Ukraine’s en­ergy cus­toms unit dis­ap­pears, reap­pears

Kyiv Post Legal Quarterly - - News - By koshiw@kyiv­post.com

In­March 2014, shortly af­ter Ukraine’s Euro­maidan Rev­o­lu­tion, the Fi­nance Min­istry is­sued an or­der to re-cre­ate a sep­a­rate en­ergy cus­toms body un­der the State Fis­cal Ser­vice. The state agency was orig­i­nally cre­ated un­der Pres­i­dent Viktor Yushchenko in 2005, but liq­ui­dated un­der Pres­i­dent Viktor Yanukovych in 2011.

But in Oc­to­ber 2015, the Head of State Fis­cal Ser­vices, Ro­man Nasirov, an­nounced his in­ten­tion to liq­ui­date the agency once again. So what is go­ing on? Lo­cated far out of Kyiv’s city cen­ter, Ukraine’s en­ergy cus­toms re­ceives lit­tle at­ten­tion from the press and its ex­is­tence is largely unknown to the wider pub­lic.

It’s an en­tirely cen­tral­ized and sep­a­rate cus­toms author­ity that works ex­clu­sively with gas and oil prod­ucts. The re­gional out­posts re­port di­rectly back to the main of­fice in Kyiv, not to the larger re­gional cus­toms au­thor­i­ties, and the data is not shared.

The main rea­son for hav­ing a sep­a­rate en­ergy cus­toms is to en­sure the up­most pro­fes­sion­al­ism, ac­cord­ing to its act­ing head, Ihor Pikovsky: “Why train 9,000 peo­ple? It’s bet­ter to train 200,” he told the Kyiv Post.

25 per­cent of rev­enues Pikovsky, who took of­fice on Aug. 31, has been one of sev­eral tem­po­rary heads of the agency since its re-cre­ation in 2014. When asked why there had been so many staff changes and what ex­actly was go­ing on at the agency, Pikovsky told Kyiv Post that he “didn’t know any­thing.” He couldn’t even say who had last held the post, and the in­for­ma­tion is not pub­licly avail­able.

Con­sid­er­ing that the agency ac­counts for more than 25 per­cent (Hr 5.5 bil­lion, or $220 mil­lion) of the to­tal cus­toms rev­enues raised in the coun­try, ac­cord­ing to Pikovsky, the non-trans­parency of its op­er­a­tions and lack of con­sis­tent man­age­ment is sur­pris­ing.

Ser­hiy Kuyun, the direc­tor of A-95, an en­ergy con­sult­ing group, told the Kyiv Post that when the agency was first in­tro­duced it was very pop­u­lar with busi­nesses, as it had de­vel­oped a spe­cific ap­proach to en­ergy prod­ucts, some­thing Ukraine used to lack. How­ever, he says that now it's not as nec­es­sary for them to be sep­a­rate.

The con­stant change in lead­er­ship of the en­ergy cus­toms, says Kuyun, is down to in­fight­ing "be­tween of­fi­cials who want to work with those goods."

Ana­toliy Makarenko, the for­mer deputy head of the State Fis­cal Ser­vice from March 2015 to April 2016 and its head be­tween 2009 to 2010, told the Kyiv Post that un­der Yanukovych it was liq­ui­dated and that the sphere had come un­der the con­trol of the Min­istry of Taxes, de facto the State Fis­cal Ser­vice, to help cor­rupt schemes.

Makarenko al­leges that be­tween Jan­uary 2013 and Fe­bru­ary 2014, 2 mil­lion tons of diesel and oil prod­ucts that came through Ukrainian cus­toms were falsely clas­si­fied as be­ing for re-ex­port. This meant that no cus­toms du­ties were paid on the prod­ucts. But in­stead of be­ing tran­sited out of the coun­try, the oil prod­ucts were de­liv­ered to var­i­ous des­ti­na­tions within Ukraine. Ac­cord­ing to Makarenko, when he took of­fice and the en­ergy cus­toms was rein­tro­duced, this prac­tice stopped.

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