Cabinet plans to extend obligation of Naftogaz under the PSO to supply gas to thermal utility enterprises at preferential prices

The Cabinet of Ministers plans to extend the obligation of the Naftogaz of Ukraine national joint-stock company to supply gas to thermal utility enterprises at preferential prices until April 15, 2024, within the framework of the provision on the imposition of public service obligations (PSO).

The Vice Prime Minister for the Reconstruction of Ukraine - the Minister of Community, Territories and Infrastructure Development, Oleksandr Kubrakov, announced this on Facebook, Ukrainian News Agency reports.

"We also prepared a system solution - extending the PSO until April 15, 2024. What does this mean? Preservation of preferential gas prices for heat producers for the needs of the population and budget institutions. For other consumers, it is proposed to reduce the base price by more than 2 times - from more than UAH 38,000 per cubic meter up to UAH 16,400," he wrote.

Also, according to Kubrakov, it is proposed to cancel the contractual write-off from the accounts of thermal utility enterprises for late gas payments.

"In particular, our vision is that enterprises always have funds left on their accounts for their own development. For this, we propose to establish that 35% of the funds on the enterprises' accounts were protected and used purely for the needs of thermal utility enterprise. The rest can be used to pay bills for consumed gas," he wrote.

Kubrakov noted that the debt of thermal utility enterprises for gas amounts to almost UAH 100 billion.

"The reason is that the current tariffs for heat, the level of which is fixed by the moratorium, do not take into account the current prices of natural gas. As a result, thermal utility enterprises cannot pay for the consumed gas, cannot accumulate financial resources for carrying out repairs. All this together creates threats to the timely start heating season. Here we have a solution - compensation for the difference in tariffs from the state budget funds. Currently, we need to compensate about UAH 36 billion. We have already developed a bill on amendments to the state budget, which provides for the allocation of this amount already this year," he said.

According to Kubrakov, the Ministry of Finance and Naftogaz, in coordination with the International Monetary Fund, are currently looking for sources to finance the compensation.

As Ukrainian News Agency earlier reported, Ukraine plans to go through the 2023/2024 heating season without importing gas.

In July 2022, the Cabinet of Ministers, as part of the PSO, extended the obligation of the Naftogaz Trading Gas Supply Company LLC to supply gas to thermal utility enterprises for heating and hot water supply at a price of UAH 7,420 per thousand cubic meters until April 2023.