A New Gas Distribution Company?

On April 19, the National Electricity Regulation Commission (NERC) granted a license for gas transportation/distribution in Chernivtsi region to Ukrgazmerezhi (UGM), the affiliate of Naftogaz Ukrainy. Currently Chernivtsigaz is the only transporter of gas in the region, while Naftogaz is the owner of gas distribution network. Now UGM (i.e. Nafotgaz) wants to operate the gas distribution network in the region by itself. Alexander Paraschiy: The conflict between the owners of series gas distribution companies (Chernivtsigaz, Ivano-Frankivskgaz, Lvivgaz, Volyngaz, Chernigivgaz) and Naftogaz/Minister of Fuel and Energy started in September 2006, when information appeared that Monopoly gas importer RosUkrEnergo (RUE) was interested in acquiring several private gas companies in Ukraine. Since that time pressure on these companies has increased, and there is a risk that they will loose operating control over their gas networks. At the moment, however, we do not see a real risk for Chernivtsigaz and others as they lease the assets on legal basis, and they all have a license for gas distribution in their regions. Moreover, according to Chernivtsioblegaz, the UGM’s license for Chernivtsi region could be revoked as the latter did not submit accurate documentation on the distribution networks they want to operate to the NERC.