regulatory and Legal Capacity Strengthening of Natural Gas Regulation in NERC, EU Tacis Project Fiche

Undated 3

16. Ukraine: Second Review Under the Stand-By Arrangement and Request for Modification of Performance Criteria - Staff Report; Press Release on the Executive Board Discussion

Sept. 2009 IMF Country Report No. 09/270, Washington, D.C.

2

17. Terms and conditions concerning The Accession of Ukraine to the Energy Community Treaty

07.10.2009 DG TREN and Ministry of Fuel and Energy of Ukraine

3

18. Ukraine - Stand-By Arrangement - Review Under the Emergency Financing Mechanism

Jan. 2009 IMF Country Report No. 09/17, Washington, D.C.

2

19. Low carbon energy strategy in the French research policy, Presentation in Stockholm

23.10.2009 Herve Bernard, Deputy CEO, CEA, France

2

20. Energy Policy of Poland until 2030 10.11.2009 Ministry of Economy of Poland, A document adopted by the Council of Ministers of Poland

2

21. Energy Policy of Poland until 2030: Assessment of Implementation of Energy Policy since 2005 Onwards (App. 1)

10.11.2009 Ministry of Economy of Poland

2

22. Energy Policy of Poland until 2030: Projection of Demand for Fuels and Energy Until 2030 (Appendix 2)


2

23. Energy Policy of Poland until 2030: Action Plan for the Years 2009 – 2012 (App. 3)


2

24. Energy Policy of Poland until 2030: Conclusions from the Strategic Environmental Impact Assessment of Energy Policy (Appendix 4)


2

35




3 25. Doing business and investing in

Ukraine Feb. 2010 PriceWaterhouseCoopers,

Kyiv 2

26. Doing Business 2010: Ukraine 2009 Intl Finance Corporation (IFC) 2

27. Independent International Experts Commission: Proposals for Ukraine: 2010 – Time for Reforms

2010 ICPS, Co-chairmen: Anders Åslund and Oleksandr Paskhaver

2

28. Ukraine 2009: Report on Transformation, 4th Europe – Ukraine Forum, Kyiv, Sponsored by Eastern Institute and United World International Fund

26 – 28 April 2010

Oleksandr Sushko 2

29. Energy Strategy of Russia for the Period up to 2030, Approved by Decree No 1715-r of the Government of the Russian Federation on 13 November 2009

2010 Institute of Energy, Moscow 3

30. Energy Security Strategy of the Slovak Republic, Adopted by Resolution No 732 of 15 October 2008 by the Government of the Slovak Republic

15.10.2008 Ministry of Economy of the Slovak Republic and the Government of the Slovak Republic

3

31. The UK Low Carbon Transition Plan to 2020 – National Strategy for climate and energy, as presented to Parliament and amended on 20 July 2009

15.07.2009 HM Government, London 3

32. The East European Financial Crisis, CASE Network Studies & Analyses No 395/2009

2009 Anders Åslund 2

33. Strategy for Ukraine, As approved by the Board of Directors

18.09,2007 The European Bank for Reconstruction and Development (EBRD), London

2

34. Vademecum on Financing in the Frame of the Eastern Partnership

16.12.2008 European Commission, Directorate European Neighbourhood Policy

2

35. Convergence Table: Directive 2003/54/EC – Law of Ukraine “On Electric Energy Industry”

20.03.2008 NERC Electricity Twinning Project

3

36. Convergence Table: Directive 2003/55/EC – Ukrainian Gas Sector Legislation

2010 NERC Gas Twinning Project 3

37. The Energy Community Treaty, Presentation at the 1st European – Ukrainian Energy Day conference, Kyiv

31.05.2010 Dirk Buschle, Legal Counsel, EC Secretariat, Vienna

1

36




3 38. Action Fiche Ukraine: Support to the

Implementation of Ukraine’s Energy Strategy ENPI/2007/18788

07.10.2009 DG TREN and Ministry of Fuel and Energy of Ukraine

3

39. International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC) Country Partnership Strategy for Ukraine for the Period of FY08 – FY11

08.11.2007 The World Bank and the IFC, Washington, D.C.

3

40. Energy Strategy Approach Paper: Sustainable Development Network

Oct. 2009 The World Bank Group, Washington, D.C.

