Metallurgprom: Ukrainian steelmakers may face losses due to gas price hike

Wednesday, 04 August 2010 11:56:44 (GMT+2)

The Ukrainian association of metal producers Metallurgprom has said that Ukrainian steelmakers could face losses from operations due to the increase as of August 1 this year of the ceiling price on natural gas for industrial consumers and budget-funded organizations by 9.76 percent to UAH 2,187.2 (about $277) per 1,000 cubic meters, excluding VAT, surcharges, transportation, distribution and supply costs.

"This measure may set to nil the profitability of the steel producing companies. The steelmakers have not seen yet such high gas prices," Metallurgprom's general director Vasily Kharakhulakh said in an interview with Ukrainian News Agency. 

According to Mr. Kharakhulakh, the decision of Ukraine's National Electricity Regulatory Commission to increase gas prices for industrial consumers differs from the initial promises of the government to support domestic producers.

Up to July 1 this year, Ukrainian steel producers had received gas at preferential prices under a previously signed memorandum of understanding with the country's cabinet of ministers.

Meanwhile, as of August 1, Ukraine has also raised domestic household gas prices by 50 percent. Increasing gas prices was a key demand of the International Monetary Fund in exchange for the approval in the previous week of a U$15 billion loan over 2.5 years to help Ukraine with economic reforms.

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