By Vitaly KNIAZHANSKY,The Day
Last week Kyiv automobile drivers experienced a major shock as A-95 gasoline
prices made a record jump from UAH 1.50 to 3, even 4 per liter.
Other brands simply vanished. As a result, a private car ride, let alone
a taxi, will cost you twice as much than a week ago. Public transport (that
which is still operational) maintains the same fares.
Vasyl Yastrubynsky, head of the price policy department, Kyiv City Administration,
told The Day, "Raising prices has not as yet been considered by
the Administration. Of course, the situation is being studied by the relevant
bodies, including not only passenger carriage, but also bread and milk
transportation.
When this is completed, appropriate proposals will be submitted." Mr.
Yastrubynsky considers that there is absolutely no economic basis for this
price jump. "Current petrochemical costs allow for at least 200% profit.
There is the government to step in when a situation like this arises in
any civilized country. It sets new rules of the game, in accordance with
market realities. State regulation is required at a time of crisis. So
what is being done to remove the reasons causing this price jump?"
He further questioned the possibility of businessmen supplying oil products
to Ukraine under the circumstance, profitable as such transactions might
seem, referring to the Verkhovna Rada's resolution confirming tax concessions
for enterprises with capital investment. Unless subject to such concessions,
only a crazy man would buy and transport oil products to Ukraine. He would
clearly go bankrupt. In a word, the situation is being examined and a decision
will be made only after a reliable forecast of oil products for the next
couple of weeks is made.
Meanwhile, Deputy Premier Mykhailo Hladiy (also appointed Minister of
Agribusiness last week) expects the gasoline price jump to cause only a
slight increase in the price of bread. The Economy Ministry is consulting
oil traders, pressing them to increase supplies, but apparently their attitude
is negative. Interfax Ukraine reports that oil traders do not believe the
effectiveness of the Cabinet's tax concessions. Instead, they believe that
the costs will continue to increase unless the market is saturated. Russian
Premier Sergei Stepashin also met with his oil people yesterday.
Russia's Novosti News Agency informs that this country may respond to
world oil price increase by raising export duties. Russian oil traders
do not welcome the idea, and Ukraine may well have to sustain higher imported
oil costs. Presidential candidate Yevhen Marchuk believes that the gasoline
crisis shows the executive's "perfect helplessness" in dealing with "elementary
issues." "The President declares that he will put the oil market in order.
In reality, he shows that he no longer capable of effectively influencing
the situation," said Mr. Marchuk. "I have already been informed that, because
of the gasoline price increase, agricultural prices rose on the food market
last weekend. Hence, we are in for another round of inflation," he added.
"A chain reaction has started, affecting essential commodities, making
primarily the socially unprotected strata suffer."
- Nota Bene: The following were Ukraine's wholesale gasoline
suppliers in the first quarter of 1999: Kharkiv Branch of Bizon Ltd. (43.2%);
Kharkiv branch of the Liutnia Enterprise (22.8%); Fianit (5.2%), and Aktiv;
these firms also imported 12%, 6.75%, 1.7%, and 1.7% of diesel fuel, respectively.
In all, they imported 76.1% of the gasoline and 22.3% of the diesel fuel
imports without paying customs duties and taxes.






