Under the USAID-funded Ukraine Energy Security Program (ESP), led by Tetra Tech, VIS was contracted by Mercados to implement a pilot project supporting the gas distribution company of Kirovograd in Southern Ukraine. The project aimed to identify, evaluate, and prioritize necessary investments for the optimization and development of the distribution network (decommissioning, replacement, rehabilitation, and expansion).
VIS conducted a thorough review of the DSO’s asset register and development plans, carried out a gas leakage verification survey, and assessed the rationale of necessary investments. A detailed financial and economic appraisal model was developed to assess investment options, including cost-benefit case studies on meter replacement and installation. VIS identified additional projects beyond the existing investment plan and supported the DSO in categorizing and prioritizing investments. A revised investment plan was formulated.
VIS reviewed the gas distribution tariff methodology set by the Regulator, and assessed the extent to which the costs of investments could be financed through tariffs. Improvements in the tariff regime for DSOs were proposed and proposals were formulated for accessing additional potential sources of finance and improving the bankability of the investment plan. VIS also provided targeted capacity building in investment planning and project appraisal.