News:
Dmitriy Vovk, the chairman of NKREKU (National Commission for State Energy and Public Utilities Regulation) at Wednesday 27 May 2015 before sitting of Cabinet ministers, declared that NKREKU that determines tariffs does not see any possibilities for reducing prices of gas for people.
He stressed that today even after growth of tariffs “if we take price of gas that we buy from Europe and multiply on the price of dollar and add all the taxes, we get a price that is bigger than the most expensive gas for people”. (Source:http://zn.ua/ECONOMICS/nkreku-ne-vidit-vozmozhnostey-dlya-snizheniya-tarifov-na-gaz-177500.html)
Comment:
3th March 2015, NKREKU decided to raise tariffs and particularly the price of gas for people from 1st April. The minimal price of gas for people was raised 3.3 times (3.6Hrv/cub.meter). Apart from this the consumption rate was also reduced, causing many consumers during winter time to be unable to foot this rate and will be forced to pay for gas according to maximum price (7.188Hrv/cub.meter), that is 7 times more expensive than before.
This decision was accepted under the pressure of IMF as a condition for giving Ukraine an Extended Fund Facility of $17.5bl. The press release of the IMF Mission in Kiev dated 12 February 2015 states as follows:
“They have developed a comprehensive strategy aiming to foster energy efficiency and independence, increase domestic gas production, and restructure Naftogaz. As part of this strategy, and to rehabilitate Naftogaz while eliminating its drain on the budget, the authorities have decided to implement frontloaded gas and heating price adjustments aiming to reach full cost recovery by April 2017…”
Apart from this, there are other factors that are discussed as a reason for such a significant rising of gas prices for people. Among them – annexation of Crimea by Russia, war in Donbass, threefold devaluation of Ukrainian national currency (Ukraine buys gas from Russia and Europe in terms of dollars) and the fact that previous president of Ukraine, V. Yanukovich, artificially restrained currency rates and tariffs on public utilities aiming for an imitation of economical stability. It is said that all these factors led the Ukrainian economy to pre-default state, when it is forced to apply to IMF for macro-economic aid and obey all its demands.
When we examine this reality it becomes obvious that devaluation of currency and the need to raise prices on gas until make-out are not the cause of this situation, rather they are only the consequences. They are seen as causes only if we search for solution of this problem solely within ideology of capitalism. But if we approach this problem based on the Islamic ideology, so called causes becomes consequences, while true causes are listed as follows:
- a) Ukraine adopting (along with other states that implement capitalistic ideology) the Fiat paper money standard.
- b) Unreasonably overrated prices on energy resources and permanent growth of these prices since energy resources are owned by private owners.
Islam obliged that currency of a country should be based on a gold-silver standard, where it is supported by valuable metal on 100%. This excludes situations when currency devalues several times and also excludes possibility of currency manipulations by speculative machinations and so called international creditors.
Islam also prohibits private ownership of energy resources. The Messenger of Allah ﷺ said,
«المسلمون شركاء في ثلاثة: في الماء والكلإ والنار»
“The Muslims are partners in three: water, pastures and fire”.
In the time of the Messenger of Allah ﷺ, fire was used for heat, light and preparation of food. When Shariah analogy (qiyas) is applied on the word “fire” it is understood that all energy resources (oil, gas etc.) could not be private, thus being public ownership.
Thereby, according to Islam only cost price of these resources are taken from the citizens (Muslim or non-Muslims) within the Islamic State. It is contrary to capitalism where energy resources are owned by private companies and as a result of every stage (geological exploration, extraction, delivery to processor factories and ultimately to the consumers, storing and etc.) that precede obtaining of these resources by the ultimate consumer, with the extra costs being added.
This article does not allow for the explanation of the reality and positive aspects of the golden-silver standard and public ownership of minerals. You can find more information about this in the book, The Economic System in Islam, written and adopted by Hizb ut Tahrir.
Thereby the problem is concealed in the economic system of capitalism, rather than in any temporary macro-economic national measures nor in unskillful policy that was adopted by the previous president and government. All of these are mere consequences that have nothing to do with true causes.
It is worse to mention that you will not be able to implement laws of golden-silver standard and public ownership of energy resources unless you refuse the whole ideology of capitalism, since privatization of energy resources is based on the main problem of economic system of capitalism (lack of resources with unlimited needs) and idea of freedoms, particularly freedom of ownership, which imply possibility and even necessity of private ownership on any goods and services.
In addition, Ukraine is not able to adopt these laws because of dominance of superpowers (USA, Britain, France and Russia) in international politics which force the use of paper money, privatization of energy resources and aid of different international institutions such as IMF. They use all these tools to secure their own interests while suppressing the will of other independent states.
Implementation of gold-silver standard and public ownership on minerals will be possible only after emergence of powerful Islamic state of the Khilafah on the method of Prophethood, which will implement the whole of the Islamic economic system. This state will be able to oppose superpowers, IMF and other institutions that impose capitalism in the world, while setting an example for other states.
Written for the Central Media Office of Hizb ut Tahrir by
Fadl Amzayev
Head of Media Office of Hizb ut Tahrir in Ukraine