Ukrainian Energy Ministry should elaborate concept of reforming coal industry - Accounts Chamber

MOSCOW. Feb 6 (Interfax) - The Ukrainian Energy Ministry should develop a draft concept of the state targeted program for reforming the coal industry and submit it to the government for approval.

This was reported on the Accounts Chamber website on Tuesday with reference to the report on the results of the audit regarding the effectiveness of using state budget funds provided by the Energy Ministry for restructuring the coal industry in 2021-2022 and in the first half of 2023, Ukrainian media reported.

"The non-reformed coal industry is a significant burden for taxpayers in Ukraine. The auditors' findings emphasize the critical need for comprehensive reforms and more effective management," the ministry said.

The Energy Ministry should also elaborate and submit to the government an action plan for implementing the Energy Strategy through 2050 with identifying measures, resources and performers involved in reforming the coal industry, and introduce a competitive market for coal products, the auditors said.

"The Energy Ministry, which is responsible for shaping and implementing the state policy in the coal industry, has not developed an integral system of regulatory and program documents required for effective restructuring of the coal industry," the chamber said in a statement.

The authorities allocated UAH 9.3 billion for the restructuring of the industry over the past three years, which provided only 33% of the demand stated by enterprises, the chamber said, citing the auditor's report. At the same time, UAH 2.5 billion was envisioned for the shutdown of mines, but in the end only half of this amount was funded.

With the lack of sufficient funding, there were delays in developing projects for the shutdown of mines and their inspections, feasibility studies of whether further operation of mines is inexpedient, as well as preparations for their shutdown.

The Accounts Chamber noted that the lack of a clearly defined plan with specific goals, measures, distribution of resources and responsibility of performers results in higher budget expenditures to support the industry.

"In addition, although the Energy Ministry collected a large amount of information on the activities of the industry, but did not process it properly, respectively, did not make analytical conclusions from it, forming a correct picture of the state of affairs," the chamber added.

If in 1991, 276 state-owned mines were operating in Ukraine, producing 193 million tonnes of coal, then in 2014 their number dropped to 33, and the total output fell to 10.9 million tonnes, member of the Accounts Chamber Igor Yaremchuk, who was in charge of the audit, said. In 2021, the output declined to 2.9 million tonnes.

"State-owned enterprises are predominantly loss-making. Budget funds have not ensured their recovery. To ensure energy security, the state should make considerable efforts to restructure the industry taking into account the present-day realities," Yaremchuk said.