Reform of Ukraine's energy complex as precondition for eliminating its energy dependence

Abstract

More than half of the energy consumed in the Ukraine is imported and most energy imports originate in Russia. This energy dependence provides a major lever for the Russian government to influence Ukrainian politics, especially given the fact that not all imported energy is paid for. It is argued that economic reform, and in particular reform of the energy complex, could greatly diminish the Ukraine's energy dependence. Economic reform would lead to more efficient energy use in the world's most energy intensive economy. Reform of the energy sector would result in higher collection rates, less rent seeking behaviour and more investments in the energy sector that could in turn diminish energy loss during distribution and lead to more and cheaper domestic energy.