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Ukraine’s energy sector regulator votes to hike gas prices by 25%
Journal Staff Report

KIEV, March 30 – The National Committee for Power Regulation, the government’s energy sector regulating body, Thursday decided to increase gas prices on domestic market by 25% starting May 1, the committee said.

In a move seen as preventing financial collapse of Naftogaz Ukrayiny, the national oil and gas company, the committee hiked gas prices for households to 220 hryvnias ($43.5) per 1,000 cu m from 175 hryvnias.

The committee also hiked gas prices for municipal consumers to 360 hryvnias ($71.3)/1,000 cu m from the current 288 hryvnias ($57)/1,000 cu m.

The gas price moves will come into affect after the Justice Ministry properly registers them, a prospect that may take about a week, analysts said.

This is the second attempt of the committee to liberalize domestic natural gas market over the past three months.

The previous attempt to boost gas prices for households beginning January 1, 2006 was torpedoed by the government amid fears that voters may punish pro-government parties at general election March 26 for the gas price hike.

Gas prices for municipal consumers were hiked by 25% to 288 hryvnias/1,000 cu m as of January 1, 2006, from 231 hryvnias/1,000 cu m that had stayed unchanged over the past five years.

Ukraine's domestic gas market had been kept under strict control for years, and the state-controlled gas prices for population remained unchanged since 1999 and are the lowest in Europe, analysts said.

Naftogaz, which supplies domestically extracted gas to households, complained it faces more than 2 billion hryvnias ($400 million) in annual losses due to low gas prices.

Naftogaz asked the government to hike gas prices for households by 50% beginning April 1 that would allow the company to reduce its annual losses by 1.5 billion hryvnias. (sb/ez)





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