Returning to market-based tariffs for gas, electricity, and heating in Ukraine may only be possible after the war ends, according to a memorandum on economic and financial policy under the new IMF program for Ukraine, UNN reports.
Details
As stated in the memorandum, the signatories "are firmly committed to implementing an ambitious reform program to address long-standing structural problems in the energy sector, which have been exacerbated by Russia's war."
"Restoring the sector's resilience and reducing quasi-fiscal obligations will require a gradual increase in gas, electricity, and heating tariffs for households to cost-recovery levels, while ensuring adequate and targeted support to protect vulnerable households," the document states.
Returning to prices that fully reflect market conditions will require restoring and strengthening competition in wholesale and retail markets and may only be possible after the war ends
At the same time, it is stated that "by the end of June 2026, based on a proposal from the Ministry of Energy and with the involvement of stakeholders, the Cabinet of Ministers of Ukraine will adopt a roadmap for the gradual liberalization of gas and electricity markets with a time-bound implementation plan for the period after the introduction of martial law."
"The roadmap will be based on a technical analysis of the sector's financial condition, in coordination with the European Commission, and will describe the steps necessary to reform PSO to gradually liberalize market prices after the lifting of martial law and ensure adequate protection for vulnerable consumers, as well as preparatory steps to be taken before the end of martial law," the memorandum states.
To ensure the financial sustainability of the proposed reform, the signatories intend to conduct and publish "a technical analysis that will quantify the costs of quota financial operations (QFA) arising from price caps and mandatory optional services (PSO) in the electricity, gas, and heating sectors, the extent of existing subsidies, and reform scenarios to achieve gradual cost recovery while ensuring adequate social protection, building on the findings of IMF technical assistance to the Ministry of Energy (structural benchmark, end of July 2026)."
Light
"After the adoption of the roadmap and to support reconstruction and repairs, we plan to gradually adjust electricity tariffs, while ensuring an adequate level of utility subsidies to protect vulnerable households. These increases may begin as early as necessary, taking into account the development of the war," the memorandum states.
Gas, heat, hot water
As stated in the document, "to ensure future adjustments to gas, heat, and hot water tariffs for households, we intend to prepare amendments to Law 2479-IX to lift the moratorium on price increases, which is consistent with our commitments under the Ukraine Facility Plan." "After the moratorium is lifted, we will gradually increase gas prices, accompanied by appropriate adjustments to utility subsidies to protect vulnerable households. This will provide the necessary resources to maintain adequate gas and heating supplies," the memorandum notes.
The memorandum also states that the signatories intend to "comprehensively" address "the issue of arrears and debt of district heating enterprises (TKE) as soon as war-related budget pressure subsides, by developing a new tariff methodology that will ensure cost recovery." "We will explore mechanisms and legislative changes to ensure that local heat and hot water tariffs gradually approach cost recovery levels and subsequently at least maintain them. We will consult with IMF staff on plans for debt repayment through direct or indirect budget support," the memorandum notes.