3

41. Sustainable Energy for Equitable Development: Contribution to the World Bank Group’s Energy Strategy Review and Development

Apr. 2010 The World Bank Group; Bank Information Centre

3

42. Russia’s Agenda on Ukraine, in “Inside Ukraine”, #8, May 2010

01.06.2010 ICPS, Kyiv 3

43. Energy Strategy of Ukraine or Dependence Mothballing, Ukrainian Magazine - 10/2008

10/2008 Vitaliy Kulyk, Director of the Centre for Civil Society Studies, Kyiv

3

44. Energy Strategy of the EU for the period till 2030

03/2006 G.M. Fedorenko, Hidroenergetika Ukrainy 03/2006

3

Component 2: Energy Generation, Supply & Transmission, Energy

Efficiency and Renewable Energy Related Documents

1. Activities of the Austrian Energy Agency, Presentation at the 1st European - Ukrainian Energy Day conference, Kyiv

01.06.2010

Karin Reiss, Austrian Energy Agency

2

2. Bioenergy in Ukraine: State of the Art and Prospects for Development, Presentation at the 1st European - Ukrainian Energy Day conference, Kyiv

01.06.2010 Dr. Georgiy Geletukha, Institute of Engineering Thermophysics of NAS of Ukraine (NASU) and SEC Biomass Ltd

2

3. Energy Efficiency: A new resource for sustainable growth – Researching energy efficiency practices among Ukrainian companies

2008

International Finance Corporation, Washington, D.C. and Freistaat Sachsen, Staatsministerium für Wirtschaft und Arbeit

2

4. Energy Law Guide Aug, 2009 Arzinger Law Firm, Kyiv 2

5. Ukraine Power Report Q3 2009, Incl. 5-year industry forecasts

Q3 2009

Business Monitor International ;ltd, London

2

6. European, CIS and Mediterranean Interconnection: State of Play 2006, 3rd SYSTINT Report

April 2007 Union of the Electricity Industry, Eurelectric, Brussels

1

37




3 7. Ten-Year Network Development

Plan 2010 – 2020: Non-binding Community-wide Ten-year Network Development Plan – Pilot Project, Draft for Consultation

01.03.2010 European Network of Transmission System Operators for Electricity – ENTSO-E

2

8. Long-term Outlook for Gas Demand and Supply: 2007 – 2030

06.05.2010 EUROGAS, Brussels 3

9. The future of natural gas as the European Union’s energy source – risks and possibilities, Turku School of Economics, Pan-European Institute 9/2010

03.05.2010 Hanna Mäkinen 2

10. EU energy and transport in figures - A Statistical Pocketbook

2010 European Commission / Eurostat

2

11. Russia - Ukraine 2009 Gas Crisis: Comparative view from Kyiv, Bucharest and Chisinau

2010 Oleksandr Sushko, Iulian Chifu and Oazu Nantoi, Institute for Euro-Atlantic Cooperation, Kyiv, with support from BS

2

12. Ukraine - Implementation of the Wholesale Electricity Market (WEM) Concept, Public Meeting of Inter Agency Commission

05.07.2007 KEMA, Norton Rose, TransEnergo, DIW Berlin, Maycroft, ECA for World Bank Loan #4795-0 UA

3

Component 2: ESBS Programme Performance Indicators Related

Documents

1. Boyarka: Mid-term evaluation of the Project on Creation of the Gas Metrological Centre in Boyarka, Ukraine, Final Evaluation Report

