ANALYSIS: Tymoshenko takes a stand against energy sector oligarchs (07/02/00)

ANALYSIS

Tymoshenko takes a stand against energy sector oligarchs

by Jan Maksymiuk
RFE/RL Newsline

PRAGUE - Most commentators will almost certainly agree that the energy sector in Ukraine is a source of both the country's direst problems and the shadow economy's greatest fortunes. However, the state of affairs related to the supply and distribution of energy resources - electricity, natural gas, oil, and coal - is so complicated and, presumably, mired in corruption that, for the time being, neither the government nor the Parliament has a clear plan on how to improve the situation in the sector and avert the threat of massive cuts in electricity, gas and heating during the coming winter.

On June 17, the Verkhovna Rada held hearings on the situation in the energy sector. Those hearings resulted in a resolution requesting Prime Minister Viktor Yuschenko's Cabinet to work out a long-term strategy for developing the energy sector. The Parliament did not suggest any immediate actions or list any names of those responsible for Ukraine's chronic energy shortage.

According to Vice Prime Minister Yulia Tymoshenko, who is in charge of reform in the energy sector, the country needs $13 billion hrv ($2.4 billion U.S.) this year to ensure the smooth functioning of the energy sector and survive the coming winter. She assured the lawmakers that the government will manage to collect this sum as payment for electricity.

Ms. Tymoshenko said the main reason for the current energy crisis in Ukraine was last year's siphoning off of some 5 billion cubic meters of Russian transit gas by Naftohaz Ukrainy. As a result of that move, Russia has stopped gas payments for Russian supplies transiting Ukrainian territory.

On June 8 the situation in the energy sector was discussed by Ukraine's National Security and Defense Council. Council Chairman Yevhen Marchuk reported to President Leonid Kuchma that Ukraine's power grid is on the verge of collapse and there is virtually no chance to avert that collapse if Ms. Tymoshenko's policies in the energy sector are continued. Stopping short of demanding Ms. Tymoshenko's dismissal, Mr. Marchuk stated that the situation in the sector cannot be improved without the president's intervention.

President Kuchma's assessment of the government's performance was harsh. He said Ukraine's debt for Russian gas supplies for the first five months of this year amounts to $700 million. He noted that Ukraine has illegally siphoned off 13 billion cubic meters of Russian gas from pipelines crossing its territory, adding that Russia has the right to take Ukraine to an international court over the issue.

However, he took no personnel action, leaving that decision to the prime minister. So far, Vice Prime Minister Tymoshenko has remained in the government. But on the eve of the parliamentary hearings on the energy sector, Fuel and Energy Minister Serhii Tulub tendered his resignation. Some commentators suggest that Ms. Tymoshenko's ouster is only a matter of time.

Ms. Tymoshenko told RFE/RL's Ukrainian Service on June 10 that Ukraine's main problem in the energy sector is that each year energy suppliers "leave 1 billion hrv [$183 million] in the shadow economy." According to Ms. Tymoshenko, the distribution and supplies of oil and gas is controlled by such shadow economy oligarchs as Ihor Bakai former chief of Naftohaz Ukrayiny, and Oleksander Volkov, a Ukrainian media mogul and lawmaker, whose leverage in Ukrainian politics has earned him the nickname of the "executive director" of the Ukrainian Parliament. As for the supply and distribution of electricity, it is controlled by Hryhorii Surkis, a media mogul and honorary president of the Dynamo Kyiv soccer club, and Verkhovna Rada Vice-Chairman Viktor Medvedchuk.

Ms. Tymoshenko said the electricity deliveries, which involve middlemen from the oblast energy supplying companies, are paid for by means of various barter schemes that enable the oligarchs to generate big revenues in the shadow economy. But, as a result, electricity producers obtain cash only for a small part of the power they generate.

"Every month from 150 to 450 million hrv are left at the disposition of the Surkis-Medvedchuk team. Do you think they are going to part with such sums without problems?" Ms. Tymoshenko asked in her interview with RFE/RL.

That opinion is shared by Yurii Kostenko, leader of the Ukrainian Popular Rukh. "The characteristic trait of these [shadow schemes in the energy sector] is a departure from cash payments in favor of various ersatz settlements: barter deals, promissory notes, setoffs. As a result, huge sums have been deposited in private accounts abroad, while the Ukrainian economy has gone into decline," Mr. Kostenko explained.

Jan Maksymiuk is the Belarus, Ukraine and Poland specialist on the staff of RFE/RL Newsline.

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