Some types of motor fuels may become more expensive than in the EU as early as July
21 May 2024 16:04
ЕКСКЛЮЗИВ
The Cabinet of Ministers of Ukraine proposes to increase excise taxes on fuel. According to the government’s draft, the increase will be implemented in several stages, with the first one due to take place in July this year. If this decision is not postponed, fuel prices in Ukraine will rise rapidly, and in a few years they will be at the level of high European prices. [Kommersant] asked energy expert Oleksandr Sirenko how likely such a scenario is and what we can expect from fuel prices.
The expert reminded that the government has made two proposals to increase the excise tax on fuel this year. In the first quarter, there was a corresponding initiative of the Ministry of Finance with different rates, and now the government has sent a new proposal to the parliament. In other words, the Cabinet of Ministers is taking a proactive approach and is obviously determined to implement its initiative. However, the expert does not share the government’s intentions.
“Why is this happening now, during the war, why is it so important to increase fuel taxes? I am not the kind of person who will campaign for high taxes, especially on petroleum products, during the war. Because fuel is life, and the more expensive it is, the less it will be consumed, someone will not get somewhere, will not deliver goods or something else…”
– he said.
The expert wonders why Ukraine is taking Europe as an example, but completely ignoring the successful experience of the United States.
“Why have these European rates been chosen, why can’t we take the experience of another developed country, the US? This is a country with one of the lowest excise rates on petroleum products. And it’s not a big secret what this has led to: every family has several cars, there is a lot of movement around the country, people travel a lot, and go on business. Cheap petrol has its advantages,”
– says Sirenko.
If the Cabinet of Ministers’ initiative is implemented, Ukraine will reach the level of European excise rates on fuel in four years, the expert adds. However, even at the first stage of the increase, starting in July this year, the rise will be very painful for motorists. The previous proposal of the Ministry of Finance was softer, he believes.
“There is a high probability that petrol will go up by UAH 1.5, diesel by UAH 2, and liquefied gas, in the case of the Cabinet’s proposal, by as much as UAH 6 per litre. This will be very painful for drivers, and I believe that there is time to correct this mistake and return at least to the proposal of the Ministry of Finance. It is a more loyal and reasoned rate, it is calculated in kopecks at the first stage, and in 4 years the rate for liquefied gas will not be so high,”
– analysed Sirenko.
Today, he says, the difference in fuel prices between Ukraine and Poland is small. If the government’s draft law is passed, LPG will become more expensive in Ukraine as early as July.
“I’ll give you the prices at petrol stations. Let’s take Germany: 95 petrol costs €1.87, while ours is €1.30. Diesel in Germany is €1.66, in Ukraine – €1.23. And liquefied gas: 1 euro in Germany, 62 cents in Ukraine. Let’s take Poland: eUR 1.56 for petrol and diesel, EUR 0.66 for LPG. I’m focusing on liquefied gas, because from 1 July, we will have more expensive gas than Poland,”
– the expert informed.
According to him, the implementation of the government’s initiative will lead to the fact that in 4 years the prices for motor fuel will generally rise to the European level, and liquefied gas will be more expensive.
