Gennadiy Ryabtsev: Fuel will rise in price, but not because of the Cabinet’s decision

8 April 2024 18:49

EXSCLUSIVE

The Cabinet of Ministers of Ukraine has approved a draft law that raises excise taxes on motor fuels in Ukraine. If it is approved by the Verkhovna Rada of Ukraine, over the next 4 years, excise rates on petrol, diesel, liquefied gas and other motor fuels will rise to the level of the corresponding indicators in the European Union. Komersant Ukrainskyi asked energy market expert Gennadiy Ryabtsev to comment on this initiative.

According to him, the government is seeking a compromise solution that will meet the requirements of the European Union but also take into account the socio-economic situation in the country.

“There are now a sufficient number of supporters of this decision, as it is aimed at harmonising Ukrainian and European legislation and is one of the conditions for our accession to the EU. On the other hand, many argue that it should not be adopted now. This is because it will make oil products unaffordable for Ukrainian consumers, who are already forced to buy them at a price that does not correspond to their average salary. Therefore, most likely, some compromise decision will be made, which will say that somewhere in the near future we will do this, relatively speaking, in 28 or 29, and the excise tax will not change during martial law,”

– commented Ryabtsev.

At the same time, the expert believes that fuel prices will rise anyway, but for reasons beyond the government’s control.

“We cannot say now that fuel prices will rise because of these intentions. Fuel will rise in price for other reasons. Petroleum products at the border are getting more expensive now, and the hryvnia is not as stable as we would like, so prices will rise despite any intentions of the government to change the excise tax,” he said,

– he said.

The Ukrainian Oil and Gas Association (UOGA) has also reacted to the government’s plans. They are unhappy that the excise tax on liquefied petroleum gas will increase significantly less than on other fuels. Therefore, the Association called on the Cabinet of Ministers to increase the excise tax on autogas not to EUR 70 per 1000 litres, as planned, but to EUR 160, which is more than three times higher. This should balance the excise taxes on petrol, diesel and liquefied gas, they believe.

Gennadiy Ryabtsev believes that the association is guided solely by profit considerations.

“The members of the Oil and Gas Association can make much more profit by selling expensive petrol, especially with mark-ups that have no basis in fact. In fact, the Ukrainian Oil and Gas Association is lobbying for its own interests, trying to destroy competitors represented by small companies that offer consumers liquefied petroleum gas as an alternative to petrol,”

– the expert said.

He stressed that the “balance between excise taxes” mentioned by the Association does not exist in nature.

“This balance between excise taxes exists only in their imagination. Because the excise tax does not provide any balance. It ensures environmental protection because it is imposed on harmful products. The most harmful product on the market today is diesel fuel. It is usually subject to the highest excise tax. Liquefied gas is much less harmful to the environment than petrol and diesel fuel. Therefore, the excise tax on LPG is lower, according to the directive that sets recommended minimum levels of the same taxes. Let them open that directive and read what the excise tax means,”

– said Mr Ryabtsev.