IMF, Ukraine to discuss ways to bring energy rates to market-based level at post-crisis stage

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IMF, Ukraine to discuss ways to bring energy rates to market-based level at post-crisis stage - mission chief

MOSCOW. April 3 (Interfax) - The International Monetary Fund (IMF) admits that it would be hard now to conduct a reform in Ukraine to increase energy rates to a market level amid the crisis and expects to discuss the matter with Ukraine during the second phase the Extended Fund Facility (EFF), when the crisis is over, chief of the IMF mission to Ukraine Gavin Gray said.

Speaking at a press briefing last Friday, Gray admitted that the IMF felt it would be politically hard at the moment to start reforms focused on bringing the rates back to a market-based level, and the IMF management expected to discuss such reforms in a priority manner at the second stage of the program, Ukrainian media reported.

While the matter can well be discussed, it still depends on the type of energy, he said.

Rates for certain types of energy could be brought to a market-based level sooner, while as concerns natural gas, which plays a critical role in Ukraine's energy balance, this apparently will happen later, he said.

Gray noted that, if the circumstances change, the parties would definitely discuss the problem as soon as possible.

The IMF said in a press release dealing with the endorsement of the EFF program for Ukraine last Friday that "ambitious reforms will be required in the energy sector to enhance competition, improve market mechanisms, and reduce large quasi-fiscal risks."

The IMF's previous EFF for Ukraine attached special priority to gas prices for households and local utilities companies.

As reported earlier, the Ukrainian government has frozen gas and electricity prices for households since the start of the crisis at least until the end of the current heating season. However, the special obligations regimes for state-run companies valid at least until April 30 have not been provided with the necessary budget financing and pose substantial quasi-fiscal risks, which market experts have estimated at hundreds of billions of hryvni.