BRDO: State support for SMEs will help decrease the energy consumption in Ukraine’s economy

05-07-2017

Energy consumption of Ukrainian economy is one of the highest in Europe and exceeds the global index twice. The reason is the inefficient state regulation, a large share of energy-consuming sectors, old and inefficient technologies, wasted permanent assets.

Small and medium enterprises (SMEs) makes more than 60% of the Ukrainian GDP, consuming 27% of the total energy, but it is out of the focus of state attention and practically does not have state support when it comes to energy saving and energy efficiency.

On July 5, the government, business, public representatives and experts discussed regulation issues in the sector during the roundtable “Energy efficiency and SMEs: new regulation – new opportunities” as part of the #PRODialogue public dialogue.

While opening the meeting, the Head of the State Regulatory Service Kseniya Lyapina emphasized: “Energy efficiency is a critically important issue for the business competitiveness and economic development. But small and medium businesses have limited opportunities to implement energy efficient measures, it is very expensive investments in the future, but there are virtually no available tools. We have to develop legislative incentives for this consumer group by joint efforts.”

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According to BRDO researches, 30% from 49 legislative acts that regulate the energy efficiency and energy-saving sector for small and medium business segment are outdated and illegal. State regulation in the sector does not achieve its goal in 86% of cases.

“The lack of recourses to implement energy efficient measures lead to the situation when additional business expenses are simply included in the price of goods or services for final customers in case of increasing the energy tariffs. At the state level, it means that domestic products are non-competitive in the world market and the state is energy dependent,” the Energy Sector Head Oleksii Orzhel mentioned presenting results of the rolling review of regulation quality in terms of efficiency, corruption risks, ease of doing business and practicability.

The imbalance of existing legislation is the thing that prevents moving to the more efficient and economically justified energy consumption schemes, re-equipment and the use of incentive mechanisms for energy-efficient measures. During 2011-2015, the energy consumption of the Ukrainian GDP decreased by 16%, and its capability could amount to 53% if the regulation were more effective.

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The Head of the EU4business/FORBIZ Project in Ukraine Matthias Halder emphasized on the necessity to achieve the balance of interests and equal conditions in the market: “The energy efficiency has become the priority in Europe long ago, and the corresponding stimulating and regulating tools had been developing solely through the public consultations involving all parties. The practical EU experience is based on it, and we are ready to share it with Ukraine.”

 Taking into account recently adopted laws, especially, the laws on commercial accounting of communal services and energy efficiency of buildings, the analysis conducted by the BRDO creates the basis to apply a comprehensive approach to develop the secondary legislation. At the state level, a system approach should be developed that will promote reducing the energy intensity of the Ukrainian economy and increasing energy safety.

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According to the BRDO experts, the measures that will push to the improvement of the situation in the housing sector and the energy modernization of small and medium enterprises are the following:

  • review of outdated regulatory acts and tools;
  • definition of SMEs as separate regulation subjects;
  • stimulation of 100% individual accounting;
  • development of the justified “tariff menu”;
  • increasing tax and custom privileges;
  • creating an effective verification system.

The representatives of the Ministry of Regional Development, Construction and Housing and Communal Services, the Ministry of Economic Development and Trade, the State Agency for Energy Efficiency and Energy Saving of Ukraine, the Antimonopoly Committee, UNDP, USAID projects, representatives of the Entrepreneurs Council at the Cabinet of Ministers, the Verkhovna Rada, business, experts and public took part in the roundtable.

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