Time for professionalism, and crisis management
One of the biggest challenges for Ukraine’s gas market, experts note, comes from the incessant politicization of the topic.
Whether it is domestically targeted populism around household tariffs, or the geopolitical games the sector is constantly pulled into, it is hard to find a moment to focus on professional management and decision-making.
Yet this is precisely what the market needs as it struggles from a series of financial and political challenges – and even criminal activity.
The Novoyavorivsk and Novyi Rozdil heating companies provide a case study in crisis management. Roman Zubyk, Executive Director of Naftogaz Teplo, which manages both power plants, noted the list of problems they are dealing with includes low payment discipline, endless litigation, and even looters.
“Over the past two months people have been cutting cables to transformer substations,” he complained, noting this almost put the start of the heating season at risk.
Payment discipline is also a major problem, as people in some areas have grown used to endless shirking of payments
Nonetheless, Zubyk noted, “we are ready to start the heating season on time (…) this is the biggest success.”
Payment discipline is also a major problem, as people in some areas have grown used to endless shirking of payments (not least because of an expectation that politicians will avoid measures that could damage their popularity).
“Novoyavorivsk and Novy Rozdil have about the same number of inhabitants, but the difference in sums accumulated is huge. Due to the political situation in Novoyavorivsk, people pay regularly, while in Novy Rozdil people seem to believe that paying for heat is not fashionable,” Zubyk complained.
He added that in Novoyavorivsk the political leadership was involved in spreading the message that it is “trendy” to be a responsible citizen and pay for utilities.
The biggest thing to sabotage such efforts, Pavliuk noted, was when national political leaders come out with statements that “our political faction is so great, we stand for low tariffs”, and then blame mayors on higher prices. “This has become a tradition,” he complained.
To ensure that such “success despite the odds” stories become commonplace, Ukraine needs to make the liberalization irreversible – rather than backtracking on reform, which can hurt the country’s image – and ensure the proper judicial and litigation measures for violators can be enforced.
This would unlock the financial resources and operational freedom – as in the case of Novoyavorivsk and Novyi Rozdil – to modernize Ukraine’s gas sector and build the future the country has so long waited for, and which is closer than ever.
Ukraine needs to make the liberalization irreversible – rather than backtracking on reform, which can hurt the country’s image