Energy sector and IMF programmes

April 04, 2023

The new IMF Extended Financing programme traditionally views the energy sector in the context of Ukraine's macroeconomic stability. This programme provides for improvement of market models in the electricity and natural gas sectors, as well as gradual transition to market prices and rates at the second stage of the programme, while retaining subsidies to vulnerable consumers.

Emphasis is placed on the need to increase the Ukrenergo tariff to cover the difference in prices for the RES sector. At the same time, the goal is to improve corporate management in the gas sector, first of all, for the gas transportation system operator, with the creation of the Supervisory Board by July 2023.

The goals of the IMF programme cannot be achieved without implementation of the plan of gradual abandonment of cross-subsidies and transition to market prices in the coming months. It also requires independence of the NERC, eliminating the possibility of administrative price regulation, and removal of distortions in the electricity and natural gas markets.

As long as political expediency prevails in pricing of energy resources, one cannot hope for significant investments in reconstruction and modernization of the energy infrastructure.

The fastest and most tangible consequences of implementation of the goals of macroeconomic stabilization will be seen in the petroleum products market. The increase of VAT from 7% to 20% and restoration of the excise duty will boost prices, according to preliminary calculations: of gasoline — by UAH 11 per litre; diesel fuel — UAH 8 per litre, liquefied gas (LPG) — UAH 3 per litre. Such a rise in prices is expected from the 1st of July this year. It will lead to reduction in the sales of petroleum products and risks of expansion of the illegal market, to evade taxes.

Volodymyr Omelchenko

Director, Energy Programmes

Born in 1967 in Kyiv

Education: Kyiv Politechnic Institute, Department of Chemical Engineering (1992)

Author of over 50 scientific works and op-ed publications. Took part in development and implementation of international energy projects and scientific research in international energy policy


1992 – 1996 — worked in different positions in the mechanical engineering industry

1997 – 1998 — Head Expert of the Division of Oil, Gas and Petroleum Refining Industry of the Ministry of Economy of Ukraine

1998 – 2003 — Naftohaz Ukrayiny National Joint-Stock Company, in Charge of Oil Transportation Section

2004 – 2007 — Chief Consultant at the National Institute of International Security Problems of Ukraine’s NSDC

since February, 2007 — Leading Expert, Razumkov Centre. Director of Energy Programmes since 2013

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