15.05.2005 KWI (Leader) – ECB – ESC – Explicit – Petrener – Strategy (EU Framework Contract AMS/451 Lot 4)

3

2. Preparation of the Terms of Reference for the Project “Assistance to Ukraine in setting up the Eastern Europe Regional Centre for Metrology of Gas, Oil and Oil Products in Boyarka”, Final Report

19.08.2008 COWI (EU Framework Contract, Lot 4)

3

3. JSC Ukrtransnafta, PERN “Przyjazn” S.A, & International Pipeline Company Sarmatia LLC: Odesa-Brody-Plock Project: Enhanced Framework Business Plan

05.05.2006

SWECO PIC OY (Leader) – ILF Consulting Engineers – KANTOR Management Consultants S.A. Consortium

3

4. Assistance to Ukraine in Developing a Comprehensive Master Plan on the Rehabilitation of the Gas Transit System: Final Report

19.04.2010 KANTOR Management Consultants S.A. (Leader) - AF Consultant Ltd consortium (EU Framework Contract, Lot 4)

3

38




3 5. Conceptual Proposal to the Ministry

of Fuel and Energy of Ukraine for the methodology of preparation of the monitoring report on progress in the implementation of the Performance Indicators (Conditions) for Disbursement of Variable Tranche under the EU Budget Support

March 2009 Andriy Kolesnyk and Volodomyr Pyzhov

3

6. Note for the File: First technical meeting of the Joint Monitoring Group in the framework of implementation of the ENPI AAP 2007 Support to Implementation of Ukraine’s Energy Strategy

09.09.2009 Hans Rhein, Head of Operations Section 3, EU Delegation, Kyiv

3

7. Note for the File: 2nd technical meeting of the Joint Monitoring Group in the framework of implementation of the ENPI AAP 2007 Support to Implementation of Ukraine’s Energy Strategy

15.02.2010 Hans Rhein, Head of Operations Section 3, EU Delegation, Kyiv

3

8. Euro-Asian Oil Transportation Corridor Project – Presentation at an Energy Conference in Batumi, Georgia

14.01.2010 International Pipeline Company SARMATIA LLC

3

9. The White Stream gas pipeline project: Investing in Europe’s future security of gas supply, Presentation at an Energy Conference in Batumi, Georgia

14.01.2010 Stephen Wilson, Project Manager and Dr Giorgi Vashakmadze, Director, Corporate Development, the White Stream Consortium, London

3

10. Resolution of 19 November 2008 #1008 of the Cabinet of Ministers of Ukraine on Fulfillment of “Support to Ukraine’s Energy Strategy Implementation” Programme Financing Agreement

19.11.2008 Cabinet of Ministers of Ukraine

3

11. Resolution of the Cabinet of Ministers of Ukraine No 992-p on Action Plan for 2010 on Initiating “LNG Supply to Ukraine and Construction of Re-gasification Terminal” Investment Project


3

12. Resolution of the Cabinet of Ministers of Ukraine of 19 May 2010 #1073-r on Adoption of Priorities for Ukraine’s Integration into European Union for 2010


3

39




3 13. Economic Reform Programme for

2010 – 2014, Committee for Economic Reform of the President of Ukraine

02.06.2010 Committee for Economic Reform of the President of Ukraine

3

14. Support Ukraine Progressive Integration to Electricity TENs; Task 1 - Technical Studies: Final Report

Nov. 2008 CESI (Leader) - decon - SWECO - Terna - Tractebel Engineering SUEZ Consortium

3

15. Support Ukraine Progressive Integration to Electricity TENs; Task 1 Report - Annex 3: Least Cost Study


3

16. Support Ukraine Progressive Integration to Electricity TENs; Task 2 Report - Legal and Institutional Studies

March 2008 CESI (Leader) - decon - SWECO - Terna - Tractebel Engineering SUEZ Consortium

3

17. Support Ukraine Progressive Integration to Electricity TENs; Task 2 Report - Legal and Institutional Studies

Dec. 2008 CESI (Leader) - decon - SWECO - Terna - Tractebel Engineering SUEZ Consortium

