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Ukraine Gas Pricing Policy

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  • Pritha Mitra
  • Ruben Atoyan
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    Abstract

    Ukraine’s gas pricing policy subsidizes gas and heating for all households. As the cost of imported gas rises, this policy increasingly weighs on government finances, sustains energy over-consumption, dampens investment in delivery systems, and undermines incentives for domestic production. However, gas price hikes have been deferred to the medium-term as they are politically unpopular. Through estimation of household demand functions by income quintiles to evaluate the distributional consequences of tarrif reform, this paper finds that tariff reforms combined with targeted social support can address the economic inefficiencies of the current pricing policy without large welfare costs to the lower income segments of the population.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/247.

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    Length: 23
    Date of creation: 15 Oct 2012
    Date of revision:
    Handle: RePEc:imf:imfwpa:12/247

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    Related research

    Keywords: Natural gas; Demand; Consumption; Tariffs; Pricing policy; Economic models; Ukraine; social assistance; gas consumption; gas demand; gas imports; gas pricing policy; social assistance programs; welfare loss; gas production; gas transit; gas availability; gas sector; basic needs; social assistance expenditures; gas subsidies; demand for gas; household welfare; targeted social assistance; gas reserves; gas tariff; welfare costs; gas tariffs; victims; disabled; gas supply; welfare change; social assistance budget; gas users; gas sales; oil and gas; gas sector reform;

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    1. Bentzen, Jan & Engsted, Tom, 1993. "Short- and long-run elasticities in energy demand : A cointegration approach," Energy Economics, Elsevier, vol. 15(1), pages 9-16, January.
    2. Lutz Kilian, 2008. "The Economic Effects of Energy Price Shocks," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 871-909, December.
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    Cited by:
    1. Michael Plante, 2013. "The long–run macroeconomic impacts of fuel subsidies," Working Papers 1303, Federal Reserve Bank of Dallas.

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