In March 2020 the wholesale price of natural gas for the needs of the population, heat providers and other protected consumers to whom Naftogaz Ukraine deliveries of gas under the terms of ISO (imposition of special obligations ISO on market participants which will ensure compensation for the difference between market and regulated electricity prices for the population) will make up UAH 3.40 per cubic meter (excluding VAT, margins by gas providers and transportation costs). This is by 14% less than in February 2020.
“Against the background of quarantine and the economic crisis, the Government is seeking to minimize people’s utility costs, which will increase as they stay at home. One way to mitigate the aftereffects is to reduce gas prices for Ukrainians. The wholesale price for natural gas provided by the Government and Naftogaz to meet the needs of the population and heat providers in March 2020 is 14% lower than last month. This allows regional distribution companies to reduce their tariffs by 9-13% as compared to February,” said Prime Minister Denis Schmigal.
According to Naftogaz, this price was formed in March due to the availability of a new price indicator in the domestic market. The operator of the Gas Transit System of Ukraine had held a tender for the purchase of gas for the period of supply for March-December 2020, and the bidding demonstrated that there is significant competition in Ukraine, which leads to a decrease in the wholesale prices for the sale and purchase of gas.
While calculating the price of gas for the population in March, Naftogaz decided to take into account new market circumstances. As the Cabinet of Ministers Resolution sets the maximum admissible price level, Naftogaz has chosen the lowest indicative price from the two possible options: calculated according to the CMU resolution and the weighted average prices of the winners as a result of bidding for gas supply to the GTS Operator of Ukraine.
Thus, the wholesale price for March is set at a level that is by 14% lower than the February price. And Naftogaz’s wholesale price list is the basis for the formation of retail prices, which belong to the area of responsibility of regional sales and distribution companies.