3

18. Support Ukraine Progressive Integration to Electricity TENs; Task 3 - Environmental Study Final Report


3

19. Support Ukraine Progressive Integration to Electricity TENs; Task 4 - Electricity Exchanges Pricing Study

Nov 2008 CESI (Leader) - decon - SWECO - Terna - Tractebel Engineering SUEZ Consortium

3

20. Support Ukraine Progressive Integration to Electricity TENs; Task 5 – Network Integration Plan, Final Report


3

21. Support Ukraine Progressive Integration to Electricity TENs; Task 6 - Action Plan for Participation in TEN-E; Final Report


3

22. JSC Ukrenergo Action Plan: Information on Integration of Unified Power System of Ukraine into UCTE Synchronous Zone

20.04.2010 JSC Ukrenergo 3

23. NAK Naftogaz Gas Purchase, Infrastructure Development & Sector Reform Loan, PSD

14.09.2010 EBRD Project Summary Document, Pending Final Review, Scheduled Board Date 14.09.2010

3

40




3 Component 2: ESBS Programme,

General Budget Support (BS) + BS Evaluation Related Documents

1. Budget Support: “A Question of mutual trust”, European Commission

2008 Louis Michel, European Commissioner for Development and Humanitarian Aid

2

2. The Sector Approach: Sector Policy Support Programmes in the Energy Sector, ENPI Seminar in Ukraine

29.-30.11.2007

Evangelos Penglis, KANTOR Management Consultants S.A.

3

3. Methodology for Evaluations of Budget Support Operations at Country Level, Assignment for the European Commission

May 2008 DRN (Leader) - ADE - NCG – ECORYS Consortium

3

4. Methodology for Evaluation of Budget Support Operation at Country Level – Methodological Details, Assignment for the European Commission

April 2009 DRN (Leader) - ADE - NCG – ECORYS Consortium

3

5. Methodology for Evaluation of Budget Support Operation at Country Level – Tools for “Step 2” : The Evaluation of the Impact of Government Strategies, Assignment for the European Commission

April 2009 DRN (Leader) - ADE - NCG – ECORYS Consortium

3

6. Methodology for Evaluations of Budget Support – Evaluation of EC Support to Partner Countries in the Area of Energy, Assignment for the European Commission

April 2008 A report by ADE / DRN (Leader) - ADE - NCG – ECORYS Consortium

3

7. The EU Energy Sector Budget Support – First practical experience in Ukraine for use in the future

12.02.2009 Rolf Reicher, Project Expert, DMI Consortium

2

8. Guidelines on the Programming, Design & Management of General Budget Support, Tools and Methods Series, Guidelines No. 1, EuropeAID

June 2007 AIDCO DEV RELEX 3

9. Support to Sector Programmes: Covering the three financing modalities – Sector Budget Support, Pool Funding and EC project procedures, Tools and methods Series, Guidelines 2

June 2007 EuropeAid 3

10. Evaluation of General Budget Support – Evaluation Framework, A Joint Evaluation of General Budget Support

Feb. 2004 Andrew Lawson – David Booth, ODI

3

41




3 11. Evaluation Guide Nov. 2008 DG ELARG, Directorate E –

Evaluation Unit 2

12. European Neighbourhood and Partnership Instrument - Ukraine: National Indicative Programme 2007 - 2010

2007 The European Commission 2

13. European Neighbourhood and Partnership Instrument - Ukraine: Country Strategy Paper 2007 - 2010

2007 The European Commission 2

14. Energy Strategy Budget Support Financing Agreement

19.09.2008 Signed by the European Commission and the Ministry of Fuel and Energy of Ukraine

3

15. Draft Report on Fulfillment of Indicators under “Support to Implementation of Ukraine’s Energy Strategy” Programme Financing Agreement in 2009

