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12 Mar, 2018 08:41

Corruption in Ukraine stems from cheap natural gas prices – IMF

Corruption in Ukraine stems from cheap natural gas prices – IMF

Ukraine should hike gas prices for its citizens in order to economize energy usage and fight corruption, according to an International Monetary Fund (IMF) representative in the country.

"Different gas prices are the cause for corruption. For example, you can buy gas at a lower price for households, and then sell it at a higher price for the industry, while pocketing the difference," Goesta Ljungman, IMF resident representative in Ukraine, told local media outlet NV Business.

According to Ljungman, cheap gas is most beneficial to "rich people with big houses" who consume a lot of fuel. The starting point should be the sale of gas at a market price in order to use additional revenue from wealthy households to strengthen the system of public subsidies, he said.

Regulating (or hiking) gas prices has been one of the four key conditions set out by the IMF if Kiev wants to receive another loan tranche. According to the IMF, consumer gas prices in Ukraine are far lower than in neighboring European nations, and if it wants energy independence, prices should be comparable to those in Europe.

It is unclear how the IMF expects Ukrainians to be able to afford gas at European prices. The average salary in the country is just a little over $220 per month, by far the lowest in Europe.

Since the Maidan revolution, Ukraine has increased gas prices several times. In just four years, consumer gas prices have grown from $28 to $266 for a thousand cubic meters of fuel. But the IMF insists gas is still too cheap in the country.

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