Ukrainian government officials unveiled plans for a significant price hike for local phone calls, just weeks after announcing that Ukrainians would be paying more for natural gas, electricity and railway travel
Weeks after announcing that Ukrainians would have to pay about 25 percent more for electricity and natural gas, government officials have unveiled planned hikes in the price of intra-city, fixed-line telephone calls by about a third.
Should the rise in the price of telephone calls go into effect, it would further squeeze the pockets of cash-strapped households, which have seen gas and electricity prices swell this month and are bracing for other expected increases, including a 50 percent price hike on passenger train rides, traditionally a common and inexpensive means of transportation for much of the public.
Government regulators last week endorsed a 30-35 percent price rise for intra-city telephone calls and a 15 percent rise in the monthly basic phone services charge, while reducing the price of long-distance calls by 20-70 percent.
The price changes are expected to take effect in June.
Ukraine’s government and parliament managed to forestall hefty tariff hikes on electricity, natural gas, railway transportation and telephone calls for the public until after the March 26 parliamentary elections, but officials have steamrolled ahead to implement them now that the elections have passed.
While not yet approved by the government, tickets for passenger train travel, which range from several dollars for hour-long trips to about $10 for overnight journeys, are scheduled to increase by about 50 percent in June as well.
According to newly adopted rates that take effect this month, electricity prices for residential consumers are increasing by 25 percent to 3.9 cents per kilowatt-hour.
Gas prices for households and state-funded enterprises have been increased by a quarter to $47.5 per 1,000 cubic meters and $71 per 1,000 cubic meters of gas, respectively. Currently, monthly electricity and gas bills paid by those who receive no privileges can be $20-30, or much higher, depending on consumption. Meanwhile, the gas tariff for heat-producing companies was increased to $78 per 1,000 cubic meters.
Analysts have insisted that such tariff hikes are necessary, considering that prices have not been raised for years as a result of populist government policies, which have left many state-owned providers of transportation, energy and communications cash-strapped and inefficient.
But this hasn’t stopped Ukraine’s population – a quarter of which is estimated to be near the poverty line – from worrying about how they will afford the new rates. Experts’ predictions of a 7-10 percent rise in gasoline prices this month, in connection with the beginning of the harvest season and other factors, is expected to create an additional cash crunch for consumers.
Ukraine’s Labor and Social Policy Ministry rushed to calm public fears on May 5, pledging in a statement to raise the size of subsidies on public utilities for the needy.
“There will be a review of the size of housing subsidies in connection with the increase in housing and utility tariffs by 25 percent,” First Deputy Labor and Social Policy Minister Pavlo Rozenko said. The ministry provided no further details on when the new subsidies would take effect.
On May 10, the state railway company Ukrzaliznytsya announced that the rail fare hike could be held to 30 percent for the near future.
Vasyl Yurchyshyn, chief economist at the Kyiv-based Ukrainian Center for Economic and Political Studies, said the tariff hikes could prove painful for many citizens, but they are necessary to help revamp the utilities sector into profitable enterprises capable of providing quality service.
“Electricity, gas and other tariffs have not increased in a very long time, despite the standard tendency across the globe to increase tariffs for such services due to more expensive raw materials and energy,” Yurchyshyn said, adding that the government’s decision to increase the tariffs during the warm summer period should help soften the blow.
“In the summer, the public spends less on electricity and gas, so the fact that they are raising them ahead of this period should make it easier for the population to adjust,” he said.
Yurchyshyn said, however, that the across-the-board tariff hikes will “without a doubt hit the purchasing power of much of the public and fuel inflationary factors.”
“On the one hand, it is understood that prices need to rise, but on the other hand, the increased prices will hit the purchasing power of the population. This situation really shows the urgent need for investment in these sectors, to improve their efficiency,” Yurchyshyn added.
Official figures show that the average monthly salary in Ukraine is just under $200, but these statistics are believed to be misrepresentative, as many Ukrainians do not declare their full incomes to avoid paying taxes, Yurchyshyn said. He added, however, that studies in recent years have shown that a quarter of the population live at the poverty level. Given that many of these people earn $200 or less a month, average monthly communal service bills costing $30 alone are a major expense.“They will need subsidies,” Yurchyshyn added.