2009 Ministry of Fuel and Energy of Ukraine

3

16. Support to the implementation of Ukraine’s Energy Strategy in the area of Energy Efficiency and Renewable Sources of Energy: Budget Support Financing Agreement (ENPI/2008/19595)

19.12.2009 Signed by the European Commission and the Ministry of Economy of Ukraine

3

17. Support to the Strengthening of Ukraine’s decision-making process in the field of energy security, Final Report + Annexes

Nov. 2008 KANTOR Management Consultants S.A. Framework contract assignment - Lot No 4

2

18. Assistance to Ukraine in carrying out the energy policy analysis and in promoting the idea of joining the Energy Community Treaty – Report on “Energy Sector Development and Policy Assessment”

28.04.2009 KANTOR Management Consultants S.A. Framework contract assignment - Lot No 4

3

19. Report on ENPI Monitoring in Ukraine

July 2009 Sacha Tessier-Stall, Victoria Gumenyuk, Olga Shumylo, Svetlana Kaltygina – ICPS, Kyiv

2

20. Implementation of Twinning Operations in Ukraine – Project Completion Report

Feb. 2010 Hulla & Human Dynamics & Co. Consortium

2

21. Making Technical Cooperation More Effective; Tools and Methods Series, Guidelines No 3

March 2009 EuropeAid 3

Component 3: Gas Transit System Modernization (GTS) Related

Documents

42




3 1. Assistance to Ukraine in Developing

a Comprehensive Master Plan on the Rehabilitation of the Gas Transit System: Final Report

19.04.2010 KANTOR Management Consultants S.A. (Leader) - AF Consultant Ltd consortium (EU Framework Contract, Lot 4)

3

2. Reform of the Operation System of Gas Transit in Ukraine (GTS-3); INOGATE website project summary document

2006 SWECO PIC OY (Leader) – Fichtner + Gaffney, Cline & Associates and Ukrgazproekt

3

3. Eternal Energy Crisis? Future of Ukraine as a Gas Transit Country, Presentation at the Yalta European Strategy (YES): 6th Yalta Annual Meeting

25.09.2009 Heikki Lehtimaki, Plan Energy Ltd

2

4. Joint EU - Ukraine International Conference on the Modernisation of Ukraine’s Gas Transit System in Brussels

23.03.2009 Declaration signed by the Government of Ukraine, the European Commission, the World Bank, the EBRD and the EIB

3

5. Master Plan: Ukrainian Gas Transmission System (UGTS) – Priority Objects, Modernisation and Reconstruction, Presentation at the Brussels Intl Financing Conference

23.03.2009 Mykhailo Bekker, Chief Engineer, JSC Ukrtransgas

3

6. Investment Projects at Gas Transmission System of Ukraine, Presentation at the Kyiv International Energy Forum, House of Ukraine

22.05.2008 JSC Ukrtransgas 3

7. NAK Naftogaz Gas Purchase, Infrastructure Development & Sector Reform Loan, PSD

14.09.2010 EBRD Project Summary Document, Pending Final Review, Scheduled Board Date 14.09.2010

3

8. Main European Physical Responses to the Gas Crisis in January 2009; EC Commission Staff Working Document SEC (2009)977/COM(2009)363

Undated European Commission 3

43

Table 9: KE3 Personal Component 2 and Component 3 R elated Inception Period Outputs

Name of Document Date Description 1. TOR for Short-term Energy Strategy Expert 26.03.201

0 • TOR proposal for the Team

Leader 2. Methodological Note on the Ministry of Fuel

and Energy of Ukraine’s Draft Progress Report (on the Financing Agreement)

06.04.2010

• Methodological note on performance measurement and on contents of the Financing Agreement

3. ESBS Project: A Further Inception Period Mobilization Proposal

06.04.2010

• A short stepwise mobilization proposal for the Team Leader

4. The ESBS Project Team Initial Assessment on Achievement of the Performance Indicators for Disbursement Since the Signing of the Financing Agreement (FA) on 19.09.2008

