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President Signs Anti-Populist Tariff Law

President Signs Anti-Populist Tariff Law

11 October 2008

President Viktor Yushchenko yesterday signed a law that requires the central government and local administrations to compensate providers of residential utilities, including gas, electricity, heat and hot water, to the extent that central or local authorities set tariffs below costs. The law will take effect on January 1. Vladimir Nesterenko: This positive bill was barely noticed when parliament adopted it last month, on the same day as a populist bill that would have rolled back recent tariff increases. Since then the latter bill was canceled. The main thing the new law will do is prod local authorities to increase tariffs for heat and hot water, in order to avoid any mandatory subsidies out of local budgets. This is good for Kievenergo (KIEN: BUY), which operates Kiev’s heating system, and for GasCos and Naftogaz, which have had problems collecting from heat and hot water providers.

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