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Friday, February 23, 2018

In Ukraine, starting riots against the “tariff of genocide”

The next increase of tariffs for gas and utility services in Ukraine have forced citizens to take to the streets. “We will have to give the salary on utilities. And how to live?” – complaining about the protesters. And this is just a small symptom of a systemic energy crisis looming in Ukraine: rolling blackouts and lack of heat in homes in winter.

Patience, some people in Ukraine finally blew up. They took to the protest March “European prices – European wages” against the shock of increasing gas prices and utility tariffs. Thousands of protesters in Kiev in two columns marched to the Parliament building and the government building, blocking traffic. The building of the Cabinet in the end going from 5 to 12 thousand protesters, including the unions.

“If the government is talking about European prices, let gives and European salaries”

“We will have to give the salary on utilities. And how to live?” – say the protesters. “If the government is talking about European prices, let gives and European salaries”, – the people demand.

During a rally on Constitution square in front of Parliament, the trade unions announced the resolution with the requirement to justify the increase in tariffs for gas and utility services, as well as set October 1, guaranteed by the state minimum wage at an economically-viable level of subsistence in the amount of 3067 hryvnia (about 123 Euro), respectively, to raise pensions and scholarships. They also require to increase from August 1, wages at least 15% savings from the reduction by almost half since the beginning of this year the single social contribution. Trade Union organizations threatened to organize a nationwide strike in case of failure of their claims.

Addressing the gathering, representatives of the Ukrainian opposition parties did not hesitate in expressions in the address of President Petro Poroshenko and Prime Minister Vladimir Groisman.

The leader of Radical party Oleg Lyashko accused the country’s leadership in the deliberate destruction of the people. “In the history of the recent history of the state Poroshenko of Ukraine will be included as the authors of the tariff of genocide,” he said.

According to him, the government set the price of gas – seven thousand hryvnia per thousand cubic meters ($286) – “it is corrupt, unreasonable price, and the government is profiting”. Lyashko is sure that the Ukrainian gas price should be no more than 1580 UAH (64.5 USD) per thousand cubic meters. It is suggested to adopt a law according to which domestic gas production would go only to the needs of the population and housing.

In turn the leader of “Batkivshchyna” Yulia Tymoshenko demanded to “remove taxes on pensions to reduce gas prices and tariffs, and subsidies to pay people salaries and pensions.” According to her, the finances in the country for the people there, but they go for other objectives, in particular “the army spent two times more money than you need”.

Earlier, Parliament was forced to suspend work after the deputies from the party “Batkivschyna”, the Radical party, and independent MPs blocked the Parliament’s rostrum before the start of the plenary session, demanding to consider the validity of increase of tariffs for gas, heat and water. As stated by the Opposition bloc faction in the Verkhovna Rada, the growth of tariffs for communal services will lead to the complete impoverishment of the population, because many people today are not able to pay utility bills. As a result of another meeting of Parliament was canceled almost before it began.

Later Vladimir Groisman came to the meeting with the representatives of the ten largest trade unions of the country to discuss the situation. Following the meeting, he instructed the Ministry of social policy to consider the proposals of trade unions in the General tariff agreement between the government and trade unions, said social policy Minister Andriy Reva.

Then the government meeting was held. It Groysman in an attempt to calm the population supported the reform and updating of our payroll system. However, the way to increase payments to citizens, if the money is not backed by anything, he called populist.

To raise salaries today, the collapse of the economy from the point of view of macroeconomic stability, of course, a bad way. Surprised by the silence, that the Ukrainian authorities led the country to economic ruin.

The growth of tariffs is not economically justified

Serious increase of tariffs several times a year has become the norm for Ukraine. The last straw was the increase from July 1, doubled the tariffs for centralized heating and centralized hot water supply. Only two months ago, gas prices have already increased to European levels. Now the Ukrainians offered to pay significantly more than the purchase price of imported gas. Despite the fact that the country itself produces natural gas, which is significantly cheaper than imported and which would be enough to ensure a minimum population.

In fact unrealistic work rates. The estimated price of Russian gas for Ukraine for the second quarter amounted to 177 USD per thousand cubic meters, whereas the population of Ukraine from July 1 to sell gas at 289,3 USD or 7200 UAH per thousand cubic meters. “Pushing the issue of gas domestic production and leaving only the export and import figures, the population of Ukraine should buy gas at 4405 USD (177 dollars) per thousand cubic meters, not 7200 USD how it works now” – the economist “the Ukrainian choice” Alexander Koltunovich.

Moreover, in the third quarter of Gazprom called the gas price for Ukraine under contract at $ 167 per thousand cubic meters, it can buy imported gas even cheaper. So, tariffs for the population in the market the logic was in General decline. Another thing is that the authorities have overpaid, purchasing fuel from Gazprom, the so-called reverse European traders.

