Cabinet Puts USD 110 Limit On Gas Prices Until 2010?

The Cabinet has set a ceiling of USD 110 per ths cm on gas prices for industrial enterprises and municipal heating enterprises until the end of 2010. Concorde Capital: A promising signal from the government. The decision implies that Ukrhaz-Energo’s won’t be able to sell its 34 bln cm of imported gas for any more than USD 110, but whether the Cabinet’s order will be enforceable is another question. However, the Cabinet’s decision reinforces our belief that the State is going to continue regulating the gas market. In the end we expect to see differentiated tariffs, but not before the government decides on whether or not to grant Ukrgaz-Energo a license to sell gas at unregulated prices. This license is the government’s ace in the hole, and it will most likely use it to gain extra leverage in further negotiations on gas pricing.