On 2 December 2020, the Ukrainian Parliament adopted draft law No. 3176 On amending of the Law of Ukraine On Public Procurement regarding natural gas procurement.
Although not yet signed by the Ukrainian President, the Law is expected to be enacted soon and contains certain provisions described below that will be valid beginning 1 July 2021.
The Law provides that mandatory public procurement tender requirements (contained in the Law of Ukraine On Public Procurement) will not apply in the following cases:
- Starting from its enactment (the day following the Law`s official publication) –
- The purchase of natural gas at the commodity exchange from the customer of the transmission services by the Gas Transmission System Operator (“Gas TSO”) in the amount of the customer’s positive daily imbalances;
- Purchase of natural gas at the commodity exchange from the Gas TSO by the customer of the transmission services in the amount of the negative daily imbalances of this customer;
- Purchase of natural gas at the commodity exchange by the Gas TSO, Gas Storage System Operator (i.e. JSC Ukrtransgaz) and gas distribution system operators to ensure the smooth operations of their own business activities, including (i) their own production and technical needs; (ii) purchases covering production and technological losses; and (iii) purchases covering balancing issues.
- Starting from the 1 July 2021 –
- Purchase of natural gas at the commodity exchange by other gas-market participants.
In addition, the Law prescribes that the commodity exchange must be compliant with the requirements of the Law of Ukraine On Commodity Exchanges and the Gas Transmission System Code.
This, in turn, means that commodity exchanges could be used instead of Prozorro, the public-procurement platform currently employed by Gas TSO/SSO, which will simplify and facilitate gas trading for balancing purposes. In addition, this development might be the first step for Ukraine in the creation of its own gas-price index.
As a result, the new Law is expected to raise liquidity, transparency and competition within the Ukrainian gas market.
Legislation: The draft law No. 3176 “On amending of the Law of Ukraine “On Public Procurement” regarding natural gas procurement.
