Ukraine promised the IMF to lift the moratorium on raising tariffs for gas, heat, and water
Kyiv • UNN
Ukraine has committed to the IMF to gradually increase tariffs for gas, heating, and hot water. At the same time, it plans to provide targeted support to vulnerable households.
Ukraine has committed to the International Monetary Fund to gradually increase tariffs on gas, heating, and hot water. At the same time, Ukraine must ensure targeted support for vulnerable households. This is stated in the updated Memorandum on Economic and Financial Policy, reports UNN.
Details
We are firmly committed to implementing an ambitious reform program aimed at addressing long-standing structural problems in the energy sector, which have been exacerbated by Russia's war. Restoring the sector's sustainability and reducing quasi-fiscal obligations will require a gradual increase in tariffs on gas, electricity, and heating for households to cost-recovery levels, while simultaneously ensuring sufficient and targeted support to protect vulnerable households. 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 end of the war
The memorandum indicates that by the end of July 2026, the Ministry of Energy will prepare a draft Roadmap for the gradual liberalization of gas and electricity markets, with an implementation plan and clear timelines.
By the end of December 2026, based on this draft and taking into account proposals from stakeholders, the Cabinet of Ministers will finalize and approve a roadmap, which will be based on a technical analysis of the sector's financial condition, in coordination with the European Commission.
The roadmap will include a description of the steps necessary to reform the PSO (Public Service Obligations) with the aim of gradually liberalizing market prices after the lifting of martial law and ensuring adequate protection for vulnerable consumers, as well as preparatory measures to be implemented before the end of martial law. To ensure the fiscal sustainability of the proposed reform, we will conduct and publish a technical analysis that quantifies the costs of quasi-fiscal activities caused by price restrictions and the implementation of PSOs in the electricity, gas supply, and heating sectors, the impact of existing subsidies, and reform scenarios to achieve gradual cost recovery while ensuring adequate social protection, taking into account the findings of the IMF technical assistance program for the Ministry of Energy (structural benchmark, end of July 2026, proposed postponement to end of October 2026)
As stated in the document, by the end of February 2027, based on the findings of the technical assistance, an assessment will be conducted of the budgetary and social consequences of possible adjustments to utility tariffs for existing and new beneficiaries eligible for assistance under the current subsidy mechanism, in particular by modeling various scenarios regarding coverage, adequacy, and budgetary needs.
Any policy changes will be aimed at protecting vulnerable households, maintaining payment discipline, and ensuring fiscal sustainability in the medium term.
After the adoption of the roadmap and to support reconstruction and repairs, we will plan a gradual adjustment of electricity tariffs while simultaneously ensuring an appropriate level of utility subsidies to protect vulnerable households. These increases may begin as needed, taking into account the development of hostilities. To enable future adjustments to tariffs on gas, heating, and hot water for households, we intend to prepare amendments to Law No. 2479-IX, lifting the moratorium on price increases. After the moratorium is lifted, we will gradually increase gas prices while making corresponding adjustments to utility subsidies to protect vulnerable households. This will ensure the necessary resources to maintain an adequate level of gas and heating supply
In August 2022, the Verkhovna Rada adopted draft law No. 7427 (Law No. 2479-IX), which stipulates that during the period of martial law in Ukraine and for six months after the month in which martial law is terminated or lifted, it is prohibited to increase tariffs for:
- natural gas distribution services for household consumers;
- thermal energy (its production, transportation, and supply) for the population;
- thermal energy supply services for the population
and hot water supply for the population.
Addendum
According to the Memorandum on Economic and Financial Policies under the IMF program for Ukraine, adopted in February, 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 was to adopt a roadmap for the gradual liberalization of gas and electricity markets with a time-limited implementation plan for the period after the introduction of martial law.
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 restrictions and mandatory option services (PSO) in the electricity, gas, and heating sectors, the scale of existing subsidies, and reform scenarios to achieve gradual cost recovery while ensuring adequate social protection, based on the findings of IMF technical assistance to the Ministry of Energy (structural benchmark, end of July 2026)"
Recall
The Executive Board of the International Monetary Fund completed the first review of the 48-month Extended Fund Facility (EFF) program for Ukraine, opening access to a new tranche of 503 million Special Drawing Rights (SDR), or about 690 million dollars.