Ukraine has asked the International Monetary Fund to allow it to delay raising household gas prices, one of the fund’s conditions for granting a $15.15 billion loan to Kiev, Prime Minister Nikolai Azarov said on Tuesday.
The unpopular conditions placed on the three-tranche loan granted to Ukraine by the IMF last summer include bridging a budget deficit, raising the pension age and increasing household gas prices.
“We have asked the IMF to postpone consideration of the [gas price] issue until we have put things in order,” Mykola Azarov said on Ukraine’s Channel One.
He said that once problems in the housing and utilities sector have been solved, and the budget deficit bridged, the need for household gas price hikes might become irrelevant.
Azarov said the budget deficit of the country’s struggling national energy company, Naftogaz, had been reduced to $1 billion.
“Our goal is to continue cutting Naftogaz’s budget deficit through better management, which will help us to pursue a more balanced approach and probably even do without it [the hikes],” he said.
Russia transits about 100 billion cubic meters of natural gas a year to Europe via Naftogaz pipelines. At the same time, Naftogaz buys 30-40 billion cubic meters of gas a year from Russia to supply local consumers at a heavily subsidized price.
The Ukrainian government has been covering losses made by the company with budget injections and gradually raising household gas prices to be able to cancel the Russian subsidies.