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Ukrainian authorities want to raise gas prices without losing political rating

Author : Ihor Rymskyi

20:48, 31 July 2017
Ukrainian authorities want to raise gas prices without losing political rating

Author : Ihor Rymskyi

According to sociological survey, if the elections were held on the next Sunday, then former Prime Minister Yuliya Tymoshenko would outstrip the current head of state by 5-7%. At the same time, the increase in gas prices and Tymoshenko's 100% rhetoric regarding this issue will only contribute to the growth of her rating.

20:48, 31 July 2017

Read original article at 112.ua

112 Agency

It seems, contrary to the statements of Prime Minister Volodymyr Groysman that the government will not allow the increase of gas prices, Ukrainians, most likely, won’t avoid this. On July 19, the district administrative court of the capital recognized the government's inactivity in the issue of paying compensation to NJSC Naftogaz Ukraine in connection with the sale of gas to the population at a special price and obliged the Cabinet to pay compensation to the monopolist. And the court approved its decision on the day when First Deputy Prime Minister Stepan Kubiv at the meeting of the government assured everyone that the rule about increasing gas prices for the population disappeared from the financial plan of the Ukrainian oil and gas monopolist. Taking into account the fact that, according to one of the influential deputies of Petro Poroshenko’s Bloc, in the fall there may be a cash gap in the budget and there is no money to cover it, the chances for an increase in the price of gas are significant. 112.ua tried to learn about games around the blue fuel and its prices.

Promises, promises ...

MPs began to speak on the possible increase in the price of gas for the population as early as the spring of this year. According to 112.ua sources in Naftogaz Ukraine and the Presidential Administration, already at that time was issued a draft resolution to raise gas prices for the population from the beginning of the heating season to about 8,000 UAH (352 USD) per 1,000 cubic meters. Later, the government even adopted a resolution that presupposed a rise in gas prices for the population to the level of imported parity (the price of gas on the European market plus the transportation cost plus the target premium of Naftogaz Ukraine) already from the beginning of the heating season 2017/2018, Moreover, the government even provided a formula for calculating the price of blue fuel for the population, and the Ministry of Energy and Coal Industry was obliged to calculate the appropriate price for gas.

At the same time, Prime Minister Volodymyr Groysman at a government meeting on May 30 categorically denied the information about the increase of gas price for the population since the beginning of the heating season.

"I heard that the government plans to raise the gas price to 8,500 UAH, I want to emphasize that this in no way corresponds to reality. This is an absolute lie, "assured the head of the government. At the same time, the updated memorandum on cooperation between Ukraine and the IMF, under which we can see the signature of Groysman himself, as well as the president of Ukraine Petro Poroshenko and the head of the National Bank Valeria Hontareva, is precisely the obligation of the authorities to raise gas prices for the population from the beginning of next heating season. Moreover, the price increase could have happened in April this year, however, the authorities seem to have been able to persuade the IMF to postpone fulfillment of its obligations.

... Meanwhile, the increase could happen

In the morning of July 19, despite the repeated statements of Prime Minister Volodymyr Groysman, Naftogaz Ukraine announced an increase in gas prices for the population from October 1 by almost 20%. According to sources of 112.ua in the Cabinet of Ministers, the corresponding norm in the financial plan of the Ukrainian oil and gas monopolist was previously agreed, but the head of government decided to change plans.

“Of course, the government does not want to take responsibility for extremely unpopular measures to raise gas prices for the people in the conditions of falling popularity of the authorities, "our interlocutors explain. Sources in the Presidential Administration note, in turn, that Administration was aware of Groysman's reaction to the indexation of gas prices, as well as about Naftogaz's suit against the Cabinet of Ministers. When asked why Groysman denied everything, the interlocutors noted that "he is still a prime minister and one of the pillars of the system ... although the environment of Poroshenko is embarrassed by the growing popularity of the head of government and his personnel ambitions."

It is interesting that Prime Minister himself admits a possible price increase. In an interview with one of the TV channels on July 24, already after the court's decision, he stated that "the price of gas for the population can vary within the size of inflation." And although he assures that there will not be a sharp increase, because the Cabinet of Ministers approved the appropriate decision, the fact that the annual inflation will exceed 10% may be a good cover for raising the prices for blue fuel.

In this regard, it is not surprising that the government is not in a hurry to appeal the decision of the District Administrative Court of the capital. As 112.ua was informed in the Appeal Administrative Court, at the moment no such appeal is registered in the court. "There was no complaint on this case," the court's information center said.

It should be noted that in accordance with the decision of the District Administrative Court of Kyiv, the government has 10 days to appeal the decision of the court of first instance. Whether the Cabinet will submit it, we have not yet been able to find out.

Sources of 112.ua in the Naftogaz note that the issue of increasing gas prices for the population since October 1 is fundamentally resolved. "And why should we refuse if no one waits for protests?", told us the interlocutor in the company.

However, for the time being it remains unclear how the issue of paying suppliers for energy resources in the framework of subsidies will be resolved by the government. Changes to the budget suggest allocating 14 billion UAH for these purposes, while the amount of debt is greater than this figure. In addition, in the case of tariff increase, there is a significant risk of growth in non-payments and an increase of subsidies number.

Do not forget about the possible rating losses. According to 112.ua sources in the Presidential Administration, a sociological survey in July shows that if the elections were held on the next Sunday, then former Prime Minister Yuliya Tymoshenko would outstrip the current head of state by 5-7%. At the same time, the increase in gas prices and Tymoshenko's 100% rhetoric regarding this issue will only contribute to the growth of her rating.

It is interesting to observe how the authorities will try to sit on two chairs - meet the IMF's demand and reduce the possible rating losses.

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