09:52 12.01.2021

Transfer to 'hub minus' formula will reduce price of gas for vulnerable consumers by about 44% - Energy Minister

2 min read
Transfer to 'hub minus' formula will reduce price of gas for vulnerable consumers by about 44% - Energy Minister

The Ministry of Energy of Ukraine proposes from February 1 to limit the price of gas for "vulnerable" consumers at the "hub [the price at European gas hubs] minus" level with the addition of a certain ceiling margin of suppliers and fix such a price for a year, acting Energy Minister Yuriy Vitrenko has said.

"According to our calculations, we are talking about the price level of UAH 5,356 [per 1,000 cubic meters], that is, 44% less than the weighted average price in January. If we do nothing, then we should expect that the price in February will increase by about 15%," he said on Facebook.

According to him, Ukrgazvydobuvannia, controlled by NJSC Naftogaz Ukrainy, will sell gas to suppliers for vulnerable consumers at a "hub minus" price, the price will be revised once a year based on quotations on the stock exchange in November, and such pricing is beneficial for the mining company.

"Suppliers will be able to compete by offering a lower margin on this price. Consumers will be able to freely choose their supplier, and if they are not "vulnerable" consumers, they will be able to choose contracts not with a fixed price per year, but any other contracts," Vitrenko added.

He specified that now the proposal of the Ministry of Energy is under discussion.

"There may be pitfalls, in particular legal restrictions; it is important to take into account all risks, in particular the risk of manipulation by suppliers. We need to calmly explain to the IMF that this is just about adequate market measures, and not about a rollback. It is desirable also to attract international partners for joint pressure on Gazprom and others," the official said.

Vitrenko pointed out that the Ministry of Energy is ready to consider alternative proposals if they solve problems in the market better and faster.

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