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Economy 2019-07-15T04:12:06+03:00
Ukrainian news
Court Denies Naftogaz Collecting UAH 6.6 Billion From Cabinet As Compensation For Supplying Gas To Population

Court Denies Naftogaz Collecting UAH 6.6 Billion From Cabinet As Compensation For Supplying Gas To Population At Prices Lower Than Market Price Within Special Obligations In Q4, 2015

The Kyiv Economic Court has denied the Naftogaz of Ukraine national joint stock company collecting UAH 6.6 billion from the Cabinet of Ministers as compensation for supplying gas to households and municipal heating companies at prices lower than the market price in the fourth quarter of 2015 within the public special obligations.

This is said in the verdict of the court of February 28, 2019, Ukrainian News Agency reports.

Naftogaz said in its lawsuit that the Cabinet of Ministers did not define sources of financing. The cabinet did not provide rules for calculation of the compensation.

The national company calculated the damage at UAH 6.634 billion.

On October 1, 2015, the Cabinet of Ministers adopted resolution No.758 to put special obligations on participants in the gas market for provision of public interests in the process of functioning of the gas market.

As the Cabinet of Ministers did not define sources of financing and did not provide for rules of calculation of compensations, the national company sued the cabinet at the Kyiv District Administrative Court and asked the court to find the inactivity of the cabinet unlawful.

On April 10 and July 3, 2018, the Kyiv District Administrative Court and the Kyiv Appeal Administrative Court respectively satisfied the lawsuit of Naftogaz.

The cabinet said that UAH 6.6 billion the company regards as losses caused by the special obligations was not loss/damage that can be compensated in compliance with Article 1173 of the Civic Code (compensation for damage caused by a state body).

The cabinet said there were no documents provide by the company during the litigation to confirm the amount of expectation damage.

The Kyiv Economic Court denied the national company satisfying its lawsuit against the Cabinet of Ministers.

As Ukrainian News Agency earlier reported, the price of natural gas for households increased by 23% to UAH 8,548.92 per thousand cubic meters (including VAT and other fees) on November 1, 2018, compared with the previous price of UAH 6,958 per thousand cubic meters.

At the same time, the government changed the formula for determining the price of natural gas for households and heating utilities.

The main benchmark will not be the average gas price at a German hub but the arithmetic average price of gas that Naftogaz of Ukraine sets for industrial consumers on condition of prepayment before the delivery period (UAH 8,981 per thousand cubic meters from July 1, 2018, to September 30, 2018).

A coefficient of 0.6943 applies to this price from November 1, 2018.

Thus, the final price of gas for households is UAH 8,548.92 per thousand cubic meters and UAH 8,361.85 per thousand cubic meters for heating utilities (taking account of cost of gas delivery and distribution and VAT).

The Cabinet of Ministers has also extended the Public Service Obligations of Naftogaz of Ukraine and regional gas supply companies to supply natural gas to households and heating utilities.

On April 3, 2019, the Cabinet of Ministers allowed Naftogaz to sell gas for purposes of households at a price lower than UAH 8,550 per 1,000 cubic meters starting April 1, 2019.


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