KYIV, Aug. 30 – President Petro Poroshenko urged law enforcement agencies Wednesday to investigate steep liquified petroleum gas price hike, but failed to address concerns that 40% of the market is now controlled by Russian President Vladimir Putin’s ally.
The developments come a day after lawmakers and industry figures have alleged the SBU security service – controlled by the president – cracked down on independent traders to clear the way for a business affiliated with Viktor Medvedchuk, Putin’s ally.
Ukraine’s LPG prices skyrocketed 55% over the past few weeks, reflecting severe shortages of the fuel that has been increasingly used by Ukrainian motorists in recent years as an alternative to expensive gasoline.
The market disruption comes as the Swiss-based trader Proton Energy Group S.A., which is believed to be affiliated with Medvedchuk, has emerged as a dominant LPG supplier controlling 40% of the market, according to Serhiy Leshchenko, a senior lawmaker.
Proton Energy benefited from the SBU-engineered crackdown on independent LPG traders, but had also received support and lucrative discounts from Russia’s state-controlled oil company Rosneft, which is tightly controlled by Putin.
“All suppliers of LPG will be checked,” Poroshenko said in a statement posted on his website. “If there will be established a fact of obtaining monopoly-like high profits, those who has done so will be fined, and the situation will return back to normal.”
Poroshenko did not address the concerns that the Putin ally is now the dominant supplier of LPG to Ukraine, but he appears to be aware of the SBU-led recent efforts to disrupt the industry by massively shutting down imports.
“In conditions of hybrid warfare, when Russia is the main supplier of LPG, decisions were made to suspend or to restrict the supplies the same way as it was done with natural gas,” Poroshenko said.
“We have to set up our own production of LPG and those shipments that were blocked from Russia have to be replaced with LPG produced in Ukraine,” Poroshenko said.
Meanwhile, Prime Minister Volodymyr Groysman said the steep hike in LPG prices was a plot and also called on law enforcement agencies to investigate the matter.
"I want the responsible agencies to sort out the LPG situation for the automotive transportation market. Such a sharp price hike has all the hallmarks of corruption. The market is suffering,” Groysman said. "This is the result of monopoly.”
Ukraine’s LPG prices increased to UAH 17 per liter on Aug. 29, up from UAH 11 just weeks ago, according to Leshchenko. He said the prices are unlikely to get back to pre-crisis level, making Ukrainian consumers pay extra for key motor fuel.
Leshchenko accused Pavlo Demchyna, the head of the anti-corruption department at the SBU, of engineering the crackdown on the independent LPG traders.
SBU chief Vasyl Hrytsak on Wednesday said he will personally look into the matter to check increasingly frequent clashes between the security service and business interests in Ukraine.
Hrytsak has agreed to meet lawmakers and business leaders next week to discuss the LPG problem in detail, according to Mustafa Nayem, a Ukrainian lawmaker. (nr/ez)