Photo from UNIAN
The Cabinet says it thus seeks to reduce tariffs for households.
The Ministry of Energy of Ukraine made a proposal to shift back away from market pricing on the gas market toward the "price at European hubs minus delivery to Ukraine" formula, as well as to limit the margin of gas suppliers.
This aims to reduce the final tariff for gas consumers, Prime Minister Denys Shmyhal said following a meeting with the leadership of the Ministry of Energy, Naftogaz of Ukraine, energy regulator NEURC, the Gas TSO of Ukraine, and representatives of the President's Office.
At the meeting, two approaches were developed that could reduce gas tariffs for households, Shmyhal wrote on Telegram.
"The first approach is forming gas tariffs by the "price at European hubs minus gas transmission to Ukraine" formula, which has been put forward by the energy ministry. In addition, it is proposed to temporarily limit the margin for gas suppliers. The expected result: a significant reduction in tariffs and the leveling of speculators' attempts to preserve excess profits in the context of new European rules being established," wrote Shmyhal.
He also said that the second approach, which was proposed by the state-owned Naftogaz, is to increase competition in the market by obliging gas supply companies to publish their annual gas tariff, as Naftogaz is already doing. In addition, it is proposed that gas supply companies start actively competing for the consumer base, which will lead to lower tariffs through open bidding. The expected result would be increased competition and, due to it, lower payments by Ukrainians.
He also said that following the meeting, a mechanism was formed that would reduce the price of gas transmission.
"NEURC urgently starts a thorough verification of all gas suppliers who have the highest tariffs for this service today," he noted.
"At the same time, support of the most vulnerable strata of the population remains an important policy of our government. Today in Ukraine, 3.1 million households receive subsidies for utility bills. The average amount of allocations, for example, for November 2020, stood at UAH 1,600 ... And this is a fair state policy that will continue along with the increase in salaries and the program to restore the economy," added the prime minister.
Background
President of Ukraine Volodymyr Zelensky, responding to protests in different regions of the country, instructed the government to urgently address the issue of gas tariff hikes for households.
A new gas price has been in effect in Ukraine since January 1, which was proposed by gas suppliers as part of the competitive gas market recently opened.
Read alsoEnergy 2020: Free gas market for households, rapprochement with EU
In addition, on January 1, new tariffs for gas transmission were enforced in Ukraine.
NEURC has increased tariffs for the services of 43 gas distribution companies by an average of 1.6 times since January 2021.
Since early January, rallies against the increase in utility have taken place in a number of regions of Ukraine.