15.04.2010

• Quantitative Team assessment on the achievement of the Financing Agreement Performance Indicators up till 15.04.2010

5. ESBS Project Initial Comments on Performance Indicators re: 2009 MoFE Report

16.04.2010

• Qualitative Team assessment on the achievement of the Financing Agreement Performance Indicators up till 15.04.2010

6. “Assistance to Ukraine in Developing a Comprehensive Master Plan on the Rehabilitation of the Gas Transit System”

19.04.2010

• Final Report on the Kantor - AF Consult FwC EuropeAid/119860/C/SV/Multi contract; Project period: 17.12.2008 - 23.01.2009 (project was suspended due to the UA - RU gas dispute in January 2009); Report requested in April 2010

7. Project Kick-off meeting presentation 18.05.2010

• Introduction of ESBS Project Component 2 and Component 3

8. A Note on the CabMin Resolution #1073-r from 19.05.2010

26.05.2010

• A Note on the adoption of priorities for Ukraine’s integration in the European Union (from ESBS Project’s point of view)

9. Comments on the letter from the Ministry of Fuel and Energy (MoFE) (signed by Ms O. Grachova) on 18 May 2010 (#13/3-372)

26.05.2010

• A Note on the specific assistance request of MoFE (Ms Grachova)

10. Comments on the Article ”Energy Strategy of Ukraine for the Period up to 2030: Problems of

Content and Implementation” by Mr Sergey Yermilov (Director of Institute of Ecology and Energy Saving Problems) as published in Zerkalo Nedeli No 20 (599) on 27.05.- 02.06. 2006

26.05.2010

• Summary of Mr Yermilov’s commenting article on the Energy Strategy of Ukraine

44

Name of Document Date Description 11. Initial Comments on the Proposed ESBS

Project Tasks as Requested by the Ministry of Fuel and Energy and NJSC Naftogaz of Ukraine in their Respective Letters from 5, 6 and 17 May 2010 and at the Naftogaz Meeting with the ESBS Project Team on 14 May 2010

27.05.2010

• A Note on the specific assistance requests of the Ministry of Fuel and Energy and NJSC Naftogaz of Ukraine

12. A Note on European Energy Publications 27.05.2010

• A recommended list of European energy sector publications for MoFE

13. Comments on the revised ESBS Project Tasks as requested by “NJSC Naftogaz of Ukraine” - Based on the translation of an undated, unsigned letter from Mr Bakulin; the letter is expected to be received soon in an officially signed form

04.06.2010

• An updated Note on the specific assistance request of NJSC Naftogaz of Ukraine

14. A Note on the 4th Europe - Ukraine Forum on 26 - 28 April 2010 in the House of Ukraine in Kyiv

06.06.2010

• A Note on the Europe - Ukraine Forum and on energy security related aspects

15. Several Minutes of Meetings • As posted on the ESBS project server

16. Inception Report presentation to EU Sector Manager

09.06.2010

• Workshop presentation on preliminary Inception period findings

17. A Note on Financing Agreement Performance Indicator Assessment Methodology

23.06.2010

• A Note for the Joint Monitoring Group Technical Meeting

18. Inception Report contribution, Draft 2 and 3 23.06.2010/

06.07.2010

• Including a Component 2 and Component 3 Implementation Note and a summary of the Energy Strategy of Ukraine till 2030

19. The ESBS Project Team Initial Assessment on Achievement of the Performance Indicators for Disbursement Since the Signing of the Financing Agreement (FA) on 19.09.2008

06.07.2010

• Updated quantitative Team assessment on the achievement of the Financing Agreement Performance Indicators up till 15.04.2010; a modified methodology note on the Indicator performance for the EU Delegation

45

Table 10: Allocation of ESBS Project Responsibiliti es in Man-Days on the Basis of the TOR, KANTOR Technical Proposal, Expert Contract and a New Revised Proposal on 23.06.2010 - Calculated according to th e ESBS Project Activity Codes:

