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26.7 27.25
Economy 2019-08-15T05:06:41+03:00
Ukrainian news
Cabinet Proposes Quarterly Increase Of Gas Prices For Households By 2-3% From April To IMF

Cabinet Proposes Quarterly Increase Of Gas Prices For Households By 2-3% From April To IMF

The Cabinet of Ministers has proposed to the International Monetary Fund the idea of raising the price of natural gas for households by 2-3% quarterly over a period of 1.5 years, beginning in April 2018.

Informed sources disclosed this to the Ukrainian News Agency.

According to sources familiar with the content of the relevant documents, the methodology is designed to avoid sharp increases in gas prices.

According to preliminary calculations, the price of gas should increase by about 16% by October 2019 as a result.

Thus, the government will be able to avoid a sharp increase in subsidy payments (which it may have to make in case of a significant one-time increase of gas prices) and the risks of an upsurge in inflation.

Simultaneously, the government has prepared and submitted to the IMF two options for imposition of the special obligation to supply natural gas to households and heating enterprises for three years (until April 1, 2021).

The first option envisages gas supply companies buying 10.9 billion cubic meters of gas (out of the 16.2 billion cubic meters that is expected to be produced in 2018) directly from the UkrGasVydobuvannya state gas company at the current price of UAH 4,942 per thousand cubic meters. (UAH 5,930, including VAT) for supply to households.

The remaining 5.3 billion cubic meters of gas is expected to be sold to the Naftogaz of Ukraine national energy company at the same price for supply to heating utilities.

However, this does not take account of the approximately 800 million cubic meters of gas that UkrGasVydobuvannya uses for technological needs and the volume of gas that remains with UkrGasVydobuvannya's partners under two agreements on joint operations.

The second option also envisages UkrGasVydobuvannya selling the same volume of gas (10.9 billion cubic meters) to gas supply companies at the same price (UAH 4,942 per thousand cubic meters or UAH 5,930 per thousand cubic meters, including VAT) for supply to households in 2018

The remaining 5.3 billion cubic meters of gas is no longer intended for The Naftogaz of Ukraine but for sale on an exchange.

As Ukrainian News Agency earlier reported, the Cabinet of Ministers has postponed implementation of the resolution No. 187 indefinite because its implementation in its current version would have required increase of gas prices by 17% in October 2017.

The government is currently holding talks with the International Monetary Fund on changing the methodology for calculating the price of gas for households and heating utilities.

The gas price for households may increase by 62% to UAH 8,030 per thousand cubic meters in April under the current methodology for calculating the price.

The price of gas may increase by 73% in October 2018, compared with the current price of UAH 8,530 per thousand cubic meters.

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