MEMORANDUM OF UNDERSTANDING between Ukraine and the USA regarding Collaboration on Ukrainian Energy System Resilience

September 24, 2023

MEMORANDUM OF UNDERSTANDING between the Government of Ukraine and the Government of the United States of America regarding Collaboration on Ukrainian Energy System Resilience

The Government of Ukraine and the Government of the United States of America (hereinafter referred to as the “Participants”),
Expressing the mutual interest in the decentralization of the energy supply system, which will contribute to improving Ukraine’s energy security and establishing a diverse and modern energy sector;
Recognizing the need to support the accelerated integration of Ukraine’s energy markets into the European Union energy markets;
Acknowledging the Government of Ukraine’s progress made on passage of Regulation on Wholesale Energy Market Integrity and Transparency (hereinafter – REMIT) legislation, movement on tariff cross-subsidy reforms, and passage of anti-monopoly legislation;
Affirming the common desire to ensure the effectiveness of future energy supply decentralization projects and relevant reforms in the energy sector, including to promote transparency, accountability, anti-corruption measures, and competitiveness; and
Recognizing the complementarity of the work of the Participants and the benefits of closer strategic cooperation between them,
Have reached the following understanding:

I. Purpose

The purpose of this Memorandum of Understanding (hereinafter – the “MOU”) is to collaborate towards the improvement of the resilience of Ukraine’s energy system, including through the restoration of critical infrastructure, introduction of distributed generation, reformation of the energy sector, and facilitation of Ukraine’s post-war transition to a low-carbon, competitive, and EU-integrated energy economy.
The Participants intend to proceed in a manner consistent with and in the spirit of the Clean Energy Partnership Statement announced by the G7+ countries and Ukraine at the 2023 Ukraine Recovery Conference in which they committed to a partnership for the sustainable recovery and reconstruction of Ukraine’s energy system.

II. Areas of Cooperation

The Participants intend to collaborate in a number of areas, including but not limited to the following:
● Restoration of Ukraine’s damaged electricity, heating, and gas infrastructure, including the purchase and installation of main lines autotransformers.
● Strengthening the resilience of the power system through increased adequacy and flexibility, including improvement of resiliency to power disruptions in essential services sectors like heating, water, sanitation, transport, telecommunications, and health;
● Installation of distributed gas generation (including CCGT turbines of USA production);
● Expansion of distributed generation from renewable and other energy sources in the power and heat sectors;
● Strengthening of Ukraine’s physical interconnection with European gas and electricity networks;
● Development and implementation of energy sector reforms consistent with European Union acquis and in accordance with Ukraine’s Energy Community Treaty obligations;
● Civil nuclear energy cooperation;
● Protection of Ukraine’s most critical energy infrastructure, including but not limited to areas such as physical anti-drone and anti-missile defense, physical and cyber security as well as the identification of cross-sectoral interdependencies and implementation of mitigation measures to prevent cascading failures due to potential power supply disruption.

III. Roles and Responsibilities

1. The Government of Ukraine intends to update the Concept Note on Priorities for Restoring Ukrainian Energy Infrastructure Facilities in Short- and Medium-Term Periods on an ongoing basis as needed and continue to make sustained progress on the adoption and implementation of legal and regulatory reforms needed to advance the objectives of this MOU.
2. Subject to the availability of funds, the United States Government intends to provide assistance to Ukraine in the total amount of USD 522 million, including USD 422 million in new energy assistance, and USD 100 million subject to the implementation of the measures by the respective Ukrainian authorities, provided for in paragraph 3 of this section.
3. Subject to the availability of funds, the Government of the United States of America intends to provide an additional USD 100 million in energy-related assistance to Ukraine provided that the relevant Ukrainian authorities make reasonable efforts to implement the following::
• approve the new charter and establish the Supervisory Board of the Gas TSO of Ukraine LLC – by October 30, 2023;
• show progress in the implementation of SE NNEGC Energoatom corporatization plan, namely:
o launch procedures for holding a competition for the selection of members of the Supervisory Board of NNEGC Energoatom – by November 30, 2023;
o establish Energoatom PrJSC – by December 31, 2023.
• The National Energy and Utilities Regulatory Commission establishes the procedure, scope, extent, and frequency of submission of information on the trading in wholesale energy products related to the REMIT legislation by April 1, 2024.

IV. Implementation

1. The Participants intend to form a Steering Committee made up of a representative from each of the following: Ministry of Energy of Ukraine, Ministry of Communities, Territories, and Infrastructure Development of Ukraine, National Energy and Utilities Regulatory Commission, State Nuclear Regulatory Inspectorate of Ukraine, Department of State of the United States of America, Department of Energy of the United States of America, and the U.S. Agency for International Development. The Steering Committee intends to meet quarterly to review progress and address key issues to achieve the purpose of this MOU, including with respect to the intended roles and responsibilities of the Participants under this MOU as identified above.
2. The Participants intend to mutually inform each other of any developments that may affect their cooperation under this MOU.
3. The Government of Ukraine intends to provide the U.S. Embassy in Kyiv with the information about the implementation of the steps listed in paragraph 3 of Section III of this MOU.
4. The Government of the United States of America intends to assess whether the Government of Ukraine has completed the steps listed in paragraph 3 of Section III of this MOU.

V. General Provisions

1. Relation to Framework Bilateral Agreement: Any assistance provided under this MOU is expected to be provided consistent with the terms of the Agreement between the Government of Ukraine and the Government of the United States of America Regarding Humanitarian and Technical Economic Cooperation, signed at Washington on May 7, 1992, including provisions of that Agreement relating to exemption from taxes and customs duties.
2. Duration: This MOU becomes operative upon the date of its signature by the Participants and is intended to remain operative for one year. The Participants may extend this MOU by mutual written decision. Either Participant may discontinue its participation in this MOU at any time but is expected to give sixty (60) days prior written notice to the other Participant.
3. Modifications: The Participants may modify this MOU by mutual written decision.
4. Effect of MOU: Nothing in this MOU is intended to give rise to rights or obligations under international or domestic law. The Participants specifically acknowledge that this MOU is not an obligation of funds. The Participants intend to maintain their own separate and unique missions and mandates and their own accountabilities. The cooperation between the Participants as outlined in this MOU is not intended to be construed as a partnership or other type of legal entity or personality. Each Participant is expected to bear its own costs for all expenses incurred by itself related to this MOU. The Participants intend to implement this MOU in a manner that does not interfere with any other arrangements between the Participants, either prior to or subsequent to the signing of this MOU. Nothing in this MOU is intended to be construed as an exclusive working relationship.