Print

Pricing

Natural gas consumers in Ukraine could be divided into three distinct categories: households, utilities and industrial. Until October 1, 2015prices and tariffs policy were determined and implemented by the National Commission for State Energy and Public Utilities Regulation (“NCSEPUR”). According to the Law of Ukraine “On natural gas market” starting from October 1, 2015 the natural gas prices are established proceeding from the free market principles. As an exception, this law also stipulates that the Cabinet of Ministers of Ukraine establishes special pricing regime for households and utilities supplying heat and hot water for household needs during transition period.

This market price is highly dependent on the price of imported natural gas under contract with Public Joint Stock Company Gazprom ("PJSC Gazprom") as well as the prices at the European gas hubs. Currently natural gas is imported only from the European Union. The average import price in 2017 made up SEK 1,945 per thousand cubic meters, which is in line with the prices at the biggest natural gas trading hubs in Europe including transportation costs.

According to the recommendations of International Monetary Fund, the Cabinet of Ministers of Ukraine several times raised the natural gas prices for households and utilities supplying heat and hot water for household needs during 2015-2017. As of the end of 2017 the natural gas price for household consumers was set at the level of SEK 1,429 per thousand cubic meters.

A private enterprise, defined at a minimum of 50.01% private ownership, operating in the local gas market, as is the case of the JA, is allowed to sell natural gas at at market price. This has created a historic precedent for State companies like PJSC Ukrgasvydobuvannya to enter into the JAAs with the private producers in order to facilitate part of production to be sold at the market prices, thus creating platform for income and investments into aging infrastructure.