The New Year and Christmas holidays were filled with various events and announcements related to gas. They clearly demonstrated that the Yatsenyuk government continues to cheat Ukrainian citizens by setting significantly inflated gas prices.
Moscow has played yet another dirty trick on Yatsenyuk and company: it has lowered the gas price for Ukraine, which, with the discount, will amount to just over $212 per 1 cubic meters in the first quarter of 2016. Moscow's "generosity" is driven by falling global energy prices and the fear of permanently losing the Ukrainian gas market.
The "dirty trick" is that the news of the new Moscow gas price, firstly, prompted an inquiry into the price at which Ukraine receives gas from Europe; secondly, it forced a comparison of Moscow and European prices with gas tariffs for the Ukrainian population; thirdly, it forced Yatsenyuk to make another jingoistic PR stunt; and fourthly, it provided the opportunity to once again obtain further proof that the government is brazenly deceiving us with its gas tariffs.
Moscow's gas "generosity" provoked Yatsenyuk to make the following statement during one of his final televised appearances. He said that Ukraine does not purchase Russian gas at the inflated price of $212 per 1 cubic meters, as the average price of European gas is significantly lower, at $200. Therefore, Yatsenyuk stated, Ukraine purchases gas from Europe, receiving it through reverse flows.
It should be noted that, according to some data, the spot price for gas in Europe sometimes drops to as low as $170 per 1 cubic meters.
In addition to the above, let's look at some more figures. In the fourth quarter of 2015, the contract price for Russian gas was $227,4 per 1 cubic meters. The 2015 state budget assumed a gas price of $248 per 1 cubic meters. The 2016 budget, meanwhile, assumed a gas price of $225 per 1 cubic meters.
At the same time, we remind you that the gas tariff for the population is set at 7200 hryvnia per 1,000 cubic meters, which, at an exchange rate of 25 hryvnia to the dollar, amounts to 288 dollars.
Yatsenyuk justified such a high tariff by citing the high cost of imports, to which must be added the costs of transporting fuel through main pipelines, the target surcharge, and VAT. But based on the announced price of $200 for European gas, an $88 markup, equivalent to 2200 hryvnias, is clearly too much!
True, there's also a social gas consumption standard, which is sold to the population at 3600 hryvnias or $144 per 1 cubic meters. But on the other hand, there's domestically produced gas, amounting to up to 15 billion cubic meters per year, which costs the state, represented by Naftogaz, literally pennies.
Indeed, the state-owned company UkrGazoDobycha, a subsidiary of Naftogaz, receives only UAH 477 per 1 cubic meters for gas. Officials at various levels tirelessly repeat that gas prices need to be raised to raise funds for the development and modernization of the gas production industry, for the exploration of new fields, and the construction of new production wells. But the difference between a tariff of UAH 7200 or even UAH 3600 and UkrGazoDobycha's purchase price of UAH 477 per 1 cubic meters is not spent on developing domestic gas production or strengthening the country's energy independence.
True, Naftogaz purchases fuel from Ukrgazodobuvannya at UAH 1590 per 1,000 cubic meters, but UAH 1113 per 1,000 cubic meters goes to the state budget as subsoil use rent. Attempts to reduce the rent by adopting amendments to the Tax Code on the eve of the new year met with stubborn government resistance.
Before reaching the end consumer, the following components are added to the cost of gas.
The tariff for transmission via main pipelines, charged by the state-owned Ukritransgaz, is UAH 294.4 per 1,000 cubic meters. Predominantly private regional and city gas companies charge UAH 361,8 per 1,000 cubic meters for transmission via distribution pipelines, as well as UAH 90,3 per 1,000 cubic meters for delivery to consumers. The state budget receives a 4% target surcharge amounting to UAH 201,7 per 1,000 cubic meters.
But the apotheosis is undoubtedly the profit margin of Naftogaz NJSC, amounting to UAH 3451,8 per thousand cubic meters. This is precisely how much Naftogaz inflates out of thin air by reselling fuel obtained at extremely low prices from the state-owned Ukrgazodobuvannya to regional gas companies. When asked where this money goes, officials offer vague answers about how these funds are supposedly used to cover some "losses" incurred by Naftogaz NJSC, a measure supposedly approved by the IMF. It's unclear what these losses are, and why they should be covered by ordinary citizens rather than by corrupt officials and oligarchs, whose activities led to the losses in the first place!
Finally, VAT in the amount of 1198 UAH/1 thousand cubic meters is added to everything listed above.
Thus, gas tariffs for households and for heating and power utilities are significantly inflated in any case – both in the case of using imported gas and, especially, in the case of domestically produced gas.
Incidentally, Bill No. 3104, "On Establishing a Fair and Economically Justified Price for the Supply of Domestically Produced Natural Gas for Population Needs," has been registered in the Verkhovna Rada. The document proposes eliminating most of the aforementioned markups on domestically produced gas sales to the population, including VAT and Naftogaz's odious margin, which would lower the tariff to a quite reasonable 2000 hryvnias per 1 cubic meters. However, the bill remains stalled in parliament.
At the same time, there is evidence that industrial enterprises are purchasing gas at around UAH 5770 per thousand cubic meters, significantly lower than the UAH 7188 per thousand cubic meters that households are forced to pay. One wonders why industrialists, including oligarchs, aren't paying Naftogaz's "margin" or are paying a significantly smaller amount?!
Alexander KARPETS, specially for the publication WORLD
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