The price of living: the truth

In the spring 2015, NGO “Public Audit” conducted a large-scale study of the validity of the prices for housing and utility services and proved that the gas price set by the government is almost twice as higher. This issue was explosive and painful for the Ukrainians, but the government did not want to enter into a dialogue with experts and concerned individuals, as well as to establish a fair gas price. So Maxim Goldarb, the leader of “Public Audit” has initiated and headed the anti-rates movement named “Tariff Mobilization”, which aims to achieve a reduction in rates and to get the housing and utility system under control.
The analytical expert assistance in the anti-rates movement will be provided by independent auditors of “Public Audit”. For a year and a half, more than 50 studies have been carried out, which are related (directly and indirectly) to the problems with housing and utility services: gas prices; the validity of gas, heating and hot water prices for households – by each region of Ukraine; social transfers (procedure of assignment and cancellation, verification, budget problems associated with subsidy payments); the procedure for creation of housing cooperatives; all legal aspects related to failure to pay the utility bills; difficulties in preparation to the heating season; mechanisms that can be used by local governments to reduce utility bills for households, etc. Public auditors have collected a large analytical basis and want to share their knowledge with the Ukrainians. Moreover, we regularly receive from readers their personal appeals for advise on how to act in a particular situation.
The information below includes the main evidences and arguments we’ve collected for you in relation to the anti-rates movement, which already covers the whole Ukraine.
Since April 2015, the new Ukrainian authorities raised utility prices out of bounds, while pension and minimum wage remained miserable.

Such living conditions make it impossible for more than half of Ukrainians to pay the utility bills, and this leads to the growth of debt and puts households beyond the survival limit.
Moreover, the government’s pricing policy contradicts the requirements of the current legislation. According to Clause 4, Part 1, Article 2 of the Law “On housing and utility services”, regulation of utility prices/rates should be conducted “subject to the achieved level of social and economic development, natural specifics of the respective region and technical capabilities”. First we need to achieve the European level of living and European incomes, and only then the government will have the right to raise the prices for Ukrainians.
An average utility bill for a small apartment this winter will amount to UAH 2,500 (which is more than twice the established minimum wage). Utility bill should not exceed 15% of the household’s income, – Groisman says. It turns out that the average income of a Ukrainian family has to reach UAH 17,000! Is it realistic?

HIGH RATES: WHAT IS THE PROBLEM?

The main reason for too high utility rates is the economically groundless gas price. In the spring 2015 it was set by the National Commission for State Regulation of Energy and Public Utilities, which was illegally established by the President (at the level of UAH 7,200 /thousand m³), and in the summer 2016 by the Cabinet of Ministers led by V. Groisman (at UAH 6,879 thousand /thousand m³).
More than half of the gas price of UAH 6,879 per thousand cubic meters – UAH 3,617.4 – represents additionally introduced crippling taxes for households: natural resources tax and VAT which Ukrainians were forced to pay for gas, while the gas, according to the Constitution, is the property of the citizens of Ukraine. They have to be abolished! It will cut the rates and price for gas by half! Then Ukrainians will be able to pay for their own gas maximum UAH 3.500 per thousand cubic meters, but not nearly UAH 7,000! And not to beg Groisman for subsidies.

EUROPEAN PRICE?

You can’t compare the price of gas in Ukraine and other European countries. First, incomes of Ukrainians are 10 times lower than incomes of European households; second, Ukraine has sufficient amounts of own-produced gas to meet the needs of households. That is, we are not that much dependent on imported gas and the market price on it, as the European countries.

In a period of unprecedented economic crisis and tripled impoverishment of the people, the Government is obliged to use the whole volume of Ukrainian gas for the needs of Ukrainians.
“The Ukrainians should receive their own gas, and that is not someone’s whimsy – this right is enshrined by the Constitution of Ukraine. No one says that it should be for free – with a reasonable profit for producing companies. This step does not require to go an extra mile – only political will of the country leaders, and especially of the President. Because the Commission for State Regulation of Energy and Public Utilities is comprised of his people; Cabinet of Ministers is comprised of his people; the ruling coalition is also comprised at least by 50% of his people”, – believes Maxim Goldarb, Head of “Public Audit”, the initiator of the “Tariff Mobilization”.

THE UKRAINIAN GAS PRICE

See for yourself: this spring A. Kobolev, Head of NJSC “Naftogaz of Ukraine” confirmed that “at the price of USD 25-30/thous. m³ there is only a possibility for traditional extraction of gas from existing wells, but at the price of USD 50-80/thous. m³ development of the new fields can be discussed. That is, if there were no tax burdens, and with a reasonable profit for gas producers and capital expenditures, Ukrainian gas should cost Ukrainians UAH 3,500/thous. m³ maximum.
Instead, at the state level they sell to Ukrainian households a product, which costs maximum USD 80, at the price of USD 300! And to prevent people from complaining, they came up with a “lure” called “subsidies”. Minister of Social Policy P. Rozenko somehow make a slip in speaking and admitted that the main purpose of the subsidies is to prevent social riots.

SUBSIDY TRAP

The system of subsidies destroys the economy of the country and turns Ukrainians into beggars, utility slaves which are forced to ask the state for a handout. Creating a visibility of the care-about state, developing a psychological dependence – here are the key tasks of the subsidies.
Just think: this heating season 9 million households (at least 27 million Ukrainians) will depend on subsidies.
This is what it means: half of the country’s population is poor, not capable to pay their utility bills and forced to “get a free ride” from the state?

The system of subsidies is running due to high taxation, which is the main component of the gas price. It washes away the households’ money, reduces the level of solvency, demand for other goods and services, leads to destruction of small and medium-sized businesses, as well as to jobs reduction.
Because people do not get subsidies in cash, they’re not interested in energy saving. Additionally, due to the extremely high utility rates, prices on goods and services grow like mushrooms. With transparent and fair gas prices, there won’t by any need for mass subsidies!

SUBSIDIES WILL COME SHORT!

The State Treasury cannot bear the burden of subsidies and there will be a need to take away this sweet “gingerbread” from people. The foundation for this is being already prepared: verification of social payments, two minimum wages for unemployed individuals, introduction of mandatory declaration of incomes…

WHAT TO DO?

To resist the pricing-based robbery together. Thousands of like-minded people from all over Ukraine have already joined the public movement “Tariff Mobilization”.
We call on the Government and President:         
  1. To channel the full volume of own-produced gas to the needs of Ukrainian households;
    2. To cancel taxation of Ukrainian gas and other utility services for Ukrainians;
    3. To follow a clear formula of gas price: cost + transportation + ROI.
Local governments:
  1. To revise capital expenditure programs of heat suppliers which will ensure 100% accounting and reduce utility payments by at least 20%;
  2. To establish strict controls over the quality of utility services and to guarantee refund for consumers which overpaid for low-quality utility services;
  3. Introduce a moratorium on foreclosure on the Ukrainians’ residential properties in case of utility debts, if the debtor has no other housing.
Everyone who believes that he/she is cheated, who feels the threat to relatives and is willing to work with us to defend his/her rights – join us!
Only by joint efforts we can stop the pricing-based robbery.