Ukraine Cabinet postpones residential gas price hike
3 October 2017
The Ukrainian
government decided last week to postpone publishing a resolution that required
raising natural gas prices for households and heating utilities as of October, the ukranews.com news site reported
on Oct. 2. A March Cabinet resolution required that this gas price be
determined based on an import parity principle, as the government and IMF
had agreed upon.
The government was
supposed to increase prices as of October 2017 if the calculated price exceeded the
existing one by 10% or more. Based on various calculations, this should have
raised retail gas prices by 18%-19%. Ukraine’s PM Volodymyr Groysman voiced his
opposition to raising gas prices for the public, and the government is
currently seeking to revise its pricing methodology for gas to avoid any increase.
A new methodology has yet to be agreed upon with the IMF, which insists upon an
import parity principle.
talks with the IMF on a new loan tranche. This week, Ukraine’s parliament is
scheduled to adopt pension reform, which is the most critical demand of the
IMF. But the loan tranche won’t come without resolving the gas pricing issue.
We still believe Ukraine and the IMF will be able to find common ground in the
coming weeks, and Ukraine will be able to receive at least USD 1 bln in a new
IMF tranche by the year end.
