Unbundling Naftogaz

For most of its history, one state company produced gas, imported gas, sold gas and owned the pipelines that carried everyone's gas. Every one of those roles conflicted with the others.

Why the conflict matters

A pipeline is a natural monopoly. If the monopoly is owned by a company that also sells gas, it has both the motive and the means to make life difficult for competing suppliers: through connection terms, capacity allocation, maintenance scheduling or simply information.

No competitor will enter a market on those terms, so the market does not develop and the incumbent stays dominant by structure rather than by performance.

What unbundling required

Legal and operational separation of the transmission system operator, with its own management, staff, systems and budget, and rules preventing the parent from directing it.

Certification by the regulator, confirming that the separation is real rather than nominal.

And, crucially, that the operator's revenue comes from published, regulated tariffs rather than from a commercial relationship with any shipper.

What it produced

A gas market with multiple suppliers, in which industrial and household customers can change supplier and in which imported gas can reach a Ukrainian buyer without passing through the incumbent.

The wider point

Ownership structure is not a technicality. Where a monopoly network sits determines whether competition is possible at all, and no amount of regulation compensates for putting it in the wrong place.

Separating the pipeline from the company that sells through it is an accounting matter on paper and something else entirely at the table. When the same company is both the carrier and a competitor, capacity allocation stops being a service and becomes a preference — I have met this in machinery distribution too, where a distributor who also sells their own product is never neutral. The value of unbundling is not efficiency but the removal of that conflict.