Cabinet introduces regulated gas price for Feb.-Mar. 2021

Ukraine’s cabinet
published on Jan. 18 a resolution to introduce interim regulation of natural
gas prices to be supplied for households. The regulated price of UAH 6,990 /
tcm (without distribution costs) will be introduced since Feb. 1 until the end
of COVID-related restrictions, but no more than Mar. 31. The government
attributes this measure to being a program of protecting the population from
the consequences of the quarantine restrictions, also formally having added
natural gas to the list of goods of social importance during the quarantine
period.

For January, the
price of natural gas from suppliers was in the range of UAH 7,200 to 10,000 per
tcm.

Recall, the cabinet
decided last week to introduce a price ceiling for natural gas, a measure that could have concerned the IMF, according to the finance minister.

Alexander
Paraschiy: The
cabinet’s explicit link of the gas price cap to the COVID-related crisis, as
well as the temporary nature of the cap, look like solid arguments to the IMF,
to which Ukraine implicitly committed to maintaining a liberalized natural gas
market.

Therefore, we stay on our position that if Ukraine
won’t be able to reach agreement with the IMF on a new loan tranche soon, this
will happen not because of the gas pricing issue. That said, we continue to
assess the probability of the next IMF tranche in 1Q21 at no more than 50%.