The Cabinet of Ministers cut gas consumption standards for privileged Ukrainian consumers from which it anticipates savings of US $500 mn

The government will not let budget money to be burned up in subsidies for housing utility services

Photo: Konstantin Melnitskiy

The Cabinet of Ministers reduced the standards of volumes of natural gas consumption, the cost of which is compensated by the government for the socially unprotected categories of citizens by issuing them subsidies from the national budget. The officials thereby hope to improve energy efficiency and prevent fraud by oblast gas companies. The government explained its decision by the fact that Ukrainians indeed consume less gas than specified in the reports of oblast gas companies.

The Cabinet proposes to reduce by 1.3-2 times the standards for gas consumption for gas stoves and water heaters, informed Vice Premier Volodymyr Groysman. Now, the standard for gas consumption, if a gas stove and centralized hot water supply are available, will be reduced from 9.8 cu m/month to 6 cu m/month; with the gas stove and without hot water supply and a gas water heater – from 18.3 cu m/month to 9 cu m per month; with a gas stove and a gas water heater – from 23.6 cu m per month to 18 cu m/month.

Playing with figures

Reduction of the standards will help the national budget save around US $400-500 mn annually, which is over half of the funds planned in the budget for subsidies, including gas subsidies, according to Groysman. This year, the government has envisaged slightly over UAH 8.8 mn in the national budget for subsidies in the sphere of housing utility services. At the current exchange rate, that is nearly US $700 mn. The new rules will take force October 1.

The government assures that reduction of the standards will in no way affect the family budgets of average citizens, who enjoy government preferences.

Groysman says the new standards were calculated based on the results of an experiment of the installation of meters and calculation of the real consumption of gas, both in apartments and in private residences.

According to information of the Ministry of Regional Development, Construction and Housing Utilities Sector, 55,000 households participated in the survey. “It turned out that a gas stove burns up to 6 cu m per month, but due to the absence of a meter the gas company writes off 9.8 cu m of gas, the price for which is subsidized by the government. Thus, the company obtains a possibility to sell the difference with a surplus profit,” says Groysman.

Former minister of the housing utilities sector and today Chairman of the Union of Homeowners of Ukraine Oleksiy Kucherenko says that in conditions of the absence of meters in apartments throughout the country, these figures cannot be trusted. “If the standards can be so easily reduced now, it points to the fact that somebody made a pretty penny from this in previous years,” emphasized Kucherenko. The expert believes that this step of the government could be successful as a temporary measure, although it will be possible to establish control over real consumption of gas only after all citizens have meters in their homes, particularly since the law on ensuring commercial metering of natural gas was adopted back in 2011. Under the law, all consumers living in private houses and apartments must be supplied with gas meters by 2018.

Gas diet

According to the government’s resolution, the main objective of the standard revision is to ensure social guarantees in the sphere of housing utility services and harmonize the existing standards of housing utility services consumption with the real volume of consumption, including gas. In addition, Groysman informed that reduction of the volumes of gas, for which the government pays, will help eliminate the schemes of semi-legal profits of gas supplying companies.

Meanwhile, Kurchenko claims that even after reduction of the standards, there is still quite an open space for abuse, since around 1 bn cu m of gas is distributed to the consumers without metering devices. The expert says that the program of installation of gas meters was sabotaged in different periods at the level of the senior management of Naftogaz of Ukraine, where these schemes were covered up. Noteworthy is that Ukrainians must be supplied with gas meters free of charge as the price of the equipment is included in the tariff. Oblast gas companies, which by law must fulfill this task, however, do not seem in a big rush to do so.