Heikki Lehtimaki (HL): KE3 - Energy Policy Expert P roject Man-Days

Activity #

”TOR”

”Technical Proposal”

”HL’s Contract”

”New Proposal”

IP ESBS PROJECT INCEPTION PHASE

IP.1 Familiarise with Project requirements

IP.2 Set up and register the Project

IP.3 Establish, develop and maintain Working Contacts with Stakeholders of the Project

• EBRD, World Bank, EIB and NJSC Naftogaz & other energy industries

25

IP.4 Initial work regarding Indicators of ESBS

10

IP.5 Start and plan Information – Visibility activities

IP.6 Train Stakeholders

IP.7 Prepare the Inception Report (IR) 25

IP.8 Discuss and adapt the IR and send to EUD

IP.9 Project and office management and Reporting

TOTAL MAN-DAYS for the Inception Period

60 60

1. COMPONENT 1: Capacity Building

1.1 Establish and manage the monitoring system for budget support

30 5

1.2 Study of existing data collection and reporting system

5 5

1.3 Design and implementation of a data collection and analysis system

5 5

1.4 Support to the Joint Monitoring Group 50 “Considerable input”

40

1.5 Training / study tours

TOTAL MAN-DAYS for Component 1 90 55

2. COMPONENT 2: Ad Hoc assistance for fulfilling the budget support indicators

“Main Activity 1”

46

Activity #

”TOR”

”Technical Proposal”

”HL’s Contract”

”New Proposal”

2.1 Further develop and refine Ukraine’s Energy Strategy

55

2.2 Develop sub-sectoral programmes within the framework of the objectives / directions of the Energy Strategy

50

2.3 Carry out studies in areas related to the fulfillment of the indicators for the budget support programme

45

2.4 Recommend and draft legislative provisions and changes consistent with the EU energy acquis

15

2.5 Training / Study tours / Collecting information for JMG’s functioning

5


3. COMPONENT 3: Ad Hoc assistance in relation to Gas Transit

“Main Activity 2”

3.1 Assistance regarding bankable projects for the modernization of Ukraine’s Gas Transit (GTS) network

• Identification and Valuation of Projects

• Due Diligence

25 40

3.2 Assistance in preparing the loan packages for particular fundable gas transit projects

• Business Plans

• Coordination between project developers and lenders

25 30


4. COMPONENT 4: Mid-term evaluation of the budget support system programme


5. COMPONENT 5: Ensuring communication and visibility of the action


GRAND TOTAL MAN-DAYS min 360

(Kyiv / min 288)

360 360 (Kyiv /

min 288)

360 (Kyiv /

min 288)

47

Table 11: A Proposed 6-Month Sub-sector Work Plan f or KE3 - Key Energy Policy Expert

Sub-sector Activity / Programme

Man-Days

Corresponding Component #

Corresponding Financing Agr. Performance Indicator #

Ministry of Fuel and Energy Requests:

1. Familiarization with experience related to development of unconventional/shale gas

10 2.2 5.5

2. Review of sectoral programmes with the Energy Strategy

25 2.2 n.a.

3. Development and application of globally accepted methodologies in the further development of the Energy Strategy

20 2.2 n.a.

NJSC Naftogaz of Ukraine Requests:

1. Consulting support to preparation of the TOR for the LNG terminal

20 2.2 5.5

2. Analytical and Expert Evaluation of completion and expansion of the Boyarka Gas Metrology Centre

20 2.2 5.3

3. Special assistance for the modernization of the Gas Transit System (GTS) of Ukraine

20 3.1 5.2/5.5/6.0

4. Ad hoc reserve 5 n.a. n.a.

TOTAL 120

Sources: Table 5 and Table 8 (Analysis of the ESBS Performance Indicators Related Documents and GTS Modernization Related Documents)