Ukraine's Yushchenko Blasts Government Over Fuel Crisis

KIEV, Ukraine -- Ukraine's President Viktor Yushchenko intensified criticism of his government on Thursday and vowed to stick to market principles while tackling a fuel crisis that led to long queues for petrol.

Yushchenko, who came to power just over 100 days ago after a bruising election and "Orange Revolution" protests, appointed his radical ally Yulia Tymoshenko to head the ex-Soviet state's government in February.

He has appeared increasingly at odds with her over both the dramatic fuel shortages and plans to review some of the privatisations of industry conducted under his predecessor. In a decree issued late on Wednesday, Yushchenko criticized Tymoshenko's government over the shortages, demanding prompt action to stabilize the situation, reduce energy dependence and allow the market to function without impediment.

On Thursday, he told executives from Russian and Ukrainian oil firms: "What happened on the oil market was a clear example of how not to manage affairs. I saw no professional approach. Today, I am asking for this page to be turned."

He pledged to do everything possible to "make it profitable, on strict market principles, for oil to be brought to Ukraine, refined and used on the domestic market.

"I give my word that we will do everything to make Ukraine attractive as a transit country."

Yushchenko has linked nearly every policy move to a drive to emerge from Moscow's shadow and one day join the European Union.

His decree, using unusually harsh language, said government policy "does not correspond to the basis of a market economy."

"This crisis emerged because of the improper actions of the Ukrainian government in terms of setting prices and excessive administrative regulation of oil and oil products," it read.

It was the second time this week Yushchenko had chided Tymoshenko's cabinet, though queues shortened at petrol stations. A 10-liter limit per customer remained in force.


Tymoshenko, who roused crowds with calls for radical action during last year's mass protests, blames the fuel crisis on a "plot" by Russian companies, which control four of six Ukrainian refineries and dominate the retail fuel market.

The president's decree gave the Economy Ministry a week to rescind decisions setting prices on the oil market.

It ordered the government to produce a solution within a month on creating a comprehensive oil company able to explore, produce, refine and sell oil. A separate order called on Tymoshenko to transfer state shares from three refineries into a fund intended to help create the company.

Ministers were commissioned to set up a program for a state oil reserve and draft a law eliminating all value added tax on oil transiting through Ukraine. And the government was ordered to start talks with other countries on oil supplies.

Tymoshenko has appeared increasingly on the defensive in recent weeks amid mixed economic results and policy disputes. Growth has slowed from last year's record level of 12.1 percent though the premier says previous figures were exaggerated.

Yushchenko on Wednesday blamed her government for being "two to three weeks behind" in tackling the fuel crisis.

The prime minister has also been at odds with Yushchenko on calls to submit to a review privatisations deemed dubious with the possibility of staging new tenders.

Tymoshenko on Wednesday denied her government was drafting a list of such companies and accused two ministers of "intrigues."

Yushchenko last week said officials were drawing up a list of 29 companies that could be sold off again, but gave no names.

Source: Reuters