Gas and electricity tariffs for population are 50% of market prices - IMF memorandum

Gas and electricity tariffs for the population are 50% of market prices.

This is stated in the memorandum of cooperation with the International Monetary Fund, Ukrainian News Agency reports.

It is noted that although electricity prices for households were increased in 2023 and 2024 from a low base, tariffs for heat and water have been subject to a price moratorium since the beginning of the war.

"Despite the increase, household electricity prices are estimated to cover about half of the price for small businesses in Kyiv, while household gas prices are approximately 50 percent of the cost recovery level based on market gas exchange prices. A plan is needed to create a sustainable sector in the post-war period (including a reduction in quasi-fiscal liabilities), where utility prices are cost-recovery and a new tariff-setting methodology takes into account social considerations," the memorandum says.

It is reported that the tariff increase will help restore profitability in the consumer energy sector, ease the debt burden in some parts of it, and stimulate market entry and competition in wholesale and retail energy markets, while stimulating energy efficiency measures.

At the same time, the most vulnerable households need to be protected from higher tariffs, in particular by reviewing the subsidy for housing and communal services to increase its efficiency and targeting.

The main challenge in this regard will be the proper identification of vulnerable households in need of support.

As Ukrainian News Agency earlier reported, the National Bank assumes an increase in utility tariffs in 2026.