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In Ukraine again, more expensive gas

В Украине снова подорожает газThe Cabinet is preparing a new regulation on the gas prices.

Last year Ukraine in the Memorandum with the IMF has undertaken, until April 2017 to develop a mechanism for adjusting prices of natural gas. In February, the Cabinet signed an agreement under which the gas price will be adjusted every six months.

Journalists have found out, how can change the prices for gas for Ukrainians this year, and which will depend on the tariff.

How much will it cost blue fuel

Last month, commercial Director of “Naftogaz of Ukraine” Yuriy Vitrenko said that if the Cabinet does not extend the obligation of Naftogaz to sell gas to the population on preferential terms, the price of natural gas will grow by 40%. Soon a statement on the government portal commented on Prime Minister Vladimir Groisman. He promised not to allow “any increase in gas tariffs for the population”. The draft resolution, which “Naftogaz” is obliged to sell natural gas to Ukrainians at bargain prices, already appeared on the website of the Ministry of economic development.

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The document envisages that gas will cost 4949 UAH (excluding VAT) per thousand cubic meters from April 2017 until the first of April 2018. The population will sell natural gas of Ukrainian extraction. If the Ukrainian gas will be missed, “Naftogaz” had to buy the blue fuel “from other wholesale sellers, abroad.”

By the way, according to the decree of Cabinet of Ministers No. 90, on February 21, the price of gas should be revised on the first of April and first of October of each year. The revision of the tariff will take into account the monthly average gas prices in the German hub NCG (per semester) taking into account transportation costs to the Ukrainian border and the entrance to the CTA in terms of the official rate of the NBU, as well as tariffs for transportation, distribution, and margin of “Naftogaz”. If you find that the rate of generated on import parity, higher current is not less than 10%, gas prices will reconsider.

By the way, in October last year, Ukraine signed a Memorandum with the IMF, in which the Cabinet is committed to: “by April 2017 to start the mechanism, allowing to adjust the gas tariffs for the population and hold quarterly indicators”.

Gas tariff for the population is determined by the formula: cost of imported gas × dollar exchange rate + VAT + transport + distribution + mark-up of Naftogaz, explained in the Ministry of economic development. When we adopted the current gas tariff, the cost of imported gas was at $ 185. And in the budget this year provides that the gas Ukraine will buy for 246 dollars. Because of this, the government would have to increase gas tariff for the population, said a member of the Supervisory Board of the Institute of energy strategies Yuri Korolchuk.

The ex-the head of Department on public relations of “Naftogaz” Valentin Zemlyansky estimated gas, according to the formula of the Cabinet, will cost 9600 hryvnia per thousand cubic meters (currently 6800 USD). At the same time, Yuri Korolchuk sure that it is economically reasonable price of gas will rise by 25-60% (8.5-11 thousand UAH). “If the price is minimal for 1,500 hryvnia will not grow, it means only one thing – the market is further manually adjusted, the government controls prices, and no market. And this difference, the state will cover from the budget”, – says Yuri Korolchuk.

Gas subsidies will rise

The ratio of consumption of gas in Ukraine just a few years was reduced from 11 to 5.5 cubic meters per square meter. The new standard is 5 cubic meters per square meter – will come into force in may this year. This decision a few weeks ago was made by the Cabinet of Ministers of Ukraine. Now that the subsidies cover 330 cubic meters heating the apartment with an area of 60 square meters, in the next heating season “utilities discount” will charge only 300 cubic meters. If we continue to burn 330 cubic meters, 30 cubic meters have to pay without subsidies. According to the current rate is still 204 hryvnia. In the apartment of the same size, with Central heating, the subsidy will cover instead of 3.28 is only 2.5 Gcal of heat. If you do not reduce consumption, 0,7 Gcal will have to pay without subsidies. In Kiev, this amount of heat will cost about 1411 USD.

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