Starting Friday, March 20, 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?”
“So a grandmother and a soldier will foot the bill for a slightly fuller tank for some BMW X5 owner,” added lawmaker Yaroslav Zhelezniak, one of the program’s most vocal parliamentary critics.
A second line of criticism concerns the effect on imports. With Ukraine’s oil refineries largely destroyed by Russia, gasoline and diesel are now almost entirely imported. Critics argue that stimulating consumption – rather than limiting it – will drive up imports, put pressure on the hryvnia, and fuel inflation that disproportionately harms lower-income Ukrainians.
“Not limiting private consumption as at the beginning of the war, not a more flexible excise tax, not targeted subsidies – just pumping money from the state budget into gas stations for a 100% imported product,” said economist Volodymyr Vakhitov. “This adds pressure on the hryvnia and ignores consumption volumes, making it effectively a regressive measure: prices rise, and fuel costs take up a larger share of a poor household’s budget than a wealthy one’s.”
Opposition lawmakers also point out that the program excludes businesses, limiting its economic impact.
“Cashback does not apply to businesses and therefore will not reduce logistics costs or lower prices on store shelves,” said deputy Yuliia Sirko.
Drivers: grateful, but not impressed
Even among drivers, enthusiasm is muted.
The author of this article, for instance, refuels between 150 and 180 liters per month – currently costing between Hr.11,000 and Hr.13,000 (around $300). Against that figure, a monthly cashback of Hr.1,000 ($25) feels modest at best.
This reflects a broader reality: many Ukrainians drive extensively, particularly those commuting from suburbs into Kyiv or covering multiple locations in a workday. For high-mileage drivers, the cap severely limits any meaningful relief.
There’s also a behavioral dimension. Ukrainian drivers have historically responded better to immediate, point-of-sale discounts than to deferred cashback. Gas station loyalty programs previously offered Hr.1 to Hr.5 off per liter at the pump – but many of those discounts have since been reduced or eliminated. The new cashback is unlikely to compensate for what drivers have already lost.