Govt amends formula of setting prices of gas for households, heat suppliers pegging it to Dutch TTF hub quotes
The Cabinet of Ministers of Ukraine has amended a resolution on imposing public service obligations (PSO) on the natural gas market, pegging the price of gas sold by NJSC Naftogaz Ukrainy to households and heat suppliers to the Dutch TTF hub quotes.
The relevant changes are enshrined in resolution No. 17 dated January 24, 2020, the text of which was posted on the government website on Tuesday morning.
"From January 1, 2020, NJSC Naftogaz Ukrainy sells/supplies natural gas in accordance with paragraphs 7, 8 and 11 of the Regulation at the prices set by the seller (supplier) and buyer (consumer), but no higher than the level that, in particular, takes into account arithmetic average of the actual prices of natural gas (End of Day) for the next day of gas supply (Day-Ahead and Weekend) at the Dutch TTF gas hub for the period from the first to 22nd days of the month when gas is supplied, according to the Powernext/EEX exchange information, the difference (spread) between the price on the TTF hub and the border of Ukraine, as well as the tariff for gas transmission services to the point of entry to Ukraine on interconnection border with Poland/Slovakia/Hungary," the government said in the document.
The Cabinet said that from January 1, 2020, the purchase price of natural gas under PSO cannot be higher than its sale price in accordance with the above conditions, plus the Naftogaz Ukrainy's trade markup at 1.917% of this price.
Thus, the price of Naftogaz Ukrainy under PSO will be set on the basis of TTF quotes plus the difference in the price between TTF and the border of Ukraine plus the entrance fee to the Ukrainian gas transmission system plus the trade margin.