presentation of the gas transmission system operator ... · 2 tso branch extension and optimization...

Advisory

Naftogaz of Ukraine

19 September 2018

Presentation of the Gas Transmission System Operator Unbundling Roadmap 2018-2020

PwC

19 September 2018

Input to the presentation

Name Advisor Time Scope Key outcome

1 Naftogaz

Unbundling

Project

Management

06.2017 –

02.2018

To facilitate the efficient and timely unbundling

of gas transmission activity of Naftogaz of

Ukraine

✔ Branch TSO created

in 11.2017

2 Ukrainian Gas

TSO Target

Operating

Model

08.2017 –

07.2018

To prepare a business and structural plan and

a target operating model based on European

best practices

✔ Preparation of TOM

for the future TSO of

Ukrainian GTS

3 Comprehensive

study of

Underground

Gas Storage

Facilities

in Ukraine

07.2017 –

ongoing

To run independent technical review of

existing assets and define optimal storages

portfolio together with implementation

roadmap

✔ Comprehensive

study on UGS facilities

in Ukraine

4 Support in

unbundling

process

implementation

07.2018 –

ongoing

To support NAK in unbundling process

implementation through pilot function

optimization and strategic business plan

Development of the action plan for TSO

extension and separation.

✔ Strategic Business

Plan, investment

planning function

transferred to TSO

Branch;

✔ Action plan for TSO

extension and

separation

2

For the past one and a half year, Naftogaz of Ukraine has been conducting numerous projects supporting unbundling process

List of projects

Naftogaz of Ukraine

EU-

funded

EU-

funded

PwC

19 September 20183

Unbundling action plan is divided into 3 stages which will allow to reach a final goal – formal legal unbundling

Unbundling roadmap

Naftogaz of Ukraine

Storage Branch

separation

TSO Branch extension and optimization

Legal unbundling

1

2

3

Organizational

separation at all levels

Cost and process

optimization

Formal legal

unbundling

Adjustment to comply

with EU standards

PwC

19 September 2018

KharkivTG aparat(3-4 FTEs)

LvivTG aparat (~220 FTEs)

Regional branches

4

Separation of Storage Branch is planned to be based on Lvivtransgaz regional branch and includes also flattening of management structure

Storage Branch separation plan

Naftogaz of Ukraine

As-is To-be

7 units under regional branches

UTG HQ

Services/

other

TSO

Branch

Storage Production Units

(SPUs)

1st

tier

3rd

tier

Cherkasytransgaz

Kyivtransgaz

Prykarpattransgaz

Kharkivtransgaz

Lvivtransgaz

2nd

tier

Storage Branch – based on Lvivtransgaz

Proletar-

ske SPU

Mryn

SPU

Dashava

SPU

Opary

SPU

Stryi

SPU

Bogorod

-chany

SPU

Uhersko

RSS

1st

tier

2nd

tier –

SPUs

From

those

branches

only LPUs

related to

storages

Main

base for

Storage

Branch

✔

UTG aparat(15-20 FTEs)

PrikarpatTG aparat(3-4 FTEs)

KyivTG aparat aparat(3-4 FTEs)

Flattening

structure

from 3-

levels to

2- levels

1 Storage Branch separation

2 TSO Branch extension and optimization

Legal unbundling3

PwC

19 September 2018

Full separation of transmission and storage functions within UTG is planned to be performed till beginning of 2019

2018 2019 2020

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec H1 H2

I. Storage Branch separation plan

1. Formal decision about

Storage Branch creation

2. Selection and transfer of

assets, people, procedures,

updating IT systems

3. Construction / reconstruction

of measurement points for all

storages

4. Creation of necessary

Storage Branch functions

currently not present in UTG

5. Storage SCADA development

and implementation

6. Optimization and

effectiveness improvement

Storage Branch creation finished – 1.01.2019

5Naftogaz of Ukraine

Schedule of Storage Branch separation plan (main tasks)



