In its Friday statement, EBA expressed concern over the Ukrainian government update to the resolution no.1236 on temporary state regulation of fuel prices that is set to cap trading margins for retailers.

According to the regulation update that appeared on the website of the Mineconomy, fuel retailers in Ukraine will face new ceiling trade mark-ups:

5 hryvnas per litre for gas and 7 hryvnas per litre for diesel.

The government claimed that the move is a temporary measure.

‘It comes as a response to unreasonable increase of prices at gas chains. The government upholds healthy and transparent competition on fuel market. Yet, the government has to protect ordinary customers that have suffered due to quarantine restrictions.  Capped profit margins will deter from price manipulation and stabilize fuel retail market, bringing the transparent pricing mechanisms,” stated the trade minister Igor Petrashko.

The move faces a growing opposition from the Ukrainian fuel retail industry and drew criticism from European Business Association.

‘These initiatives are unacceptable in a civilized European country and will contribute to the growth of shadow trade in the market,’ said EBA in its Friday statement.

EBA warned against ‘state intervention in economic proccesses’ saying that such  policies ‘contradict the Association Agreement between Ukraine and the EU, as the decision on state regulation of prices completely eliminates the role of the market as the main regulator of market relations’.

The association statement struck a cautionary note claiming that “manual” price regulation can destroy the pricing mechanisms used by the transparent business for years and create a crisis with the unpredictable supply of petroleum products to consumers’.

Warning about negative consequences of such regulation, ‘European Business Association appeals to the Cabinet of Ministers to repeal the adopted Resolution and not to allow the introduction of a limited trade margin on fuel, so that the industry continues to function under equal rules of the game’.