Gas, electricity tariffs for households are half of market prices – IMF
Gas and electricity tariffs for households cover approximately half of the market price, but market liberalization with tariff increases is possible only in the post-war period, according to the updated Extended Arrangement under the Extended Fund Facility for Ukraine, which the International Monetary Fund (IMF) published on its website on Tuesday.
"Despite the increases, household electricity prices are estimated to cover around half of the price for small business customers in Kyiv (OECD, 2025), while household gas prices are roughly 50 percent of cost recovery levels based on market exchange gas prices," the document reads.
Meanwhile, it is noted that the authorities in Ukraine intend to adopt a roadmap for the gradual liberalization of the gas and electricity markets within six months of the end of martial law, with a time-limited implementation plan for the period after its lifting.
"The roadmap would cover proposed PSO reforms, plans for gradual tariff increases/ tariff methodologies, mechanisms to deal with the legacy debt and arrears in the energy system by different energy players, as well as a comprehensive protection scheme for the most vulnerable households," the arrangement states.
The IMF said a plan is needed to create a sustainable sector in the post-war period, including a reduction in quasi-fiscal liabilities, according to which utility prices will correspond to cost recovery and a new tariff methodology will be introduced that takes into account social aspects.
The Fund is convinced that the increase in tariffs will contribute to the restoration of profitability of the energy sector, the reduction of the debt burden in some of its parts and competition in the wholesale and retail energy markets, while stimulating energy efficiency.
"At the same time, the most vulnerable households need to be protected from higher tariffs, including through revision of the Housing Utility Subsidy (HUS) to increase its effectiveness and targeting," the IMF states.
It also recalls that due to the inconsistency of tariffs for the population with the market situation, heat supply enterprises owed UAH 100 billion to Naftogaz, and despite the increase in electricity prices, a moratorium on water and heat supply tariffs remains in place.
However, the IMF said that despite frequent large-scale energy attacks during the war, Ukraine's energy sector remains resilient thanks to repairs, new generating capacities and imports, which is supported by strong support from international donors.