Headline: Ukraine‘s household debt for utilities reaches record high as tariff hike looms in 2025
In a worrying trend, household debt for utilities in Ukraine has reached unprecedented levels, with experts warning that the situation could significantly worsen following planned tariff increases in 2025. Oleh Popenko, head of the “Union of Consumers of Communal Services” and an energy and communal services sector expert, recently stated this in a press briefing.
Popenko disclosed that the current debt for heating services alone stands at around 90 billion Ukrainian Hryvnia (UAH), inclusive of occupied territories and illicit billings across the country. Additionally, the debt for natural gas is estimated to be over 60 billion UAH, with some sources pegging it at 100 billion UAH.
However, the situation is expected to deteriorate further, Popenko noted. He predicted that once tariffs are raised to market levels, gas debts could swell to 150 billion UAH, emphasizing that 80% of Ukrainian households struggle to meet even the current tariffs.
Supporting his concerns, data from the State Treasury Service of Ukraine revealed that as of October 2022, the total debt for communal services exceeded 200 billion UAH.
Adding to the bleak outlook, Popenko warned of substantial tariff hikes in 2025. Gas prices for households could more than double, leading to a corresponding increase in heating costs, as gas constitutes 95-96% of the cost of heat production.
Using Popenko’s estimates, a family using 50 square meters of housing currently pays around 2500 UAH for heating. Post-hike, this could skyrocket to 5000 UAH. However, there are no projected increases in wages to match these rising expenses, leaving many households vulnerable.
Moreover, the 2025 budget envisions a 5 billion UAH cut in subsidies, further squeezing Ukrainian consumers. Popenko fears this could force people to sell their belongings to afford communal services.
Popenko concluded that while Ukraine aims to align its communal services tariffs with EU market levels, the average Ukrainian wage is significantly lower. This may result in citizens paying EU-level tariffs but without the corresponding economic benefits.
Ukraine previously pledged to the International Monetary Fund (IMF) to adjust communal service tariffs towards market levels, even amidst ongoing military actions.
As the Ukrainian government plans tariff increases and subsidy cuts, it is crucial to ensure that these moves are accompanied by measures that support vulnerable households, helping them to meet their heating and gas costs.
