The Ukrainian government
has decided to cancel reduced prices of natural gas for households and set a
single market price from May 1, 2016, at the level of a purchasing price of
imported gas, according to a Cabinet resolution dated April 27, 2016.
The single price is fixed at UAH 6,878 ($275) per 1,000 cubic meters.
The new price consists of the price of imported gas with costs of delivery
to the Western border (UAH 4,942 per 1,000 cubic meters), value added tax (UAH
1,147 per 1,000 cubic meters), costs of transportation inside Ukraine (UAH 219
per 1,000 cubic meters), gas distribution costs (UAH 513.7 per 1,000 cubic
meters), and regional gas distribution companies' commission (UAH 57.4 per
1,000 cubic meters).
Earlier, during the heating season, some households in
Ukraine were able to pay for the consumption of up to 200 cubic meters of gas
per month UAH 3,600 hryvnia (about $144) per 1,000 cubic meters of gas. When
consuming large volumes of gas, the price was UAH 7,200 (about $288) per 1,000
cubic meters.
Ukrainian President Petro Poroshenko described the decision to introduce
the single price as a serious anti-corruption measure.
Ukrainian Prime Minister Volodymyr Groysman said that the decision was
uneasy and could trigger broad debates in the public, but it would let Ukraine
get rid of all existing schemes that allowed earnings on a difference in gas
tariffs.
At the same time, the Cabinet additionally allocated UAH 5.3 billion for subsidies
this year to cover the subsidies recipients will have in connection
with the introduction of the single price of gas. Thus, gas subsidies in 2016
will exceed UAH 40 billion. The Ukrainian government says that the amount will
be enough to cover low-income households' gas costs.
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