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Posted On

06
January
2022

MP Gerus proposes to expand powers of state to intervene in gas market during crisis

KYIV. Jan 6 (Interfax-Ukraine) – MP Andriy Gerus (the Servant of the People parliamentary faction) proposes to expand the participation of the state in regulating the natural gas market in times of crisis by increasing the powers of the crisis committee under the Ministry of Energy of Ukraine.

According to bill No. 6426-1, registered by the MP on December 30, 2021, which amends the law on the natural gas market, in a crisis situation of any level, the committee will be able to oblige those who do not participate in meeting the needs of household consumers (population) with gas to forcefully sell their gas on the organized commodity market (exchange), as well as to establish price limits when making transactions for the sale and purchase of natural gas on it.

In addition, the committee will be able to prohibit the operator of underground storage facilities from approving nominations for gas injection (except for volumes delivered in the customs warehouse mode), as well as set price limits to resolve positive imbalances among customers of transportation services by the operator of the gas transmission system to stimulate customers of services transportation not to create positive imbalances.

The bill also provides for the establishment of price caps on the natural gas market for a certain category of its participants on the basis of decisions of the Cabinet of Ministers on the imposition of public service obligations (PSO).

"The volatility in the global natural gas markets determines the advisability of additional regulation on the Ukrainian gas market, including through the introduction of price and other restrictions aimed at protecting the interests of natural gas consumers," he said in an explanatory note to the document.

Gerus said that the introduction of price and other restrictions proposed in the bill is in line with Article 3 of Directive 2009/73/EC on imposing PSO and consumer protection.

"Accordingly, the mechanism for responding to crisis situations on the gas market does not violate the obligations that Ukraine has assumed as a country that has ratified the Protocol of Accession to the Treaty Establishing the Energy Community and the Ukraine-EU Association Agreement," the Fuel and Energy Complex Committee said, explaining the document.

According to the document, the expected time of the bill’s adoption and its entry into force is May 1, 2022.

As reported, the Cabinet of Ministers of Ukraine by Resolution No. 1433 dated December 30, 2021 ordered private natural gas undertakings to sell 20% of the produced gas on the Ukrainian Energy Exchange (UEEX) until April 30, 2022. For this, 20% of the volume of natural gas produced by private traders is included in the list of types of products that are traded exclusively on organized commodity markets.

In addition, the Cabinet of Ministers, by resolution No. 1435, amended the so-called "quarantine" resolution No. 1236 dated December 9, 2020, according to which, by April 30, 2022, the highest surcharge to the price of natural gas of own production (excluding royalties) is set at a level no higher than 24% for producers of premium wheat flour, pasteurized milk with a fat content of 2.5%, rye-wheat bread, chicken eggs, sunflower oil and loaves.

The trade markup for the supply of natural gas of own production to meet the needs of the above economic entities is set at a level no higher than 1%.

According to the estimates of First Deputy Prime Minister, Minister of Economy of Ukraine Yulia Svyrydenko, private natural gas undertakings will sell about 80 million cubic meters of gas on the stock exchange in January. The main buyers will be end consumers – producers of social varieties of bread, flour, milk, butter, eggs, chicken, the list of which will be approved by the Ministry of Economy.

At the same time, the Association of Gas Production Companies of Ukraine opposed this decision of the Cabinet of Ministers of Ukraine, stating that it is illegal and contrary to the current legislation, in particular, the law on the natural gas market.