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. Last Updated: 07/27/2016

Kiev Lifts Import Duty to Increase Flow of Oil

KIEV -- Ukraine's parliament on Tuesday removed duties for oil product imports in a step aimed at easing the country's fuel crisis.

Ukraine has been hit by fuel shortages for the past three weeks, prompting lengthy queues at service stations and a 10 percent leap in fuel prices. The government has struggled to stabilize the market by freezing prices and banning exports.

Prime Minister Yulia Tymoshenko has described the crisis as a "plot" by Russian oil companies, which control four of Ukraine's six refineries, and vowed quick action to restore order.

Russian firms say higher world oil prices are behind rising prices.

Oleg Salmin, the author of the law rescinding the duties for gasoline and fuel imports, said it represented a compromise between the government, oil importers and refineries.

"The law will help fill the market with oil products. It will also create a highly competitive market for oil products," Salmin told deputies.

A total of 310 members backed the motion in the 450-seat chamber. Eleven deputies voted against.

Finance Minister Viktor Pynzenyk said the government would still be able to meet its budget targets this year, despite scrapping the duties.

The government came to power on the back of Orange Revolution mass protests and faces a crucial test at a parliamentary election next year. It has significantly increased pensions and wages in the 2005 budget.

The budget approved by parliament in March was described by Western economists as "high risk."

"We agreed on the bill. ... The Finance Ministry agreed with such a proposal. It allows us to keep the balance of the budget and to open the way for imported oil products," Pynzenyk told reporters.

Ukraine does not produce much oil but is a significant consumer and is also important for world energy markets as a transit route for Russian crude oil and Russian gas to Europe.

The new administration has repeatedly said it would work to ensure smooth transit.

President Viktor Yushchenko urged a compromise between the government and the Russian oil companies.

"I am sure there is a possibility to agree today with the Russian side to settle the dispute. Ukraine should change its position for a clearer, more predictable position in such a delicate issue as prices," Yushchenko said in a statement.

The president chairs a meeting on the fuel market on Thursday.

The bill also sets a fixed excise duty rate of 60 euros per ton for petrol and 30 euros per ton for diesel fuel.

Two of Ukraine's major refineries are closed for maintenance at a time when demand for fuel usually increases due to the spring sowing campaign. The government plans to cover shortages by importing fuel from neighboring Belarus and the Baltic countries.