Legal unbundling3

PwC

19 September 2018

Target structure of Storage Branch could be achieved at the beginning of 2019


Storage Branch

Commercial

dispatching

Commercial

relations,

contracts and

customer

service,

international

relations

Strategy and

development

Relationship

with the

Regulator

Technical

dis-

patching

HR

department

Legal

services

Security Materials

and

technical

resources

Procurement Property and

land

Administra-

tive and

household

support

Finance and Accounting

Fuel and

energy

resources,

energy

saving,

ecology

Metrology

(gas

measurem

ent)

Planning and

ordering of

maintenance

and repairs,

supervision

Technical

docu-

mentation

Auto-

transport,

machine

tools, load-

lifting

equipment

Information

technology,

automation

and commu-

nication

Labour

protection

Capital

construc-

tion

Secret

paperwork

and

mobilization

training

Support functions Financial functions

Lvivtransgaz

Branch

Proletarske

UGSSMryn UGSS Dashava UGSS Opary UGSS Stryi UGSS

Bogorodchany

UGSSUhersko RSS

SPUs (all storage SPU’s will be transferred to Lvivtransgaz)

Concept of storage system operator org structure (Storage Branch)

Technical and operational functions Commercial and business dev.



Legal unbundling3

Initial concept of UTG

PwC

19 September 2018

1st

tierRegional

branches

merged

with

Branch

TSO

2nd

tier –LPUs

manage

technical

processe

s only

1st

tier

3rd

tier

2nd

tier

35 units under regional

branches

7

Extension plan foresees merger of TSO Branch with Regional Branches as well as flattening of the management structure from 3 to 2 levels

Key assumptions of TSO Branch extension plan

Naftogaz of Ukraine

Regional branches

As-is

UTG HQ

Services/

other

TSO

Branch

Linear Production Units

(LPUs)

Kyivtransgaz

Prykarpattransgaz

Cherkasytransgaz

Lvivtransgaz

TSO Branch

LPUs LPUs LPUs LPUsBase for

Storage

Branch

Kharkivtran

-sgaz

Prykarpat-

transgaz

Kyivtran-

sgaz

Kharkivtransgaz

✘

Flattening

structure

from 3-

levels to

2- levels

Reduction

in number

of LPUs

from 35 to

10-12

Cherkasy-

transgaz



Legal unbundling3

~ 137 FTEs transferred to TSO Branch in October 2018 (pilot project)

~ 5 200 FTEs transferred to TSO Branch in June 2019

~ 7 200 FTEs shall stay in UTG and should act as external service

To-be

PwC

19 September 2018

Pilot Project assumes creation of the new Network Development and Planning Department in Branch TSO and transfer of the function in October 2018


Network Development employees transfer

As-Is location of employees involving

in network development function

Transfer to Branch TSO

Branch

TSO

Transfer before

18.Oct 2018

• The final number of FTEs that will be transferred will

be clarified after confirmation of design of to-be

processes

UTG HQ

16 FTEs

Regional Branches

140 FTEs

LPUs

232 FTEs

Capital

Construction

Sub-

Department

Investment

Project Sub-

Department

UTG HQ’s

departments that

are subject to

analysis in terms

of FTE’s

transferring to

branch TSO

Regional Branches

Departments that are subject to analysis for FTE’s

transferring

1

2

3

1

2

Department

of

compressor

stations

operation

Department

of gas

pipeline

operation

Regional Branches'

departments that are

subject to analysis in

terms of FTE’s

transferring to

branch TSO

Capital

construction

Department

Budget

office (excl.

