Energy Transparency Index of Ukraine 2020: Information Openness of the Sector Has Improved

Transparency in Ukraine’s energy sector is average and has improved compared to previous years. This conclusion was reached by analysts who worked on the Energy Transparency Index of Ukraine 2020 study from DiXi Group Think Tank.

“Ukrainian energy markets are in the process of liberalisation. Transparency is a key factor that shows the real state of the market. And the Transparency Index allows tracking the progress. I am very glad that this year the overall score of the sector has risen to 58 points. This means that Ukraine is progressing from unsatisfactory transparency to medium transparency,” the USAID spokeswoman Ashley King said.

The Energy Transparency Index has been developed to assess the real state of availability and quality of the information in the energy sector and to diagnose gaps. DiXi Group has been analysing the transparency of the energy sector since 2018.

The final score of Ukraine according to the assessment conducted in 2020 is 58 out of 100 possible. At the same time, compared to last year’s estimate, transparency in most categories has increased, and the Index itself has increased by 10 points.

“This year we were pleasantly surprised. We saw not only the progress of transparency but also the acceleration of progress,” Bohdan Serebrennikov, an expert at DiXi Group and head of the research team, said during the presentation of the results.

The 2020 index covers 210 indicators grouped into 8 categories. They are based on specific regulatory requirements and best global disclosure practices. The evaluation is the result of processing open-source data on the functioning and development of the energy sector along the chain “from producer to consumer”.

The greatest progress is observed in the Consumption, Natural Monopolies and Supply categories (+15, +13 and +9 points, respectively).

“We have noted significant progress in the Market Concentration and Level of Competition subcategory. The Regulator carried out high-quality work, it introduced quarterly monitoring of the state of the wholesale and retail segments of the electricity and gas markets,” the expert Uliana Pysmenna said. “Significant progress has been made in the Consumption category, especially in the Service Standards subcategory. Here, for the first time in the history of the Index, absolute transparency has been achieved thanks to the NEPURC’s work on informing consumers about their rights, quality of energy supply and compensation for non-compliance with service standards. In other subcategories, we have not yet reached such a depth of transparency.”

A comparison of energy markets showed that transparency by sectors is determined by the degree of readiness of the regulatory framework.

Thus, after the introduction of new rules in the electricity market in 2020, the transparency of the relevant sector began to grow faster, ahead of the indicator for the Natural Gas sector by two points (66 compared to 64). As for the Oil and Liquid Fuel sector, to the development of which the state pays much less attention, its transparency remains unsatisfactory (22 points).

Progress of varying intensity has taken place in most categories, with the exception of energy statistics.

“The balance sheet category determines the transparency of annual and monthly energy statistics. A comparison with last year’s estimates shows that the level of transparency for the category as a whole has not changed. The reasons for this may be different. However, it seems to us that the main reason was the slowdown in bringing the process of state statistics in Ukraine in line with EU best practices. There is also a lot of good news: we have stated that most methodologies have been brought into line with the requirements of the EU regulation on energy statistics. In addition, the required statistics are available on the websites of public authorities and business entities. However, the EU regulations stipulate that this information should be disclosed by the executive body in the field of statistics,” the expert Hennadii Riabtsev explained.

A novelty of the 2020 Index is a pilot assessment of the transparency of authorities that formulate and implement energy policy, are involved in the regulation of the sector and are managers of information.

Their evaluation was carried out in terms of individual indicators of the Index. Preliminary estimates show that three of the six authorities (Ministry of Energy, AMCU, State Statistics Service)are still in the zone of insufficient transparency, while the other three (the NEPURC, State Agency on Energy Efficiency and Energy Saving, Ministry of Ecology and Natural Resources) are characterised by a medium or good level of transparency.

The “black boxes” revealed during the evaluation and deficiencies in the presentation of information formed the basis for specific recommendations to the authorities and companies, which are set out at the end of each section of the study.

“The government or companies can listen to our advice within the Index. For example, next year they may make efforts in specific areas of the sector that are more closed today to show publicly what is being done in these areas. More information is a more realistic assessment of the sector. This is some kind of the best “diagnosis” of what is happening in our sector, and therefore an understanding of what “medicines” should be chosen. And, of course, this means more trust from consumers, investors and market participants,” DiXi Group President Olena Pavlenko said.

More details on the results of the study, in particular the table of transparency indicators, which contains assessments and comments, can be found at the link.

The event was held within the USAID Energy Sector Transparency Project, implemented by NGO DIXI GROUP.

DIXI GROUP is solely responsible for the content of the views expressed, which does not necessarily reflect the views of the USAID or the Government of the United States.

Source: DiXi Group