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Leanid Zaika: Decline in prices on gas should lead to the reduction in utility costs

31.08.2016  |  Economy   |  Aliaksei Jurych,  EuroBelarus
Leanid Zaika: Decline in prices on gas should lead to the reduction in utility costs news.vitebsk.cc

In the situation of cheaper prices on gas Lukashenka's decree on non-cash housing subsidies looks weird.

Belarus and Russia have agreed on price-cutting for Russian gas, according to the Russian newspaper "Kommersant". As a result, price on gas for Minsk will become cheaper by 30%: the average price of a thousand cubic meters of gas for Minsk makes $92.41 dollars for 2017, and $97.03 - until the end of 2016.

Leanid Zaika, the head of the analytical center “Strategia” (“Strategy”), believes that the decline in prices on gas should lead to the reduction of utility costs. However, the decree on provision of non-cash housing subsidies came as a complete surprise for the economist. He told about it to the “EuroBelarus” Information Service.

- Reduction in gas prices should lead to the reduction in utility costs.

Reduction in utility costs means lower commodity and labor; more dynamic labor market.

I would say that switching to Russian rubles in gas payment is the most important event in the last 25 years, as previously the two countries, the Union State of Belarus and Russia, were estimating cost in dollars.

Belarusian people, who aim at sovereignty, should know that the price of a thousand cubic meters in Russia and in Algeria is $15. And for the sake of justice, Belarusians have the right to ask the brotherly Russian people: for what reason do Belarusians get gas at $100, if it costs $15?

Belarusians must now understand the national character of the government: if the gas becomes cheaper, the rent becomes cheaper, too.

- Yesterday Lukashenka signed a decree on non-cash housing subsidies. Consequently, nobody even mentions the reduction of utility tariffs.

- There is a dichotomy of intellectual values: it’s bewildering if in the situation of cheaper prices on gas and further reduce of utility costs the president signs a document on subsidizing vulnerable population. Why should we do this? Subsidizing public services means that the proportion of people who are unable to pay for apartments will increase.

- Gas is getting cheaper; so are the utility costs. Where do the sources of growth of the Belarusian economy lie? First Belarusian authorities survived at the expense of external loans, which are hard to get now.

- Belarusian economy has domestic sources of growth – capital, land and labor. I wouldn’t expect that the decline in gas prices would give a boost to the economy.

We will get no incentives for the economic development: people who have no idea about the growth factors explained by Adam Smith 300 years ago, want to use the decline in prices on gas to keep their posts and to smarten up the economic situation.

- To which extent should the utility costs decline, if gas prices fall by 30%?

- Let's count. I advise your readers to take utility bills for January and February 2016 and count how much they paid for water heating, central heating and discard 30%. In winter, utility costs can be reduced by 10-15% depending on the region.

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