Oil Companies OK Ukraine Gas Price Cap

Oil Companies OK Ukraine Gas Price Cap

Tuesday, August 15th 2006

Ukraine’s oil businesses have agreed to temporarily cap gasoline prices, the energy minister said Monday, amid a dramatic spike in prices that has alarmed consumers and prompted calls for the government to intervene.Retail prices for both gas and diesel fuel have climbed about 10 percent in the past three weeks in Ukraine, reflecting record high world oil prices and increased tariffs from Russia ”” a major source of Ukraine’s fuel.

Fuel and Energy Minister Yuriy Boyko told reporters that oil companies representing about 60 percent of Ukraine’s fuel market agreed to cap retail gas prices at 4.7 hryvna a liter (93 cents) and diesel prices at 4.1 hryvna a liter (82 cents) for this week.

He said the government set the caps, taking into account world oil prices and tariffs, as well as consumers’ interests. He said that if fuel stations did not respect the agreement, they would be barred from receiving shipments from refineries.

Valery Ryashin, a spokesman for Lukoil Ukraine, a subsidiary of Russia’s OAO Lukoil, called the agreement “normal, as cap prices for this week correspond with market prices for this week.”

Neither the companies nor Boyko said whether the caps would remain in place through next week, nor what would happen if the companies refused to go along with government requests for cooperation.

Viktor Yanukovych, who was confirmed prime minister last week, earlier pledged not to interfere in market forces on gas prices ”” in an apparent attempt to avoid the mistakes of former Prime Minister Yulia Tymoshenko, who threatened companies with lawsuits if they did not institute price caps.

Her threats caused a fuel crunch at many gas stations and ultimately led to her being fired by President Viktor Yushchenko.

“We will follow market economy rules and our law … no administrative measures by us,” Yanukovych said.

Copyright 2006 by The Associated Press. All rights reserved.

Share this post