Analysts say the move would cause gasoline price increases to slow and diesel prices to stabilize
Ukraine’s parliament may extend tax breaks on fuel imports in an attempt to halt rising fuel prices. Analysts
say the move would cause gasoline price increases to slow and dieselprices. Analysts say the move would cause gasoline price increases to slow and diesel prices to stabilize.
Oleksandr Matviychuk, representative of parliament’s fuel and energy committee, said lawmakers would consider extending tax breaks for imports of petroleum products in Ukraine until the end of the year.
Matviychuk said his committee has already received a relevant draft law written by parliament deputies. According to Matviychuk, the law is expected to be approved by the end of October.
He said the measure, if approved, is aimed at preventing a “sudden hike” in prices on imported fuel.
Earlier this year, the legislature exempted fuel importers in Ukraine from paying a 30 euro per ton excise duty from March 1 until June 1. Later the exemption was extended until Oct. 1.
Parliament had planned to raise the excise duty on imported gasoline from 40 euros per ton to 60 euros per ton as of Oct. 1. But when fuel prices jumped last month internationally, triggering fuel price hikes in Ukraine, lawmakers decided to postpone the duty increase.
Diesel prices grew by up to 60 percent in Ukraine over the last month to an average of Hr 1.85 ($0.34) per liter, with some regions seeing prices as high as Hr 2.55 per liter. Prices on high-octane gasoline A-95 also rose by an average of 7 percent throughout Ukraine to reach Hr 2.20 ($0.40).
Analysts said rising world prices on petroleum products are mostly to blame. Kostiantyn Borodyn, director of Ukrainian Petroleum and Energy Consultants, said the price of Russian diesel fuel jumped from $247 per ton on Aug. 11 to $330 per ton on Sept. 18. During the same period, gasoline prices rose from an average of $306 per ton to $340 per ton, Borodyn said. The rise in Russian fuel prices has had an immediate effect on retail prices in Ukraine, which gets about 70 percent of its petroleum products from Russia, he said.
Borodyn said fuel supplies to Ukraine dropped considerably as Russia directed its exports to expensive Western European markets. Most areas in Western Europe have been hit by acute fuel shortages as workers blocked entry to oil refineries in protest of high fuel taxes and gas prices.
Borodyn said fuel shortages in Ukraine could have been more severe, if it weren’t for the country’s oil refineries. He said a steady supply of petroleum products from Ukraine’s oil processors have helped to hold the rising fuel prices. However, even Ukraine’s oil refineries recently started exporting their products to take advantage of high fuel prices in Western Europe, he said.
Borodyn said diesel prices in Ukraine are unlikely to rise further.
“Prices on diesel have reached the line where any further increase will make diesel fuel unaffordable,” Borodyn said.
He said gasoline remains liquid in most parts of Ukraine and the prices could still increase by up to 10 percent if the fuel crisis in Western Europe continues.
