Page 10 - FSUOGM Week 20 2021

FSUOGM POLICY FSUOGM

Ukraine imposes controls

on fuel prices

UKRAINE UKRAINE’S government introduced con- co-operation with the International Monetary
trols on retail gasoline and diesel prices in Fund (IMF). Ukraine is awaiting $2.5bn in loans
Industry has said the an attempt to stem rising inflation, in a move from the IMF, but the IFI had listed liberalised
decision violates the that has prompted harsh criticism from the gas prices as one of its key demands.
principles of market industry. More seriously, in late April the government
competition. In an announcement on May 12, the govern- shocked its international partners by dismiss-
ment said it had added oil products to the list of ing the CEO of national gas company Nafto-
socially important goods, and that retailers now gaz, Andriy Kobolev, along with its supervisory
needed to declare plans to increase prices by 1% board. It has faced accusations of violating
or more to the state consumer market watchdog corporate governance standards. Kobolev was
some 20 days in advance. Earlier this year the replaced by Yuriy Vitrenko, a former Naftogaz
government also imposed a price cap on natural executive that had been serving as Ukraine’s act-
gas and electricity for households, while the cen- ing energy minister.
tral bank has hiked its key rate twice to combat Kobolev was ostensibly fired as a result of the
inflation, which grew to 8.5% in March and 8.4% losses that Naftogaz sustained in 2020, when
in April, up from 5% in December. gas demand and prices were weaker as a result
The Ukrainian Oil & Gas Association has said of the impact of the coronavirus (COVID-19)
the government's decision violates the principles pandemic. The government was also dissatisfied
of market competition, as it is not possible to set with the company’s failure to meet gas produc-
up prices 20 days in advance. tion targets.
Ukraine has won praise in recent years Kobolev was respected by the international
for steadily liberalising its energy sector. But community for having brought Naftogaz in line
recent policy decisions by the populist Zelen- with EU standards of governance and market
skiy government have prompted concerns of rules. A number of other reformers at key state
backtracking. The move in January to cap gas institutions have either been dismissed or quit
prices is expected to jeopardise the country’s since last year. ™

P10 www. NEWSBASE .com Week 20 19•May•2021