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Ukraine to increase motor fuel imports from Poland, suspend price controls

Highlights

Poland to double motor fuel supply to 120,000 mt

Retail gasoline prices likely to increase

  • Author
  • Alexander Bor
  • Editor
  • Shashwat Pradhan
  • Commodity
  • Agriculture Natural Gas Oil

Ukraine will increase imports of motor fuel from Poland after the two countries agreed to boost supplies to 120,000 mt from 60,000 mt, Ukraine's First Deputy Prime Minister Yulia Svyrydenko said late May 17.

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The government has been struggling for weeks to ensure adequate supply of gasoline on the domestic market after missile strikes by Russian forces destroyed much of the fuel storage infrastructure in March and April.

The government also plans to suspend regulations on the price of gasoline and diesel fuel, Svyrydenko said.

The plan to remove the restriction means that the price of gasoline in Ukraine will probably increase to Hryvnia 52/liter ($1.76/liter), up from Hryvnia 34/liter currently, while the price of diesel fuel will increase to Hryvnia 58/liter, up from Hryvnia 42/liter, Svyrydenko said.

The government's plan, which must be approved at the Cabinet of Ministers meeting in order to come into force, is aimed at tackling long queues at gasoline stations across the country. The government had planned to open more border crossings to boost supplies, but that hasn't worked with some private traders saying restrictions have made selling gas in the country unprofitable.

Ukraine is also expected to see an increase in fuel supply from other EU countries as it looks to ensure that its motorists are able to buy gasoline and diesel fuel, according to Svyrydenko. Currently, long queues at gasoline stations are being seen. Also, stations have been refusing to sell more than 10 liters of gasoline per person.

The restrictions were introduced in March after Russia bombarded the country's fuel storage infrastructure, while demand has spiked as farmers have started planting spring grains.

Ukraine has lost 97% of its fuel supply and storage infrastructure since Russia invaded the country on Feb. 24, according to Svyrydenko. Russia has also launched missile strikes targeting the Kremenchuk oil refinery, Ukraine's largest by capacity.

After Ukraine suspended imports of gasoline and diesel fuel from Russia and Belarus in February, Kremenchuk became the only supplier of gasoline in the country, and supplied 50% of the country's diesel fuel demand, according to Svyrydenko.

The blockade of Ukrainian Black Sea ports by Russian naval ships has contributed to the shortages, Svyrydenko said. "The situation and the blockade of ports have become apparent, fuel is now supplied to the country by rail and river transport," she added.