Come winter, price hikes on natural gas will hurt the households of the nation in full force. With local elections scheduled for Oct. 25, the three-fold gas price increase has become a hot political potato for the government.
Speaking in parliament on Sept. 18 in defense of the hikes and the government’s energy policy, Prime Minister Arseniy Yastenyuk said a move from low prices to energy savings was long overdue. “We should have done it 20 years ago – just like Poland did,” he said. “Instead we have been heating the atmosphere around us – bankrupting the country on high energy bills.”
He said that low energy prices helped the larger consumers the most, debunking critics who said that low prices are needed for poor people in Ukraine. To compensate poor people, Yastenyuk’s government offered a system of individual subsidies to offset the price hikes based on financial need.
All households in the country had received application forms for the aid in the mailbox. As of now, Yastenyuk said, 2.7 million families with almost 9 million people were receiving subsidizes.
Roughly speaking, Yastenyuk went on, the subsidizes were intended to ensure that no household would pay more than 10 percent of its income for heating. A total of Hr 43 billion was set aside for the subsidies on the 2016 state budget.
“We don’t subsidize the rich but the poor,” he said and received applause from members of parliament.
Yastenyuk said that almost 70 percent of Ukraine’s gas imports now come from the West. This was a major shift in the gas trading patterns as the country until recently got almost all it gas import from Russia and beyond.
Ukraine was also fighting Russia in the courts as the country demanded $16 billion for “overpriced gas” in the Stockholm Court of Arbitration.
The Russian Federation had made a counter claim undertake-or-pay clause in the contract regulating Ukraine’s purchase of gas from Russia. The controversial contract was struck in January 2009 between the then Prime Ministers of Ukraine and Russia, Yulia Tymoshenko and Vladimir Putin after almost three weeks of interruption in the gas flow.
Yastenyuk said the state Oshcad bank had paid out 600 individual loans for energy saving measures in housing according to a new law. Under the law the state budget was subsidizing up to 70 percent of the payments of the loans depending on the complexity of the energy saving steps taken.
“Now we need to create a market for gas. Combined with energy saving we can be self-sufficient on gas supplies in 10 years,” he promised.
Yastenyuk promised that the newly appointed head of the UkrNafta gas company, minority owned by the oligarch Ihor Kolomoisky, Mark Rollins, would ensure that the government received the Hr 2.4 billion it was owed by the company.
The obligation to consider the interest of all shareholders would be included in the employment contract of the new CEO. Yastenyuk said he had taken the step in response to a blog by Serhiy Leshchenko, a lawmaker who had accused the former CEO of UkrNafta of running the company to the benefit of Kolomoisky, who owned 50 percent minus one share.
Kyiv Post staff writer Johannes Wamberg Andersen can be reached at [email protected]
