Ukraine Introduces Fuel Cashback – But Not Everyone Is Buying It

March 24 ------ Ukrainians began receiving compensation for high fuel costs. In a country at war, the state will partially reimburse drivers who refuel with traditional fuel types, helping offset a sharp rise in prices.

Not all Ukrainians have welcomed the initiative, however. The government’s decision to introduce fuel cashback has drawn resistance and widespread criticism from both experts and drivers – even as most say they still plan to use the program.

Why fuel has become so important – and why the government decided to act

Fuel prices in Ukraine have risen more sharply than at any point since the first days of Russia’s full-scale invasion. The spike follows US and allied strikes on Iran, Iran’s retaliatory strikes on oil and gas infrastructure in Persian Gulf countries, and the blocking of the Strait of Hormuz.

At most gas stations, prices have climbed by more than 10%. At standard stations offering basic gasoline and diesel without additional services, the price per liter of 95-octane gasoline has risen from Hr.60 to Hr.69 (from $1.50 to 1.70) over the past two weeks.

Premium gas stations – which offer restaurants, a wider selection of fuel, additional services – have seen increases of up to Hr.10 per liter ($.25 per liter / $.90 per gallon). Diesel prices have risen even more steeply. Spring agricultural season typically drives diesel demand higher on its own – and this year, the war in the Middle East has compounded that pressure.

For Ukrainians, these prices represent a serious burden. With airspace closed, Russian strikes disrupting rail lines, and power outages periodically halting urban electric transit, the car has become the primary mode of transportation for people and goods alike. During blackouts, vehicles also serve as heating points, charging stations, and power sources for small appliances. Fuel demand has also surged from another direction: businesses increasingly rely on generators during outages, which experts say now account for up to 20% of Ukraine’s total fuel consumption.

Gasoline and diesel have become the lifeblood of both the Ukrainian economy and everyday civilian life – which is why rising prices hit so hard, particularly as many Ukrainians continue to struggle with reduced incomes and high inflation.

How the program will work

The fuel cashback program is an extension of the existing “National Cashback” initiative, which already offers compensation of up to 10% on purchases of domestically produced goods. Shoppers buy a participating Ukrainian-made product, pay with a bank card linked to the program, and receive a percentage of the purchase price credited to a designated account at the start of the following month.

The same mechanism will now apply to fuel. Drivers pay at a participating station using their linked card, the transaction is automatically registered, and cashback is credited the following month. Compensation rates are:15% per liter — diesel10% per liter — gasoline5% per liter — automotive gas. There is a monthly cap of Hr.1,000 (approximately $25), regardless of how much a driver spends. Importantly, cashback funds cannot be spent freely. They may only be used for medicines, utility payments, essential groceries, books, or donations to the Armed Forces of Ukraine.

Why the backlash?

The initiative has drawn sharp criticism – much like the broader National Cashback program before it. The most common objection is fairness. Critics argue that the program amounts to distributing public funds during wartime to people who are not among the most vulnerable. The total budget allocated to National Cashback has not been disclosed, but experts estimate it runs to several billion hryvnias – tens of millions of dollars. That may be a relatively modest sum in the context of the overall budget, but in wartime, every allocation is scrutinized.

“In Ukraine, motorists generally are not poor,” wrote soldier, businessman, and popular blogger Serhii Marchenko. “Of course, there are different situations. Pensioners with old Soviet Volgas who drive once a year… and unemployed people who cannot afford to refuel. But I don’t think I’m lying if I say that 99% of Ukrainian motorists live better than pensioners. So why does the Ukrainian state support people who are not poor instead of supporting pensioners?”

Source: kyivpost.com