Higher gas prices not to have much impact on inflation – NBU

Thursday, May 5, 2016 - 13:46 (EEST) Section: Latest news

The National Bank of Ukraine (NBU) says that the Ukrainian government`s decision to raise gas prices for households and industrial consumers will not have a significant impact on inflation.
”We support the government decision`s because it is important for Naftogaz`s financial strength, and it will not have a significant impact on inflation,” a posting on the regulator`s website said referring to a statement by Deputy NBU Governor Dmytro Solohub made at a meeting with external experts and market participants.
However, administratively regulated prices and tariffs in 2017 will grow faster than was expected in January, the posting said. According to NBU estimates, the increase in gas prices for households to the market levels will lead to an increase in the average gas price by 42% in 2016 and by 22% in 2017.
The NBU also said that it had kept its headline inflation projection unchanged at 12% by the end of 2016 and 8% by the end of 2017.
As UNIAN reported earlier, the Ukrainian government fixed starting from May 1 a single price for gas at UAH 6,879 ($273) per 1,000 cubic meters, equal to the purchase price of natural gas, which is imported to the country.
Before the May increase, there were two gas prices for households depending on consumption volumes and a season – UAH 3,600 ($142) per 1,000 cubic meters and UAH 7,188 ($285) per 1,000 cubic meters.
The new price consists of the price of imported gas with costs of delivery to the Western border (UAH 4,942 per 1,000 cubic meters), value added tax (UAH 1,147 per 1,000 cubic meters), costs of transportation inside Ukraine (UAH 219 per 1,000 cubic meters), gas distribution costs (UAH 513.7 per 1,000 cubic meters), and regional gas distribution companies` commission (UAH 57.4 per 1,000 cubic meters).
At the same time, the Cabinet additionally allocated UAH 5.3 billion for subsidies this year to cover the subsidies recipients will have in connection with the introduction of the single price of gas. Thus, gas subsidies in 2016 will exceed UAH 40 billion. The Ukrainian government says that the amount will be enough to cover low-income households` gas costs.