OREANDA-NEWS. July 29, 2010. The decision to regulate the gas price for the population could not be avoided. Prime Minister of Ukraine Mykola Azarov said this today at a press conference on "Causes of bringing tariffs on natural gas to economically sound level and the Government's measures to strengthen social protection of the population.

According to him, based on objective economic conditions, the Government had to decide on the gradual reduction of gas tariffs for the population to the economically sound level. Mykola Azarov noted that the state will pay compensation to the citizens if the costs of housing and utilities exceed 15% of total income for working age and 10% for the disabled. This Government has simplified the most appropriate mechanism of subsidies processing.

"Our task is to protect those whose standard of living, unfortunately, is quite low. We have a month to complete this work. If it is done correctly and effectively, the large number of citizens will not feel those measures for which we had to take", said the Prime Minister.

Mykola Azarov noted that this is a very difficult decision because here there are corresponding risks: "But we deliberately go to such risks because we are not interested in that the majority of our citizens has reduced their spending on the domestic market, we are interested in creating incentives for development of our economy".

According to the Prime Minister, the Government in negotiations with the IMF needed to find a balance between the need to reduce fiscal deficit and thus the amount of social assistance, which must pay to support the national economy: "I think we have found this balance.

Moreover, Mykola Azarov noted that the decision to regulate tariffs, there were several reasons. According to him, first of all, absolutely unfair to say that for the needs of the population there is enough gas of domestic production. "Unfortunately, not enough. And we have to mix our gas with Russian gas which is more expensive", the Prime Minister boted and added that the Russian gas price has increased substantially since 2009.

Also, in the opinion of Mykola Azarov, it is untrue statement that the state could continue to subsidize gas expenses of the population: "A very common mistake that if the budget pays for people, it is borrowed money. This is absolutely the same money. If we subsidize Naftogaz from the budget, and the previous Government did so, it meant only one thing: either the Government lent this money, and we are paying these debts every month through taking away 5-4 billion UAH from our people, or underpay our people from the budget as increasing wages, pensions.

Furthermore, as the Prime Minister noted, Ukraine needs to increase production of its own gas. But it is needed to make appropriate investments: "We should understand that wells which pump gas in our territory, are not eternal. Sooner or later they run out, and we must drill new wells. And if we want to save gas production that we have now, and we want not just to store but to double it, we must increase investment in developing our own oil and gas industry.

"In this situation we think not about image, not the election ... We do not want Ukraine to do bankruptcy, and our citizens to be work-hands in all work markets - that's the whole answer", said Mykola Azarov.

Meanwhile the Prime Minister warned all unscrupulous people who intend to "make a hand of" the public assistance: "Our specialists will have enough opportunities to test whether the wage or income which the applicant stated in its declaration or declarations really correspond true data. We will do it later. But we believe that our people we trust will also trust us", summed up the Head of the Government.