The Ukrainian cabinet of ministers has refused to prolong for the third quarter of 2010 the memorandum of understanding (MoU) with the country's mining and metallurgical companies, signed in November 2008, mainly due to tight public finances and the difficulties in those sectors, i.e., gas, electricity supply and railway, from which the mining and metallurgical complex was receiving benefits.
The abolishment of preferences for the country's mining and metallurgical companies has also become one of the conditions of the International Monetary Fund for the provision of the next tranche of finance to Ukraine. The IMF noted the unacceptability of subsidizing one industry at the expense of others.
Meanwhile, Ukraine's Ministry of Industrial Policy has affirmed that, in the event of a worsening of the situation in the mining and metallurgical sector, it will reconsider resumption of preferential treatment for companies in the sector.
During the one and a half years when the preferential measures were effective, the mining and metallurgical sector received total benefits in the amount of UAH 1.9 billion (approx. $241 million).
As SteelOrbis previously reported, within the framework of the MoU, the Ukrainian government imposed a moratorium on the increase of gas, railway transportation and electricity supply tariffs.