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Week's balance: Ukraine halts air traffic with Belarus and suspends Belarusian electricity imports, while gas suppliers release June tariffs

14:00, 29 May 2021
3 min. 1931

Ukraine has cut all flights to Belarus and banned imports of Russian and Belarusian electricity, while domestic gas suppliers published household tariffs for June – these are the main economic developments of the last week of May.

The main event of the outgoing week was the decision by Ukrainian authorities to terminate air traffic with Belarus and the subsequent ban on the imports of Russian and Belarusian electricity.

Starting May 26, Ukrainian air carriers are prohibited from flying in the Belarusian airspace, while Belarus-registered aircraft are banned from using the airspace of Ukraine from May 29.

Ukraine imposed an air blockade of Belarus in response to the latest actions by Alexander Lukashenko which outraged the civilized world. This is about scrambling a MiG jet to force-land a Ryanair commercial flight en route Athens-Vilnius, transiting Belarusian airspace – all to detain a dissident reporter, founder of the NEXTA Telegram channel Roman Protasevich, who was on board the plane.

"The situation with the forced landing of a Ryanair aircraft in Minsk is a violation of the Convention on International Civil Aviation. Our government decision is aimed at ensuring the safety of flights and passengers," said Prime Minister Denys Shmyhal.

Halting electricity imports

Photo from UNIAN

Following the decision to terminate flights with the northern neighbor, the national energy and utilities regulator banned the import of Russian and Belarusian electricity until October 1, 2021.

Valeriy Tarasiuk, the regulator's chief, said the ban would probably be extended beyond that date.

Energy experts polled by UNIAN note that the impact of electricity supplies from Russia and Belarus on the domestic market is greatly exaggerated, since even in the most difficult periods, when such import reached maximum values, it didn't exceed 5% of total consumption.

According to the operator of Ukraine's Unified Energy Grid, the state-owned Ukrenergo, electricity imports in January-April 2021 amounted to about 947 million kWh, while supplies from Belarus stood at 511.6 million kWh, and from Russia – at 101 million kWh.

Photo from UNIAN

"This is more of a political than an economic decision. The issue of electricity import and its impact on the market is greatly exaggerated. These imports rarely exceeded 5% of consumption, which can in no way affect price-forming," energy expert Hennady Riabtsev has told UNIAN.

Belarus' response

At the end of the outgoing week, Ukraine's trade representative, Taras Kachka, said the Belarusian authorities were introducing licensing for a number of Ukrainian goods imported into the country.

"According to operational information, Belarus has introduced an individual licensing regime for the import of a number of Ukrainian goods: confectionery, chocolate, juices, beer, chipboard and fiberboard, wallpaper, toilet paper and packaging, bricks, ceramic tiles, glass ampoules, agricultural machinery for sowing, washing cars and furniture," said the trade envoy.

It is obvious that the escalation of political confrontation will prevail between the civilized world and Alexander Lukashenko, who retained power in Belarus in an election many believe was rigged. And Ukraine, due to its proximity to an unpredictable neighbor, unfortunately, will become one of the first parties to be affected.

Gas prices not going down

Photo from UNIAN

In the outgoing week, domestic gas suppliers published updated monthly and annual gas tariffs for the households from June on.

Despite PM Shmyhal's expectations of a decrease in the annual gas price this summer, gas suppliers have retained their prices at the level from UAH 7.9 to UAH 13.5 per cubic meter.

The fixed annual gas tariff, to which all household consumers were automatically transferred with a validity period from May 1, 2021 to April 30, 2022, did not decrease, despite the onset of the summer season.

At the same time, the company's monthly gas prices dropped slightly. Offers start at UAH 7.99 per cubic meter and reach UAH 11.89 per cubic meter.

Most companies post a monthly price for June that is lower than their annual offer. So it's time for citizens to think about what tariff they should choose for the summer season.

War with Gazprom

This week, Russian Gazprom again refused to use the additional capacity for gas transit through Ukraine for June in the daily amount of 63.7 million cubic meters. This deprived Europe of the opportunity to additionally pump 2 billion cubic meters of gas into its storage facilities in the first month of summer.

Putin's Russia is trying to reduce as much as possible the volume of gas pumped through the Ukrainian gas transmission system, since the construction of the Nord Stream 2 pipeline bypassing Ukraine  is at the final streak.

Last week Naftogaz of Ukraine did a reshuffle in its team working to hinder the NS2 launch. Among other officials who resigned was Lana Zerkal, an advisor to the head of the Naftogaz board.

After Yuriy Vitrenko was appointed as new head of the board, the company underwent serious personnel shifts.

Among other important economic reports of the outgoing week is the one by the State Statistics Service on a 13% rise of industrial production in April 2021 on year. A month earlier, such an increase stood at just over 2%.

Against to the previous month, industrial output in April this year was up 2.7%.

The stats agency noted growth in the mining and processing industries, as well as the supply of electricity, gas, steam, and air conditioning. The production of intermediate consumption goods also increased by 25.2% and consumer durables – by 103%.

Anna Bredikhina

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