Ukraine Sets Higher Gas Price For Homes To Avert Naftogaz Losses

KIEV, Ukraine -- Ukraine will have to raise the prices utilities and households pay for natural gas to protect state-run energy company NAK Naftogaz Ukrainy from losses, Deputy Prime Minister Serhiy Tigipko said.

The country “cannot make it without increases in the rates” households pay, Tigipko told reporters today before the weekly government meeting in Kiev. The poor will be compensated for the increases, Tigipko said.

NAK Naftogaz Ukrainy will have a deficit of 10 billion hryvnia ($1.27 billion) this year, compared with 30 billion hryvnia in 2009, Tigipko said. “We cannot leave Naftogaz loss making,” he said.

Ukraine promised to raise its utility tariffs and prices paid by households to qualify for a new loan program with the International Monetary Fund. The government will today approve a memorandum with the Washington-based lender, Prime Minister Mykola Azarov said today.

The nation’s National Commission for Energy Regulation decided yesterday to double from Aug. 1 the price households pay for gas, according to its website. Utility companies will pay 1,309.2 hryvnia per 1,000 cubic meters compared with 873 hryvnia as set in late 2008.

“Social protection” will follow the rate increase, which will “gradually bring prices close to real cost,” Azarov said today.

The government will compensate families if their utility bills are in excess of 15 percent of family income, if there is a working family member, and 10 percent for families without working members, Azarov said.

Source: Bloomberg