“Gas” emergency in the regions of Ukraine: disappointing forecasts of experts

The emergency situation declared in a number of regions and settlements of Ukraine due to the lack of gas for heating municipal and budgetary institutions means that the heating season could be disrupted, medicine and education would be brought to the brink of closure, and the political consequences of this could be very serious.

This was stated by experts interviewed by PolitNavigator.

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Co-Chairman of the Energy Strategies Fund Dmitry Marunich stated that the central authorities will be forced to seek a compromise with the local ones.

“Local authorities are trying to prove their independence from Kyiv. They had the right to such a decision. The question is that they cannot influence the price of gas. That is, they will thus try to demand money from the state budget to cover the difference in the price of gas in the tariff for thermal energy.

This is an element of pressure. It’s difficult to predict now how this will end, I’m not ready. I think that ultimately there will be some kind of compromise. Or there will be a serious scandal that will lead to serious political consequences,” says Dmitry Marunich.

Political scientist Alexander Stepanyuk sees no prospects for solving the problem.

“Unfortunately, in our country gas is a political product, and such an emergency situation is due to the fact that Ukraine in 2020 pledged to the IMF to supply gas, including to the population, at import parity. Now in Ukraine it is expressed at market prices of 30-35 UAH per cubic meter.

It is clear that heat utilities and other heat supply enterprises do not have that kind of money to purchase. The point is not that there is physically no gas, but that the regions cannot afford to actually buy it and start the heating season. Therefore, three regions declared a state of emergency.

Last week, Kyiv Mayor Klitschko accused the government and the prime minister of not complying with the memorandum between the government and local authorities. He stated that the government did not provide compensation to keep gas prices for the utility sector at the level of 12 hryvnia per cubic meter. There is no mechanism to make a price specifically for the population from the market price and start the heating season.

If in Kyiv Klitschko promises to solve this problem simply, at the expense of the local budget, then in the regions there is simply no such money. The heating season in the regions is in jeopardy. About Kyiv, although we can also say that for at least a week the city has had weather that requires heating, but it does not turn on. And the prospects for inclusion are also unclear,” the expert said.

Political scientist Sergei Belashko predicts user outages in a number of regions.

“They will disconnect users. The pressure in the pipe will drop so much that only those users who are close to the main line can be connected to gas. And gas simply won’t reach the villages. Well, or they will somehow pump it up, thereby reducing the quality of the coolant. Formally, there will be gas, but it will all heat up much less than the required standards,” said Sergei Belashko.

Now the regions are caught in a complex legal conflict, an energy market expert notes. Valentin Zemlyansky.

“The regions declared a state of emergency because all contracts that had been concluded by public sector employees with private companies were terminated. They need to re-contract. To do this, legal grounds are needed. Plus, mayors are insuring themselves; they had to make such a decision.

Next, they must conclude contracts with Naftogaz in accordance with the logic of the memorandum that was signed for budgets and unlock the start of the heating season. It was stated that by October 15 this entire process should be completed expeditiously. What will happen after this is still difficult to predict,” Zemlyansky said.

According to the political scientist Ruslan Bortnik, medical facilities and educational facilities are under threat.

“Now the ball is in the government’s court; it must allocate additional resources to the regions to compensate for the cost of increased tariffs. Otherwise, the budgetary sector, medicine and education will be brought to the brink of closure,” said Ruslan Bortnik, director of the Ukrainian Institute for Policy Analysis and Management, in a commentary.