REASONS AND PREREQUISITES FOR RAISING UTILITY TARIFFS IN UKRAINE

Abstract

The article investigates the consequences of a full-scale invasion of the market and activities of enterprises in the field of public utilities. Thus, as a result of the full-scale invasion, the production capacities of the energy and oil and gas sectors of Ukraine, which provided the population and businesses with the opportunity to live and function effectively, were significantly damaged and destroyed. The author analyses the financial statements of JSC ‘Ukrgasvydobuvannya’ and calculates the possible level of gas prices for the population of Ukraine, which does not take into account the cost of supply, the cost of gas imports from other European countries with market mechanisms of price formation and the fact that the production of other private companies may be higher than that of the leading national producer. The advantages and disadvantages of possible liberalisation of utility prices, which are highlighted by the US and EU governments and senior IMF officials, are identified. The advantages include: creating conditions for effective competition, increasing the transparency of tariffs and reflecting the real cost of such resources, creating attractiveness for investors, levelling prices for all categories of consumers and eliminating cross-subsidisation. The disadvantages include the potential for a sharp rise in utility prices, increased social inequality, the risk of monopolies, the dependence of the utility market on external factors, and uncertainty for households. However, it was also found that in the long run, liberalisation of the utility market would bring significant benefits to individual households. Therefore, recommendations were made to the Government of Ukraine to create an efficient market for public utilities on a direct market basis. The elements of scientific novelty are an independent calculation of the possible cost of gas production based on the financial statements of JSC UkrGasVydobuvannya, substantiation of the advantages and disadvantages of liberalisation of the utility market, and summarisation of theoretical directions of the utility market. The practical significance of the article lies in the fact that the study resulted in recommendations to the Government of Ukraine for the effective implementation of the market mechanism for setting prices for utilities.