Ukraine opens gas sector to investors

Ukraine's parliament has approved a law designed to break the monopoly and attract investment in the country's lucrative but opaque natural gas sector. In accordance with the law, Ukraine will divide Naftogaz into separate production, transit, storage and supply. Its restructuring, together with an increase in gas tariffs to market levels, are key conditions for the tranche of the International Monetary Fund in March.

The government hopes the legislation will help attract investors to modernize and work together the country's huge gas pipeline, which is a key channel for the supply of Russian gas to European markets. The law also allows traders to gain access to the open market. Ukraine has increased its gas imports from the EU in recent years and plans that energy ties with Brussels will help it reduce its dependence on expensive imports from Russia.

At the last minute, the deputies amended the law on the collection of fees from the companies of the holding, a monopoly in the regional distribution of gas, which they claim is controlled by oligarchs, including Dmitry Firtash, a former partner of Russian Gazprom in gas supplies to Ukraine. Firtash is currently in Austria, where he faces extradition to the United States on corruption charges, which he denies.

In Ukraine, prosecutors have announced that they will seek cancellation of what they described as “falsifications” in the privatization of utility power systems by Viktor Yanukovych, who was ousted in the Maidan last year. In one such deal, Rinat Akhmetov, Ukraine's richest oligarch and former political ally of Yanukovych, acquired a controlling stake in Dniproenergo (DTEK), one of the country's largest electricity producers. In its statement, DTEK insists that the acquisition was legal and promised to oppose any infringement of property rights in court.