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Monday, October 24, 2016

Ukraine became Europe in terms of gas prices

In Ukraine, finally appeared a figure, which reached the European level. Here only population of the country this is not sweet. Now Ukrainians pay for gas like the Europeans. The Ukrainian government has fulfilled the requirement of the IMF for loans, and the national Bank saw no risks. Only here in the Maidan promised European salaries to Ukrainians did not become.

The national Bank of Ukraine supported the Ukrainian government’s decision on increasing gas prices to European levels. The regulator does not see any risks for the Ukrainian economy.

“In fact, the dream of independence realized, now Ukraine has gas prices in the EU, but the salary in the country is far from EU”

“We support this decision of the government, as it is important for the recovery of the balance of “Naftogaz of Ukraine” and will not have a significant impact on inflation”, – says Deputy head of the NBU Dmitry Sologub.

The national Bank kept the inflation forecast at 12% at the end of 2016 and 8% by the end of 2017. Meanwhile, the Ministry of economic development and trade of Ukraine expect more price rises by 13.5%. However, all these forecasts may be too optimistic. Only in 2015 inflation in Ukraine was 43.3%. And the increase in gas prices for households to market level will be consequences and may increase inflation in the country.

Thus, according to the NBU, and only in 2016 the average price of gas will increase by 42%, and in 2017 and by another 22%.

Ukrainians began to pay market prices for gas from 1 may. Initially the increase was to take place in April, but due to the change of the government is fatal to the population the decision was postponed for a month.

In “the Ukrainian choice” explain that from may 1, increased prices for gas, which is used for cooking and heating water. Previously operated a preferential price during the heating season for the first 200 cubic metres for private houses and apartments with independent heating. Now she rose from 3.6 to 5.4 UAH UAH per cubic meter. The price of everything beyond that grace amount, remains at the level of 7.2 USD.

Thus, the government of Ukraine has fulfilled the requirement of the IMF to increase domestic gas prices to market levels. Now the Ukrainian population and enterprises Teplokommunenergo will pay for gas at the same rate. The NBU explained that a single tariff for gas – 6,88 UAH per cubic meter – will be equal to the purchase price of imported natural gas country – 6879 USD per thousand cubic meters (273 dollars per thousand cubic meters).

However, not only the gas for Ukrainians will be unaffordable. Then automatically twice as expensive heating (from USD 16 to USD 30-32 per square meter) and hot water (38-42 76 to 85 USD to USD per cubic meter).

“In fact, the dream of independence realized, now Ukraine has gas prices in the EU, but the salary in the country is far from EU”, – says Director of the Ukrainian analytical center Alexander Okhrimenko.

So, considered an expert, the average salary in Ukraine in 4920 USD or 165 euros, you can buy 723 cubic meters of natural gas. Even in the poorer countries of the EU the situation is not so deplorable. “Even in the most impoverished Bulgaria and Romania the income of their residents is much higher, to pay bills for gas,” – says Okhrimenko. So, it is estimated that Bulgarians can buy at 370, and Romanians – on a 410 cubic meters more than the Ukrainians. Residents of the Baltic countries can afford on an average salary to buy more than twice as much natural gas, and the Czechs and the poles – four times more than the Ukrainians.

At the same time, like Ohrimenko, to the Maidan, the price of one cubic meter of natural gas for Ukrainians amounted to EUR 0,07 (0,24 euros instead of the current, rising in three and a half times), and then the Ukrainians could on his salary to buy 4332 cubic meter of gas (not 723 Cuba). That is, in 2013, the Ukrainians could afford on his salary to buy one and a half times more gas than can now afford a Czech or a pole.

“But the Ukrainian people could not tolerate such low gas prices and therefore came to the Maidan with the requirement to make gas prices in the EU. That’s why the Ukrainian authorities “on the Maidan” and fulfill the Covenant of the Maidan. Now “eat yourself to health and enjoy that independence won,” writes Alexander Okhrimenko.

That though as-that to cover such a clearly unfair situation with gas prices, the Ukrainian government announced the indexation of the minimum wage 72 C, the subsistence level on 69 USD and the minimum pension is 56 USD. But such a slight increase in performance, of course, can not compensate much more significant – at times – the growth of tariffs for housing services.

This increase in payments is but a drop in a sea of devalued wages in the country. In comparison with 2013, hryvnia devaluation and galloping inflation devalued wages of Ukrainians in three to five times, according to “the Ukrainian choice”. Finally, the may rise in gas prices – not only in this year. The next increase of tariffs on certain utility services are planned in the fall of 2016.

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