Naftogaz Lowers Gas Price in March

Ukrainian state monopoly Naftogaz has applied a new formula for setting the monthly wholesale gas price in March, it said March 24. It means the population, heating and other protected consumers will pay 14% less for their gas than in February: hryvnia 3.4($0.122)/m³, net of tax and transportation and other charges. 

It said that despite the worsening economic condition of Ukraine resulting from the spread of Covid-19, Naftogaz still tracks the changes in the market as seen at the Dutch title transfer facility, in accordance with the regulations.

But in March, exchange trading in Ukraine has proved itself a competitive way to trade gas, and had been used by the state gas transporter. “There is significant competition that has brought down wholesale gas prices,” the state monopoly said.

Naftogaz decided to use these indicators as well when calculating the March gas price, it said. Rather than taking the highest price allowable by the council of ministers’ decree, Naftogaz took the lower of two indicative prices: one calculated according to the council of ministers' decree; and the weighted average price of purchases by the state gas transporter.

That produced a price that was 14% lower than February’s and 21% lower than the price set by the decree. This will form the basis for setting retail prices, which are the responsibility of the regional energy companies.

“Being a responsible company, Naftogaz recognises the importance now of supporting households. The stability of the Ukrainian economy as a whole depends on the stability of each family. Our contribution is to lower prices in March, to minimise the negative effects of quarantine for each Ukrainian and for our country,” said CEO Andrei Kobolev.

Naftogaz expects to use the same principle to calculate the price in April.