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Ukraine quadruples domestic gas transportation costs to balance out effect of Russian offer expiration

Ukraine will quadruple gas transmission tariffs for domestic customers from Jan. 1 to balance out the effect of lost earnings following the yearend expiry of the gas transit agreement with Russia, officials stated on Monday.

Nearly three years after the start of the war with Russia, Ukraine has actually declined to extend the deal that enabled Russian gas to be pumped to customers in the European Union.

The Ukrainian regulator - the nationwide commission for state policies in the energy and utilities sectors - authorized a. choice to increase domestic gas transmission tariffs to about. 502 hryvnias ($ 11.95) for 1,000 cubic meters from some 124. hryvnias ($ 2.95) previously.

In 2024, 85% of our income came from transferring gas. coming from the Russian Federation. It suggests that only 15%. remains for us from domestic consumers, Dmytro Lyppa, basic. director of Ukraine's gas transport operator, said during the. meeting to talk about the tariff boost.

Although Russian gas supplies to Europe via Ukraine have. diminished as numerous European nations have sought alternative energy. sources, Ukraine still earns $0.8-$ 1 billion in transit fees per. year from Russian transit.

The domestic costs are paid by Ukraine's energies and. intensive energy users, such as steel-makers.

Olha Kulik from the Federation of Ukrainian Companies said. the greater tariffs would cost Ukrainian market more than 1.6. billion hryvnias a year.

Russia delivered about 15 billion cubic metres (bcm) of gas. via Ukraine in 2023 - equivalent to 8% of peak Russian gas flows. to Europe via numerous paths in 2018-19.

Lyppa stated the tariff increase would not cover fully the. lost incomes, however that the Ukrainian economy needed well balanced. and reasonable choices, with recommendation to greater production costs. many services face because of wartime financial challenges.

The gas transportation operator was cutting its costs by closing. some facilities and laying off staff, he said.

Ukraine's economy was ravaged by Russia's full-scale. intrusion in February 2022 as millions of people left the. combating, cities and infrastructure were bombed and harmed, and. exports and logistics were interfered with.

Gross domestic product fell by almost 30% in 2022 and. in spite of growing in 2023 and 2024, the Ukrainian economy is. about 78% of its size before the war.

(source: Reuters)