According to the provided information, the cooperation program provides the incensement up to the market prices. It means that the current tariff has to be increased by 40 percent.
The calculation of the market tariff is proceeded based on an import parity – the average price for the gas import over a certain period of time.
This is the main feature in the structure of the gas price. Moreover, the price formation includes a forecasting cost on the German gas trading platform NCG and the transportation price from NCG through Germany, Czech, and Slovakia to the western border of Ukraine.
Previously, it was decided to increase the tariffs once but now, they propose to hold the gradual increase within a year. According to the sources, Ukraine can’t renege on the conditions. The IMF expects that another increase will happen yet in spring 2019 and in the fall.
As we reported earlier, on October 19, the Government adopted a decision on gas price increase by 23.5 percent from November 1. Within one hour after the relevant decision of the Cabinet of Ministers was adopted, a statement appeared on the website of IMF that Ukraine and IMF reached an agreement on a new 14-months support program of economic policy Stand-By Arrangement (SBA), which to change the Extended Fund Facility (EFF) adopted in March 2015 and expiring in March 2019.
The Monetary Fund expects that IMF Council to adopt the program by the end of 2018 under the condition that Ukraine fulfills all agreements, including the adoption of the state budget by the Ukrainian Parliament, which corresponds to the recommendations of the Fund.