Ukraine to Raise Gas Prices by Half
Ukraine has agreed on a 50% increase of gas prices for domestic consumers.
Hike of gas bills is part of conditionality set by the International Monetary Fund (IMF) if Ukraine is to be granted an aid package.
State energy company Naftogaz reported that price changes will be into force from May 1, with more rises due to be made until 2018.
Until now, low consumer bills were possible due to state subsidies, but the IMF believes the system should be reformed in order to stabilize Ukraine's financial situation.
The new pricing rules are to affect not only ordinary consumers but also district companies, which will have to pay 40% more for gas.
It is yet unclear how the hike will correspond to the scrapping of Ukraine's special pricing regime for gas supplies by Russian energy giant Gazprom, which officials from the company justified with delays in debt payments.
Fiscal reforms and stepped-up efforts to fight corruption are among further demands by the IMF that Ukraine has to meet to receive EUR 11 to 15 B.
Talks between the fund and Ukrainian officials including Finance Minister Oleksandr Shlapak are under way, and according to the Financial Times a rescue package could be announced as early as Thursday.
The EU and the US have promised further assistance to Ukraine, but only after successful negotiations with the monetary fund. Ukraine has earlier repeated it is in a dire economic situation, expecting GDP to go down 3% and uncertain whether it could make current budgetary payments.
Prime Minister Arseniy Yatsenyuk announced a few weeks ago that ousted President Viktor Yanukovych, who was toppled down on February 22 following prolonged street violence and a vote in Parliament, could have drained up to USD 70 B out of the country, diverting them to offshore bank accounts.