Ukraine, Oil Cos. Pledge Transparency

KIEV, Ukraine -- Ukraine's new premier and oil company chiefs pledged Monday to bring stability and transparency to the country's volatile gasoline market amid increasing prices at the pumps.


Viktor Yanukovych, who was confirmed as prime minister earlier this month, promised that he would avoid heavy-handed tools, such as price controls, and he won a written pledge by oil companies representing about 60 percent of the gasoline market not to use backdoor deals to raise prices.

"The task is to create and support a transparent, competitive environment .... to ensure, most importantly, stability," Yanukovych said after signing a five-page memorandum with the companies.

The deal did not provide specific targets, but called instead for a commission to foster cooperation.

Vagit Alekperov, head of Russia's Lukoil company, said the agreement was "built on discussion, not dictates." German Khan, acting director of TNK-BP, praised it for encouraging dialogue.

The Ukrainian government and gasoline traders have long tussled, exchanging accusations of secret price-fixing and market interference; the disputes have occasionally led to a shortage of gasoline. Last year, then-Prime Minister Yulia Tymoshenko triggered a crisis when she capped prices and threatened companies with lawsuits if they failed to comply with government orders.

Last week, Fuel and Energy Minister Yuriy Boyko set a week-long cap on retail gas prices at 4.7 hryvna (US$0.93, euro0.75) a liter and diesel prices at 4.1 hryvna (US$0.82, euro0.65) a liter for this week.

Many gas stations ignored the price caps, while others sold gas only to customers who had purchased special coupons in advance.

Asked what the price would be now, Yanukovych said that was for the gas companies to answer. The gas chiefs said it was difficult to predict. "We hope it won't get more expensive," Alekperov said.

Boyko, meanwhile, predicted that the prices might decrease next month due to falling world oil prices.

Retail gasoline prices have risen noticeably in Ukraine this summer, climbing about 3 percent in the past week; a sharp increase could spell trouble for Yanukovych's new government.

Source: AP

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