For comparison: prior to independence in 2013, the population was selling gas at 725 USD per thousand cubic meters, in 2014 – already at 1089 USD in 2015, and 3.5 times more expensive at 3600 USD. This year, the growth rates reached 7200 UAH per thousand cubic meters. And this is not the limit. Against the background of falling world prices for oil and gas the Ukrainians have already promised by the end of this year, the new price of gas in 9300 USD, says Koltunovich.

The expert estimated that after the increase in tariffs from July 1 for heating in a Studio apartment up to 50 sq. m will have to pay 1649 USD, two-room up to 80 sq m – 2638 USD. For hot water – about 500 UAH and 830, respectively. Just the cost of municipal services from 1 July 2016 will increase to UAH 2567,6 in a Studio apartment and up to USD 4369,4 in the bedroom (a little more than 11 thousand rubles). Such accounts are simply not affordable for most Ukrainians. “The minimum wage is 1450 USD (after tax even less) and the average in 4686 UAH (about 12 thousand rubles), even with subsidies and incentives to master the new tariffs will not all,” says Koltunovich.

“There is no economic justification, and common sense in the pricing of tariffs. Tariffs for fuel and utility services do not meet the level of solvency of the population. In the result, the vast majority of citizens are simply not able to pay the bills for utilities, and the system of granting subsidies are as far from the people, and the promise of monetization of social benefits on housing and communal services”, says Ukrainian economist.

In the end, the inability to pay such a high rent will result in problems for all utilities, which will face an unprecedented volume of defaults and lack of means for routine maintenance and preparation for the heating season. inflated tariffs for gas and utility services will not fill the budget, but will lead to the collapse of the entire housing and utilities system.

In fact this is already happening.

Problems with the heating season

If we do not take the necessary action, the country is ready for the heating season, so in winter the population may be without heat in apartments. Even the mayor of Kiev Vitali Klitschko understood the horror of the problems in the housing sector.

“We have to prepare sledge in the summer. To prepare for the heating season spent a lot of money. Now, however, blocked accounts 104 energy companies across the country. And there is a great risk that we will not be ready for the heating season. In this regard, we appealed to the government to resolve the situation. A misunderstanding between Naftogaz and energy companies could lead to the fact that people are without heat,” he said.

Previously, the company “Kyivenergo” said that stopped the preparation of municipal energy facilities and communications for the new heating season in conjunction with penalties from the “Naftogaz of Ukraine”. The point is, Kyivenergo owed to Naftogaz for gas deliveries. The gas debt, the company eventually paid off, but Naftogaz has added more and penalties for late payment of 1.5 billion USD. The legitimacy of charging interest on 1.2 billion Kyivenergo is contesting in court. But the remainder of the fine to 372 million USD and caused the arrest of all accounts of the company, the company’s work is completely blocked.

The problem with chronic non-payment was the result of inflated gas prices. It is a vicious circle: the population to pay for gas nothing, and resource-supplying companies have nothing to pay for raw materials with Naftogaz. The solution of the problems with the deficit of Naftogaz and its reform is one of the important requirements of the IMF. That’s why raise the rates, and the state-owned company so zealously took not only out of debt but also for issuing fines.

Everything else, Kyiv should actively start pumping gas in underground storages for the heating season, however, to get to this promised just in July. At the end of June in underground storage facilities was only 9.5 billion cubic meters, of which buffer (inactive) gas is about 7 billion cubic meters (it cannot be pumped out of the storage. That is real gas in storage total 2.5 billion cubic meters. To pass the winter season without incident, it is necessary to download an additional 8-9 billion cubic meters by mid-October, said the Naftogaz.

Problems with the light

This energy Ukraine’s problems do not end there. Within two weeks the country can enjoy the rolling blackouts.

The district authorities of Kyiv region received warnings from the capital about possible rolling blackouts in connection with its shortage, said local newspaper “Vesti”. “Warned orally. Schedule of outages for the population yet,” said Baryshevsky district Council region. Districts were asked to make a list of the objects which you want to disable – hospitals, maternity homes, etc. “From Kiev go signals. Unofficially warned that if in the next two weeks will not buy coal, the blackouts are not inevitable,” – confirmed in the Executive Committee of Fastiv city.

But in Borodyansky district at the weekend was already off the light for the whole day. Tuesday from 10.00 to 16.00 there was no light also in Tokmak of Zaporizhzhya region. Was the cuts in two districts of Donetsk region Mariupol and Berdyansk, Zaporozhye region.

The shortage of electricity providers explain the increased load. “Because of the heat were more likely to use air conditioning. Fuses do not. If the load is not reduced, they will fail, followed by the transformer substations and cable lines. Kiev can remain without light for at least two days”, – explained the press-Secretary of the regional power Zoreslava, Zurenko.

Economic expert Alexander Okhrimenko considers that the reason is far-fetched. “Local authorities were instructed to reduce electricity consumption and are already doing it, turning off the light under the form of crashes and repair, but in fact there is no electricity due to the shortage of coal,” – says the expert.

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