## Ukraine Gas Pricing Policy: Distributional Consequences of Tariff Increases

_IMF Working Papers, October 15, 2012_

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## Bibliographic details
- Authors: Pritha Mitra, Ruben V Atoyan
- Published: October 15, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475512878.001

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### Key findings
- Ukraine’s gas pricing policy subsidizes gas and heating for all households.
- Rising cost of imported gas increasingly:
  - weighs on government finances,
  - sustains energy over-consumption,
  - dampens investment in delivery systems,
  - undermines incentives for domestic production.
- Gas price hikes have been deferred to the medium-term because they are politically unpopular.
- Estimation of household demand functions by income quintiles indicates:
  - tariff reforms combined with targeted social support can address the economic inefficiencies of the current pricing policy,
  - such reforms can be implemented without large welfare costs to the lower income segments of the population.

### Methodology and analytical approach
- Household demand functions were estimated by income quintiles to evaluate distributional consequences of tariff reform.
- Analysis focuses on distributional impacts and welfare effects across income segments under tariff adjustment scenarios.

### Policy implications and recommendations
- Replace universal price subsidies with reforms that:
  - reduce fiscal burden from rising import costs,
  - correct incentives to curb energy over-consumption,
  - encourage investment in delivery systems,
  - restore incentives for domestic gas production.
- Complement tariff reforms with targeted social support to protect lower income households and limit adverse welfare impacts.

### Publication and identifiers
- Pages: 23
- Volume: 2012
- Issue: 247
- Series: Working Paper No. 2012/247
- DOI: https://doi.org/10.5089/9781475512878.001

*Pritha Mitra and Ruben V Atoyan; October 15, 2012. IMF Working Paper No. 2012/247.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/ukraine-gas-pricing-policy-distributional-consequences-of-tariff-increases-40047_