• 20/07/2024 18:07

Gradual increase in utility tariffs: what the government agreed on with the IMF

The Ukrainian government, in its letter of intent to the management of the IMF, allows for a gradual increase in utility tariffs for the population during the war and after its end. This is stated in the updated Memorandum with the IMF.

Gradual increase in utility tariffs: what the government agreed on with the IMF

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“In general, potential reform measures include gradual tariff increases (taking into account new tariff methodology and social considerations during war), provision of external financing and provision of transparent and exclusive direct budgetary support to energy state-owned enterprises, pending the availability of budgetary resources,” it says. document.

The Memorandum notes that stabilizing the system will require a gradual increase in gas and electricity tariffs in order to recover costs (especially after the war ends), with the allocation of adequate and targeted resources for vulnerable households.

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The document also states that the lifting of the moratorium on disconnecting consumer debtors from December 29, 2023 will help improve payment discipline.

Reforms in the energy sector

According to the document, after the end of the war, the reform program in the energy sector will require the resumption and strengthening of competition in the wholesale and retail gas markets.

The Cabinet of Ministers will adopt a “Road Map” for the gradual liberalization of the gas and electricity markets with a clear implementation plan.

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It is also noted that heating and utilities companies accumulated significant debt to Naftogaz before and after the start of the war. The reason for this is the difference in tariffs and the consequences of the war.

In this regard, the amount of overdue debt and the financial position will be established using an analysis carried out by a reputable auditing firm (structural lighthouse, end of June 2024).

This will help clarify the amount of debt and the financial position of heating and utilities enterprises, including the reasons for the accumulation debt on the eve of the 2024/25 heating season.

The updated Memorandum with the IMF was signed by the President of Ukraine Vladimir Zelensky, Prime Minister Denis Shmygal, Minister of Finance Sergei Marchenko and the head of the NBU Andriy Pyshny. It contains voluntary obligations of the country's authorities to take certain steps.

Moratorium on increasing tariffs

In Ukraine there is a moratorium on increasing tariffs for gas, hot water and heating, but it does not apply to electricity and cold water. water.

The NBU inflation report notes that the moratorium on tariff increases can only be lifted in 2025. Moreover, this will happen after martial law is lifted.

minfin.com.ua

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