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Ukraine could review household gas tariffs in October-November

Ukraine could review household gas tariffs in October-November

19 September 2011

The Ukrainian government could revise household tariffs for natural gas at end-October or November, according to statements made by First Deputy Prime Minister Andriy Klyuev on Friday at a conference (via Bloomberg). Klyuev said an increase was possible after Ukraine completes negotiations with Russian on natural gas imports, which it hopes to do by the end of October. Earlier in the day, President Viktor Yanukovych said Ukraine might introduce a gradual increase in household gas rates after it raises social standards such as pension, benefits and salary payments. The International Monetary Fund’s representative in Ukraine Max Alier said last week at a round table that the IMF still insisted on Ukraine raising household gas tariffs before resuming its USD 16 bln loan program. Brad Wells: After almost four months of tough talk from top Ukrainian officials denying any intention to raise the household gas tariffs or renew work with the IMF, the two statements by Klyuev and Yanukovych on Friday are notable. However, we do not believe the government will move quickly on this issue until it has no other choice. The government controls all the key levers to implement the change, but with parliamentary elections in October 2012 it has been lax to provoke the population with another tariff increase (it raised rates by 50% in August 2010).

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