ANALYSIS: The battle with winter in Ukraine (12/10/06)

ANALYSIS: The battle with winter in Ukraine

by Roman Kupchinsky

In what has now become an annual autumn event, the Ukrainian government is frantically trying to calm the population by telling the people the country will have enough oil, gas and coal to keep their homes warm and industry working during the cold winter months.

"The underground gas storage facilities are filled to the brim," Yurii Boiko, the minister for fuel and energy, assured his countrymen a few weeks ago, while failing to mention that most of the gas in these facilities does not belong to any Ukrainian entity, but to RosUkrEnergo, a joint venture between Gazprom and two private Ukrainian businessmen, Dmytro Firtash and Ivan Fursyn.

This would not be terrible if the owners of the gas were transparent and respected businessmen. But they are not, and, as a result, the population has cause to be concerned.

To make matters worse, only Mr. Boiko seems to understand the latest gas deal signed with Moscow in October. Nobody has seen the contract or any amendments it might have - and this is truly disturbing.

Apparently, the idea is to convince the public that Mr. Boiko is indispensable and can be trusted to look after Ukraine's needs when it comes to oil and gas. Mr. Boiko seems to go along with this view and his press office keeps churning out press releases praising his business acumen and patriotism.

Unfortunately, Mr. Boiko was one of the key backstage players in setting up RosUkrEnergo in 2004. In 2005 he was about to be arrested for his activities until Viktor Yushchenko came to his rescue.

In any other country he would never be permitted to work in the public sector. In Ukraine, however, he was Viktor Yanukovych's logical choice to head up the corruption-ridden energy ministry. When the president of the country did not protest this appointment for whatever reasons he might have had, Mr. Boiko became the energy hetman of Ukraine.

Part of the hype about the approaching winter is to allow Mr. Boiko to look good next spring. By April he will be declared a national hero for not allowing schoolrooms to freeze over and all his past activities will be forgiven by a "grateful nation."

Meanwhile the pressing issue of reforming the energy sector in Ukraine has not been placed on the back burner, it has been hidden in the closet - not to be mentioned or shown to curious visitors.

After all, with Mr. Boiko in charge, who needs reforms? Everything will work just fine. Gazprom, according to Mr. Boiko, should be allowed to take a stake in Ukraine's domestic gas distribution network, as well as have a say over the main gas pipeline to Europe.

RosUkrEnergo should be given the right to import not only gas, but oil to Ukraine and foreign companies (meaning Western) should be prevented from entering the sector.

As to energy efficiency, it is best to forget the term altogether. While some industries did indeed make bold attempts to lower their use of fuels, by and large the country is still living in the mid-1980s in terms of its huge appetite for gas.

Demand for gas has not decreased in the last few years while Mr. Boiko's calls to increase drilling for oil and gas in Ukraine will only hasten the day when Ukraine will become 100 percent dependent on Turkmen and Russian gas.

The saddest part of the energy sector in Ukraine is that nobody has any vision on how it must change. The Boiko view is "ganz klar" as the Germans say - give it to Gazprom and to Mr. Firtash.

President Yushchenko has no views on this matter and, even if he did, they would probably be inane and be dismissed out of hand.

The Donetsk boys are not fools and do not trust Messrs. Yanukovych and Boiko to take care of their needs. In November a delegation from the Industrial Union of the Donbas went to Uzbekistan to arrange a barter deal for gas. The idea was that the IUD would construct pipelines in Uzbekistan in return for 3 billion cubic meters of gas. But even there, RosUkrEnergo and Gazprom were watching and waiting for their cut - reminding the IUD that it was they who controlled all gas coming out of Central Asia.

Ukraine it seems, will remain a hostage to the shady schemes devised by Leonid Kuchma, Vladimir Putin, Mr. Boiko, Mr. Firtash and others for years to come. The "winter wars" will be fought over and over, and the descendants of the above-mentioned men and their gangs will continue to thrive for the foreseeable future.

Roman Kupchinsky is the former director of the Ukrainian service of Radio Free Europe/Radio Liberty. He can be contacted at [email protected].

| Home Page |