Not Enough “Coal Money” for All
On September 11 the Ministry for Fuel and Energy and the Ministry of Finance mucked up presentation of the projected budget coal subsidies at the parliamentary committee for fuel and energy. The Ministry for Fuel and Energy suggested governmental expenditures at the level of UAH 5.4 billion, while the Ministry of Finance opined that coal miners would do with 2.2 billion. The absence of a coordinated governmental position literally blew up the deputies. Parliamentary committee chair Andriy Kliuyev did not hide his resentment; “There is neither logic nor reason in your proposals. You look unconvincing!” he told the Cabinet representatives. It should be noted that the deputies received the two ministries’ proposals just at the committee meeting, so any sound analysis of the governmental initiatives was out of the question. It turned out in the course of the meeting that Mr. Kliuyev had been approached by Petro Poroshenko, chairman of the Verkhovna Rada budgetary committee, who suggested UAH 3.6-billion budgetary subsidies. In this case, too, no calculations or explanations were presented.
As there was no point in a serious budgetary debate, this meeting of the fuel-and-energy committee was reduced to a routine, but still interesting, discussion of sectoral problems. The deputies who represented oil and gas business sincerely began to wonder why the state subsidizes a loss-making industry. The businessmen calculated as meticulously as they could that the miners’ nationwide wage fund is UAH 3.3 billion a year, so it is cheaper to keep people afloat at the treasury’s expense than to support the mines that have no chances to ever become cost-effective. But Serhiy Baulin, Deputy State Secretary at the Ministry of Finance, did not exactly view this idea as brilliant, “In America there is an area called Harlem, where all live on welfare. And crime is rife there.” So they decided not to close the mines. But it is still unknown how much budgetary money they will be entitled to. “If it is 2.2 billion, this will be a complete...,” committee chair Kliuyev said curtly and clearly. He made it clear at the same time that nobody would give the miners 5.4 billion, even though this amount is envisaged by the national program Ukraine’s Coal already approved by the Cabinet of Ministers, “This program was written to be shelved.”
As the proceedings were drawing to a close, the floor was given to the deputies who have real experience of working in the coal industry. Hennady Astrov-Shumilov, who was elected to parliament while managing the Rovenki-Antratsyt coal-mining association, said that the wear-and-tear of Ukrainian mining equipment is now 70- 80%. In his words, it is only possible to solve the problem of loss-making in the sector by building new mines. So subsidizing the now existing coal mines is, as a rule, of an exclusively social significance — just to keep the miners busy. Still, Mr. Astrov-Shumilov is sure the state should grant as high subsidies as possible to the sector next year because otherwise the sector will be making ever more catastrophic losses. Besides, the deputy said the coal sector is being subsidized all over the world. While Ukraine subsidizes 20 hryvnias per ton, in Germany this figure runs to 180 marks.
Chairman of the Independent Trade Union of Ukrainian Miners, Mykhailo Volynets, made a proposal about pulling the sector out of the financial pit. He suggested that steel mills, the main consumers of coal, put the loss-making mines on their payroll. “As steel mill owners are reaping superprofits, nothing is left for mines. There are conglomerates all over the world, which include both steel mills and coal mines,” Mr. Volynets said. In his words, this kind of associations would look quite logical because the private companies that own steel mills are also go- betweens in coal sales. Yet, “metallurgists” do not hasten to share out their profits. This means the current year is again going to see a debate over the size of budgetary subsidies which may account for as many as 10% of the state budget. Addressing the parliamentary committee meeting last Wednesday, the deputies said bluntly that coal mine subsidies had long become the object of money laundering and theft. This means that, whatever funds the budget may provide, the miners will never get them.
