On September 8, Ukraine celebrates Oil, Gas, and Refining Industry Workers’ Day. However, the Ukrainian fuel industry is currently facing serious challenges. On the eve of this professional holiday, we reviewed the situation — how the industry is functioning now and what difficulties it is overcoming.
The full-scale war with Russia has been ongoing for over 2.5 years. The socio-economic situation in Ukraine remains difficult, and the fuel market is undergoing serious tests. Since the beginning of the war, many oil refineries have been hit by Russian missile strikes, forcing the Ukrainian market to shift to European imports.
Since the start of the full-scale conflict, Ukraine has diversified its fuel supply sources, reducing its dependence on Russia and Belarus. Currently, most fuel supplies come from the EU. However, wartime logistics challenges are affecting domestic prices. During this period, fuel prices have almost doubled, and unfortunately, this is not the limit — prices are expected to continue rising.
Meanwhile, in recent weeks, the Verkhovna Rada has been working on draft law №11416-d, which proposes tax increases, including for participants in the fuel market. If the bill is passed in its current form, retailers will be required to pay monthly advance payments ranging from 30,000 to 80,000 UAH for each retail fuel outlet, depending on the types of fuel sold and the presence of licenses for selling tobacco and alcohol products. Consequently, this tax will be included in the final fuel price.
“If we are not talking about large retailers but about smaller regional networks that serve a significant portion of the population, changes in legislation may increase the burden on businesses. Under the current difficult conditions, many of them are operating at break-even, but they maintain jobs and, importantly, continue to supply fuel to people,” explains Alina Potapovych, a lawyer and member of the Fuel and Energy Business Association. “It’s clear that tax increases will either be passed on to the fuel price or force some businesses to close. In that case, many communities could face difficulties in accessing fuel. We hope the government will take the situation into account and engage in dialogue with representatives of small and medium-sized businesses, as well as with society.”
Additionally, the country’s energy infrastructure is in a difficult state and, to some extent, still depends on conventional fuel available at gas stations. Power outage schedules have affected both consumers and businesses. Many are forced to buy and use generators. According to experts, the upcoming winter will be one of the most difficult in the history of independent Ukraine. It’s logical that under such conditions, the uninterrupted supply of fuel is crucial to meet the population’s needs and avoid a repeat of the fuel shortage seen in 2022.
To alleviate the situation in the energy sector, the government has developed a special program aimed at increasing energy independence. Individuals can obtain 0% loans for purchasing generators that produce electricity from alternative sources, such as solar panels or wind turbines with energy storage systems. Businesses can also take advantage of a special program for purchasing generators. Therefore, it is expected that in the coming years, the use of household alternative energy sources in Ukraine will increase, which could give an additional boost to the development of the economy and the energy sector. Facing challenges alone is difficult, so various sectors of business are coming together to address urgent issues and promote industry development.
“Our Fuel and Energy Business Association not only unites representatives of the fuel and energy sector — fuel producers and suppliers, experts, and consultants from all over Ukraine — but also works on energy supply directions, the development of alternative energy, and the energy efficiency of enterprises and communities. We develop projects and standards, provide information support on financing and grants for businesses, and offer informational and advisory services on legal and tax matters for small and medium-sized businesses in the fuel and energy sector. In these difficult times, all these areas are crucial for the survival of businesses and ensuring the comfort of Ukrainians,” emphasized Ihor Khirgiy, founder and head of the Fuel and Energy Business Association.