By Pavel Polityuk
KIEV, Dec 25 (Reuters) - Ukraine could face a shortfall of petrol next year due to the sharply depreciated hryvnia currency, new import tariffs, higher local taxes and a temptation to export more, industry analysts said on Thursday.
The government, trying to find extra revenue as the country sinks into recession and the credit crunch holds it back from borrowing, plans to introduce an additional import duty of up to 13 percent as well as double the excise duty on fuel.
The fall in the hryvnia's value against the dollar -- about 70 percent since September, as well as higher taxes, will increase the cost of producing refined products like petrol.
Analysts said these factors would lead to similar volumes of production next year -- rather than higher -- at a time when imports of fuel are likely to fall, again due to the strong dollar and the additional import duties.
'The future will be very tough -- we cannot amply supply the internal market,' said Volodymyr Yemelyn, director of Ukrneftekhimpererabotka, a division of the energy ministry.
'The introduction of import tariffs and administrative interference will cause traders to fear this business,' he said.
Ukraine produced about half of its own fuel consumption this year, with the rest imported. Last year it produced 70 percent of its needs. However, there is already evidence that imports are slowing -- 120,000 tonnes of diesel in the first half of December against 420,000 tonnes in November.
However, it is precisely at this moment that domestic producers may be tempted to export more.
'For producers, it is more beneficial to work not for the domestic but the export market. There, they can receive dollars, where as here, collect hryvnias with which one has to try to buy some dollars,' Yemelyn said.
The currency depreciation also makes it even more difficult to take out loans, which petrol retailers use to buy their supplies and develop their network of stations.
Serhiy Kuyun, director of industry consultants UPECO, said the new measures would add about 0.7-1.0 hryvnias to the price of petrol which is now around 5 hryvnias (about $0.65).
This would go against government pressure to keep in check petrol prices, which factor strongly in inflation figures, because petrol is used by so many businesses and producers.
Neither Yemelyn nor Kuyun gave any forecasts for petrol production next year, partly because they say there are many unknowns -- such as the future level of the hryvnia or the ability of the government to pass laws through parliament.
(Writing by Sabina Zawadzki; editing by Michael Roddy) Keywords: UKRAINE PETROL/ (Kiev bureau; tel: +380 44 244 9150; RM: sabina.zawadzki.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
KIEV, Dec 25 (Reuters) - Ukraine could face a shortfall of petrol next year due to the sharply depreciated hryvnia currency, new import tariffs, higher local taxes and a temptation to export more, industry analysts said on Thursday.
The government, trying to find extra revenue as the country sinks into recession and the credit crunch holds it back from borrowing, plans to introduce an additional import duty of up to 13 percent as well as double the excise duty on fuel.
The fall in the hryvnia's value against the dollar -- about 70 percent since September, as well as higher taxes, will increase the cost of producing refined products like petrol.
Analysts said these factors would lead to similar volumes of production next year -- rather than higher -- at a time when imports of fuel are likely to fall, again due to the strong dollar and the additional import duties.
'The future will be very tough -- we cannot amply supply the internal market,' said Volodymyr Yemelyn, director of Ukrneftekhimpererabotka, a division of the energy ministry.
'The introduction of import tariffs and administrative interference will cause traders to fear this business,' he said.
Ukraine produced about half of its own fuel consumption this year, with the rest imported. Last year it produced 70 percent of its needs. However, there is already evidence that imports are slowing -- 120,000 tonnes of diesel in the first half of December against 420,000 tonnes in November.
However, it is precisely at this moment that domestic producers may be tempted to export more.
'For producers, it is more beneficial to work not for the domestic but the export market. There, they can receive dollars, where as here, collect hryvnias with which one has to try to buy some dollars,' Yemelyn said.
The currency depreciation also makes it even more difficult to take out loans, which petrol retailers use to buy their supplies and develop their network of stations.
Serhiy Kuyun, director of industry consultants UPECO, said the new measures would add about 0.7-1.0 hryvnias to the price of petrol which is now around 5 hryvnias (about $0.65).
This would go against government pressure to keep in check petrol prices, which factor strongly in inflation figures, because petrol is used by so many businesses and producers.
Neither Yemelyn nor Kuyun gave any forecasts for petrol production next year, partly because they say there are many unknowns -- such as the future level of the hryvnia or the ability of the government to pass laws through parliament.
(Writing by Sabina Zawadzki; editing by Michael Roddy) Keywords: UKRAINE PETROL/ (Kiev bureau; tel: +380 44 244 9150; RM: sabina.zawadzki.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.