Kharkiv)

Transferred at

a later stage

~16 FTEs

~121 FTEs

NA



Legal unbundling3

~137 FTEs

PwC

19 September 2018

2018 2019 2020

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec H1 H2

III. TSO separation plan

1. Formal decision about TSO extension

2. Assets (low value assets, land)

2.1. Selection of assets related to transmission not

yet transferred to TSO and subsequent transfer

2.2. Identification and resolving of land plot issues

3. Organizational structure & people

3.1. Analysis, approval and development of Extended

TSO 2-level org structure

3.2. Selection and transferring of people, merger of

RBs with Branch TSO and merger of LPUs

4. Preparation and/or updating of internal processes

and procedures

5. SLAs & internal agreements preparation,

acceptance and signing by all sides

6. Selection and transferring of existing contracts to

Extended TSO

7. IT systems - selection and transferring of IT

related assets to TSO together with Identification of

required changes to IT system and implementation

8. Headcount outsourcing – SLA with UTG

9. Project Management activities execution

Creation of fully functional and certifiable extended TSO based on Branch TSO and Regional Branches is planned to be finished in mid 2019


TSO extension

kick-off - 1.10.2018

TSO extension finished - 1.06.2019



Legal unbundling3

Schedule of TSO extension plan (main tasks)

TSO ready for conditional

certification – mid 2019

PwC

19 September 2018

A new optimized TSO structure will be developed and equipped with all needed functions prior to legal unbundling in 2020


TSO HQ*

Unbundled TSO structure

Regional service

centers

Regional service

centers

Regional service

centers

Regional service

centers

RSCs (not filias) based

on reduced number of

LPUs

Regional branches

within TSO HQ

All critical functions

within TSO HQ

(centralized)

Target TSO structure assumes that:

✔ All decisions will be made at TSO

✔ FTEs will be mostly optimized

✔ Follows EU recommendations on TOM (WECOM)

✔ 2 level structure will be developed

✔ All critical functions will be transferred or created

within TSO HQ



Legal unbundling3

Concept of target TSO structure

PwC

19 September 2018

Unbundled TSO structure will centralize functions, so far scattered, improving operational efficiency of the entity


C

Commercial

C2 Strategy, business

development and internat.

relations

C3 Network development

and Invest. planning

C4 Contracting and

customer relations

C5 Allocation and

commercial balancing

TM

Transport

management

TM2

Metering data

management

TM 3

Dispatching execution

IT

IT 2

IT operations and projects

F

Finance

F 2

Financial accounting

F 3 Management

accounting budgeting

F4 Economic and financial

analysis

CS

Corporate services

CS 2

Legal services

CS 3

Procurement

CS 4 Facility and fleet

management

CS 5

Cyber security

AM

Asset management

C1

Regulatory management

TM 1

Dispatching

IT 1

IT policy & strategy

F 1 Treasury and cash

management

CS 1

HR

AM 1

Strategic asset

management

AM 3

Project management

AM 4

Inspection and

maintenance

AM 5

Right of way

AM 6

Technical documentation

AM 2

Engineering

Supervisory board

Executive body (executive board or CEO)

Compliance officer*

Corporate secretary*

HSEQ Officer

Risk management*

Internal audit*

Corporate communication

Target TSO organizational structure according to WECOM’s TOM – HQ

* Reporting either to the supervisory board or the executive body



Legal unbundling3

EU-

funded

PwC

19 September 2018

2018 2019 2020

Sep Oct Nov Dec H1 H2 H1 H2

III. TSO legal unbundling

1. Creation of the new company

under UTG (NewCo TSO)

2. Transfer of TSO employees to

the NewCo TSO

3. International partner

involvement

4. Application for conditional

certification

5. Change of ownership of

NewCo TSO

6. Transmission assets to

NewCo TSO

7. Implementation of conditional

certification decision

TSO legal unbundling plan assumes TSO readiness for certification in mid-2019, while conditional certification is expected in H1 2020


Schedule of TSO legal unbundling (main tasks)

High-level roadmap – work in progress



Legal unbundling3

NewCo TSO operational - 1.06.2019

(aligned with TSO extension)

NewCo TSO applies for conditional

certification – mid 2019

Conditional

certification H1 2020

PwC

19 September 2018

Thank you!

12

Thank you!

presentation of the gas transmission system operator ... · 2 tso branch extension and optimization...

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