Ivan Bondarchuk, Head of Energy & Natural Resources practice at EVRIS, told about trends of Ukrainian energy market in his interview for research “Client’s choice. Top 100 Best Lawyers of Ukraine – 2019” by “Yurydychna Gazeta”.
Ivan, what are the reasons for your decision to leave for EVRIS?
I had been working for ILF within 6 years. I have grown from the paralegal to senior associate and during that period felt I could do more. Firstly, I have accepted a job offer because of my strong desire for changes. Secondly, Evris offer was really interesting. Thirdly, a correlation between my view of own development and how do Evris allows for it. Fourth, being a practice leader is a challenge for me (and not only professional).
How are you planning to develop the practice? Which goals do you set for yourself?
The lawyer involved in the energy law field should assist his client in the implementation of the related projects. To do so, he should advise the client on the corporate and commercial law issues and some aspects of the protection of international investments. It is necessary to consider a project entirely from different perspectives. In addition, the energy industry is still a specific area from both the technical and infrastructure sides and it operates under extensive industry-specific regulation.
In my opinion, an energy law expert is a person who lives inside the industry an is well-informed on national and global issues; this is a person who’s been deep-hip in the energy world. Therefore, in my opinion, the ideal team consists of one, two or three experts with perfect knowledge of the energy market. We will have a team of experts capable to deal with the energy aspect of the project and, at the same time, identify those aspects where it is necessary to involve experts in other areas of law. In general, it was another great advantage of Evris for me. They have experts and the team able to complete all the aspects of any client project from the standpoint of different areas.
Do you have any particular plans for the next half of the year?
For the initial period, my plans are very simple. To define in details what particular services in the energy industry we shall offer. In addition, to make potential clients and market players aware that Evris started the energy practice. As a Head of practice, I also will promote Evris in the energy industry. Furthermore, it is important to tell people what kind of legal support this practice basically offers. We have to raise a pool of partners ready to assist us at any time.
Furthermore, what is undoubted, we shall establish efficient relations inside the team and involve a particular basic portfolio of clients.
To speak globally, we will strengthen our position in specific areas. The first vector is a booming renewable energy sector. I am currently handling a few solar energy projects. A large client — the Norwegian company that makes significant investments into the solar energy industry in Ukraine — moved to Evris with me. The other interesting vector for us is the energy market. The third vector is venture projects in waste recycling. It is currently a general trend in Ukraine. In my opinion, the investor community will experience an increase in such projects. They will be definitely attractive to us. The fourth vector: we will be joining the work within the expert community, including the law-making process in this field. Generally, I will keep on working as an expert and GR specialist.
What issues are the most pressing in the energy market?
There are several issues of that kind. In particular, this is the issue of due payments and payments under the “green tariff”, and guarantees for the rights of renewable energy investors. Also, the issues related to the development of the power energy market, competitive aspects to be more exact. This market is still like a blue ocean. Thus, the problem is that some companies are trying to sell their product in the highest price segment of the market – balancing market, at the same time ignoring the intraday market. I can suppose signs of anti-competitive conduct here. Let’s see the reaction of the Antimonopoly Committee of Ukraine.
However, these problems must be handled within the legal framework and under the due procedures. Anyway, I have never supported the attempts of manual control or at the political level instead of engaging legal mechanisms. Typically, it is made in a rush and not always efficiently.
The last important point to note is that the consumers and some market players have not yet realized that the competition on the market is currently developing, that time has come to be partners, and to negotiate, in other words, to move to normal market-based relationships. We need to “teach” the market players to understand that the electric power shall be treated as goods and a part of the prime cost of their products. Energy consumers should carefully review agreements and not fear to insist upon their conditions.
Could these issues be governed by law only or some sensitization may be efficient?
Both are possible. Beyond a doubt, we will take some measures to teach how to select an energy supplier, analyse an agreement, protect own interests in case of dispute, etc. The number of such disputes is growing, but it will decrease as soon as the first judicial practice emerges. Thus, the more active market players try to defend their interests in courts, the sooner we will get some benchmarks.
Regarding the legislation, there are several outstanding issues. Firstly, the case is the regulatory framework that is been still forming. Secondly, the legal status of the National Energy and Utilities Regulatory Comission (NEURC). It is relevant, given the fact that the Constitutional Court held unconstitutional some provisions of the law on the NEURC. In simple words, the Parliament should make a decision on the important issue: whether the NEURC is an independent regulatory body or not. If yes, to confirm that we need to amend the Constitution, otherwise, the NEURC shall be a part of the Cabinet of Ministers of Ukraine and under control of the competent Ministry. Thirdly, given some political views and trends, it is likely that the law on the electricity market seems to be amended.
What are the current trends in the energy market? What should the business expect?
Trends are going to start revealing now, and we could be able to analyse the actions of the Parliament. The business should be ready for changes (including price changes). The energy industry as an industrial sector is subject to the symbiosis of legal and regulatory changes and positions of the key market stakeholders. Thus, the business should be an active initiator of changes, trace and carefully analyse all the data. It is sometimes easier and faster to protect one’s interest at the stage of initiatives rather than some regulatory act is adopted. So, it is necessary to learn to work in the new environment of the energy market.