Government Increases Special Charge to Gas Price

According to a government ruling, the special charge added to the price of domestically-sold gas, will increase from the current 4% to 8% for industrial consumers, effective April 1, 2008. Chemical producers using gas as an input will see an increase from 0.01% to 4%. The special charge is aimed at raising funds necessary for maintenance and modernization of the country’s gas pipelines. Vladimir Nesterenko: The ruling will result in about USD 15/tcm absolute increase in the gas price for industrial consumers; for chemicals producers, the charge will increase by around USD 7/tcm. In an informal conversation we had with representatives from one Ukrainian fertilizer producer, they disclosed that they will buy gas net of the wholesale margin (normally added to the import price, at around USD 10/tcm). If this is indeed so, the increase in a special charge will be offset by a reduction in the wholesale price.