By Oleksandr FANDEYEV, The Day
At a briefing in the Cabinet Club, First Deputy Economy Minister Viktor
Kalnyk and Deputy Chairman of the Construction Committee Mykola Rul tried
to convince journalists that, on the whole, the citizens will benefit from
this innovation.
According to them, the completion of the public utilities reform is
urgent not because the IMF wants it, but because "we should protect the
state budget and lend a hand to the domestic producer", who has to deviate
about Hr 3 billions of his working capital annually to pay higher bills.
Recall that late last year Verkhovna Rada adopted a law, proposed by
the Social Policy and Labor Committee, banning any increase in public utilities
rates before paying off back-wages. However, the Constitutional Court annulled
this decision of Parliament after the President's petition. Since everyone
understands that the population has not been paid its earnings in months,
and, thus, cannot pay for the services even under the existing rates, the
government has found a quasi-way out.
As was stated at the briefing, a draft decree on mutual offsets is being
prepared in the Cabinet's depths, envisioning offsetting the debts for
utilities with back-wages. This arrangement will be applied in the budgetary
sphere only. However, more than 80% of debts lie with the production sphere,
and it is still not clear what is to be done with them. Also, a specter
is haunting the corridors of power: to offset the population's rent arrears
with the state debt in saving deposits. But some are doubting whether this
will be fair to those who have regularly been paying their utility bills.
The officials say that the shock caused by this innovation must be alleviated
by: substantial (almost double) reduction in gas price; switch from the
dollar equivalent to the national currency when pricing utilities, demonopolization
of the sector, and of course, the lifesaver for the poor - subsidies. Currently,
3.5 million of residents use this service. And about one million more will
after May 1. Correspondingly, the annual amount of subsidies will have
to be raised from Hr 1 billion to 2. Though, this will cost the state Hr
4.2 billion.
In Poland, incidentally, housing reform caused rates to drop by 40%.
But the Poles reformed their economy first. Hence, it is not worth hoping
for a similar miracle in Ukraine after increasing public utility rates
by 25-30%.






