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Oct 17, 2021
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Kiev’s energy adventures are pushing people over the edge

State of emergency declared in Odessa, Transcarpathian, Poltava regions

The Federation of Employers of Ukraine published the results of a survey showing that by the end of October 91% of industrial companies in the republic will become unprofitable due to gas prices, which will reach 56,000 hryvnia (about USD 2,100) on the domestic market per 1,000 cubic meters. The Ukrainian industry has come up against the fact that since January, the rise in gas prices has been 7-fold. The survey was conducted among 100 companies in 20 industrial sectors.

“Such a price level is devastating for the Ukrainian industry, which is the only one in Europe that buys 100% gas at spot prices,” – the Federation of Employers said in a commentary on the results of the study.

In November, according to the forecast, the work of 96% of Ukrainian industrial enterprises will become unprofitable. 49% of survey participants have already begun preparations for the reduction or complete shutdown of production. Most of the companies participating in the survey intend to stop production in December. They have no way to replace gas with something else.

Kiev's energy adventures are pushing people over the edge

The cost of Ukrainian companies’ products will rise sharply. Moreover, this will affect such products as bread, sugar, cheese. The situation with the chemical industry, the production of glass and ceramics, and agricultural processing is becoming catastrophic. It is impossible to compete with foreign competitors who have access to gas, which is 4-5 times cheaper. Most European countries (many of them have entered into long-term agreements with Russia) buy blue fuel at a price of 300 to 700 euros per 1000 cubic meters, while Ukraine, in a fit of “struggle with Moscow,” has tied to the indicators of the EU spot market.

The head of the Federation of Employers of the Glass Industry Dmitry Oleinik called the position of the Ukrainian authorities on the gas issue a “big deception”. “There is no gas market, just as there is no equal price in different countries … The world has insured itself against fluctuations with long-term contracts … Only new consumers or consumers who have deliberately decided to contract since the beginning of the year are buying on the spot … Each country keeps the price of gas in secret … But everyone is fighting for low and stable prices, because this is the competitiveness of the economy, ” – says Oleinik.

“The first in Ukraine, – he continues, – the processing industry will lay down, and this is a direct path to the agrarian-raw material neo-colony … As world experience shows, successful countries are those who export, in addition to grain, also cheese and ham, and besides ore, there are also planes, cars and engines … There will be no possibility to export at an uncompetitive price … The consumer in Ukraine will not be able to cover even the production cost. Factories and factories will gradually stop … And people without work on the street – this is already serious “

Protests in Poltava

In addition to industry, the sphere of housing and communal services is being observed. In a number of regions (Odessa, Transcarpathian, Poltava and others) a state of emergency has been declared. The real cost of gas is more than four times higher than that laid down in the tariff for state employees. The authorities promise to make up for the difference, but the promises are impracticable; In just two weeks of October, gas prices for the population increased by one and a half times. There is no gas for hospitals, kindergartens, schools. In the Odessa region alone, 220 budget facilities have already been disconnected or are about to be disconnected from the gas supply. The public utilities refuse to even turn on the hospitals.

Kiev's energy adventures are pushing people over the edge

The refusal of direct contracts with Gazprom has long turned sideways for the Ukrainian authorities, and now other unfavorable factors have coincided with this: the rise in gas prices in Europe; lack of long-term contracts for the supply of fuel; Hungary’s refusal to transit gas through the territory of Ukraine. Although all the problems boil down to two main ones: the policy of “Get out of Moscow!” and to the theft of Ukrainian officials.

The prospect of a gas collapse loomed in front of Ukraine, but “Kleptocratic Kiev is trying to shift the blame to Moscow”, – is talking political scientist Valery Pesetsky. In his opinion, the authorities should restore direct contracts with Gazprom, regain the role of a regulator in the domestic gas market and move to pragmatism in the energy sector.

Kiev's energy adventures are pushing people over the edge

“It’s time to stop demagoguery in favor of the rich at the expense of the poor. For seven years now, we have been brainwashed by asserting that the country’s energy security is based on two pillars: the first is the refusal to purchase Russian gas, and the second is that the domestic price should be formed on the basis of import parity. Practice has shown that both installations destroy our security, introducing into practice unaffordable, ruining gas prices for the population and the entire economic organism of the country. We still take Russian gas from our own pipe through a paper-virtual reverse with Hungarians, Slovaks and Poles, winding up an additional 50-60 dollars per thousand cubic meters in favor of gasket firms, whose profits are formed at the expense of ordinary Ukrainians’ pockets ”, – declares Pesetsky.

Hungary refused to transit gas through Ukraine

“You can talk for a very long time about the” reforms in Naftogaz “, but … in fact, it turned out that these” reforms “work well in conditions when you can pump cheap gas into storage in summer and sell it to consumers at an expensive price in winter. Plus the Russian three billion dollars for transit, which balance the financial flow all year round, ensuring the payment of space salaries, bonuses and the implementation of the 20/20 program to increase gas production, which was successfully failed … “- wait there either a kidok or a hit of all the citizens of the country for money”, – says economist Aleksey Kushch.

If a miracle does not happen and gas prices do not drop several times in two or three weeks, Ukraine will find itself in a difficult situation. And what will happen to the authorities, which brought the country to the handle?

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