Price of filled pipeline
Russia’s Gazprom resumed gas supplies to Europe and Ukraine on Jan. 21. Prime Minister Yulia Tymoshenko, exhaused after hours of nighttime talks but quite satisfied with the results, shared the good news with journalists in the morning in Moscow. She said she was present in the control room when the command was given.
Tymoshenko went on to gladden the hearts of the journalists and the rest of Ukraine, saying, “We expect to reach the level (of the gas price — V.K.) for the Ukrainian consumers at $230 per thousand cubic meters during the year” (according to Gazprom, we will have to pay $360 in the first quarter). The prime minister described the fixed transit tariff ($1.7 per 100 km) as profitable for Ukraine (“since the gas price is lower here than elsewhere in the world”) and said that Ukraine has purchased 11 billion cubic meters of process gas at $167 for 1,000 cubic meters. Tymoshenko believes that Ukraine has saved five billion dollars as a result of the gas talks. She has also succeeded in doing away with the hateful intermediary and establishing direct and absolutely transparent relations with Gazprom.
After making peace with Russia’s gas monopolist, prospects look more than attractive. According to Tymoshenko, “starting in 2010, we willl be paying 10 percent less for gas than Europe.”
What laurels and comments awaited the tired prime minister in the Ukrainian capital that day, after the feast of the Epiphany?
The Ministry of Foreign Affairs, which is practically not accountable to the cabinet, issued a belated statement on the “planned nature of Russia’s gas attack” which was aimed at ruining Ukraine’s gas transportation system. “Even after failing to carry out these plans against its ‘strategic partner’ and antagonize Ukraine’s European partners, the Russian government still cannot find it in itself to cease the information onslaught on Ukraine,” the statement said. Why should our diplomats, who were not too active during the talks, suddenly start making a stir after the fact?
This is no big secret, of course. The camp of another likely presidential candidate is loath to see triumphant Tymoshenko (although neither the victory, nor the victor is totally unblemished). They believe that the price of the current gas accords may prove too high for Ukraine. Viktor Baloha, the head of the Presidential Secretariat, declared that same day that the Russian gas supply agreement is leaves room for many questions and criticisms because of the nontransparent manner in which these decisions were made. Baloha predicts that “come February, the industrial facilities and the population will see considerably larger figures in their gas bills. As a result, fewer consumers will be able to afford to pay for such expensive energy supplies; this will cause an instant increase in arrears on the domestic gas market.” Baloha added that “Yulia Tymoshenko asked to have two days to calculate the exact cost of gas for Ukraine, which gives her room for free improvisations with the price formula. The impression is that the government first bought a pair of shoes that are several sizes too big and then started figuring out how to wear them.”
The head of the Secretariat refuses to accept the price of Russian gas for the Ukrainian consumers that starts at $450 per 1,000 cubic meters, which “Moscow has been imposing on us over the past several months… If the government proceeds from these figures, Ukraine will be able to receive fuel at $360. However, quite recently, precisely on Jan. 1 this year, the prime minister recognized $201 per thousand cubic meters as an economically reasonable price in a joint statement with the president,” said Baloha, adding that the difference between these figures “may conceal the corruption component of the Ukraine-Russia gas accords.”
The Secretariat’s perspicacity is admirable indeed. The strange thing is, however, that Baloha has failed to see one simple nuance: Tymoshenko does not seem to be going to use gas that will cost $360 in the first quarter. Proof of this, among other things, is the annual amount of gas to be supplied by Gazprom under the latest accords: 40 billion cubic meters (54.6 billion in 2008). The difference is roughly what Ukraine needs during the quarter.
Are we going to freeze? We will not if domestic production and the underground storage facilities prove adequate. What about the industries that are almost in a state of stupor because of the gas and financial crises? What about GDP growth that has all but stopped? To solve these problems, the government must stop working in the mode of a fire brigade, going from one crisis to another, and switch to a systemic mode to help the country’s economy. Regrettably, there aren’t too many cabinet members capable of handling such tasks. The opposition is not coming forth with fresh ideas either. Somewhere out there is a new elite born of the middle class—people who are sick and tired of corruption schemes practiced by the post-Soviet bureaucracy. How long will it be before this new elite gains enough strength?
