14:14 26.05.2020

Gas market liberalization for public will put customer in center instead of supplier – Naftogaz

3 min read
Gas market liberalization for public will put customer in center instead of supplier – Naftogaz

The liberalization of the natural gas market for internal consumers, planned on July 1, 2020, will put a customer at the central position instead of a supplier, Naftogaz Group's Chief Transformation Officer Otto Waterlander has said.

"A Ukrainian as a customer should be at the center of the market. He should not get the runaround gas sales and the regulator in order to terminate or conclude an agreement, but rather, a customer's mailbox should be overfilled with promotional letters about the best conditions, additional options and discounts," he wrote in a column on the website of Interfax-Ukraine.

The expert said that the Ukrainian gas market has changed significantly over the last six years, namely, access to the gas transmission system was demonopolized, dozens of Ukrainian and foreign traders import gas from Europe, hundreds of suppliers competed in price and service for Ukrainian customers.

"However, all this is in the sector of industry and business. Meanwhile, Ukrainian households are still assigned to regional suppliers. Due to several conflicting standards in the rules for gas supplies, it is extremely difficult for Ukrainians to exercise the right to change their supplier on their own," he said.

Waterlander is convinced that the liberalization of the market with the subsequent stimulation of effective competition among suppliers will allow customers to receive the lowest price.

"However, instead of a logical solution to this issue, we hear criticism of the further opening of the gas market for the population, supposedly in case of a change in supplier, either the Ukrainians will stop paying for gas, or the new suppliers will be unfair. Global practice shows that the free market solves these issues, namely, the freedom to choose a supplier, competition, improvement of services for customers. That is, in order for Ukrainians to receive a fair and market price of gas, a large number of players are required, as in any market for products or services. Only under such conditions the supplier is the most flexible, sparing, innovative and convenient for the customer" he said.

He also said that Naftogaz is ready to be the motive force of gas market reform for the population, in particular, taking on the role of the supplier of last resort, which guarantees the supply of gas to any customer who is left without a supplier. In parallel, the company will contribute to increase competition in the retail segment of all regions of the country.

"It is necessary to allow the customer freely and quickly, in one click, switching to the new supplier. All operations, without additional presence of the subscriber, can be carried out between themselves by the gas transmission and gas distributing chain operators, the new and previous suppliers. If it is enough for industrial customers to transfer to the supplier for the transition EIC-code [energy identification code], this should be enough for the household," Waterlander said.

Naftogaz Ukrainy unites the largest oil and gas producing enterprises of the country. The group is a monopolist in storing natural gas in underground storage facilities and transporting oil through pipelines across the country.

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