Ukraine to change energy tariffs to comply with IMF calls

Ukrainian government announces new energy tariff regulations to meet IMF demands, in an effort to reduce budget subsidies for state-run energy company.

Photo by: Reuters (Archive)
Photo by: Reuters (Archive)

Ukrainian Prime Minister Volodymyr Groysman (R) listens to First Vice Prime Minister and Economy Minister Stepan Kubiv during a government meeting in Kiev, Ukraine, April 20, 2016.

The Ukrainian government on Wednesday unified natural gas tariffs for consumers as it seeks to meet demands by the International Monetary Fund to secure financial aid.

The move to introduce one flat tariff was announced by new Prime Minister Volodymyr Groysman, whose election to office ended months of political turmoil that has hampered talks with the IMF to unlock $1.7 billion in new loans in exchange for reforms aimed at transforming Ukraine's battered economy and ending widespread corruption.

Visitors are silhouetted against the logo of the International Monetary Fund at the main venue for the IMF and World Bank annual meeting in Tokyo October 10, 2012.

"This is consistent with the Ukrainian obligations to the International Monetary Fund," Groysman told a government meeting, adding that the decision could reduce gas prices for some consumers.

Most, however, will face higher prices, complying with IMF calls for Ukraine to increase energy tariffs for households and utilities in an effort to reduce budget subsidies for state-run energy company Naftogaz.

Groysman said that new single tariff to come into effect next month will be 6,879 hryvnia ($272) per 1,000 cubic metres of gas used.

The outgoing two-tier system's winter pricing was 3,600 hryvnias per 1,000 cubic metres for up to 1,200 cubic metres of gas, rising to 7,188 hryvnia for consumption above 1,200 cubic metres.

Ukrainian servicemen walk past the headquarters of Ukraine's national joint stock company Naftogaz in Kiev March 26, 2015.

Most Ukrainian households use slightly more than 1,200 cubic metres during the winter, according to Naftogaz.

The new system should also help to reduce corruption in the sector, Groysman said.

The old system was open to manipulation, Groysman said, through the sale to industrial users of higher-priced gas that was meant to be sold to households at lower prices.

TRTWorld, Reuters