Unfeasibility of the new PSO in the gas market - APE

The "Regulations on the Assignment of Public Special Obligations (PSO) to Natural Gas Market Entities" approved by the Cabinet of Ministers pose significant threats to the market and consumers, as most suppliers will not be able to renegotiate contracts with the NJSC Naftogaz of Ukraine.

This is stated in a letter sent by the Association of Energy Suppliers (APE) to the Office of the President, the Cabinet of Ministers of Ukraine, the Ministry of Energy of Ukraine and Naftogaz of Ukraine.

According to the members of the Association, the adopted version of the PSO does not fulfill, in particular, the requirements for a bank guarantee. The Association emphasizes that suppliers do not have free working capital due to the low margin provided by current agreements with the Gas Supply Company Naftogaz Trading LLC, as well as due to the payments by the household consumers by 55% for gas consumed during the war. To ensure a bank guarantee, suppliers need to obtain loans that are currently impossible to obtain from banks.

In addition, suppliers will not be able to comply with the PSO requirement to limit the amount of the supplier's overdue debt for used gas, which should not exceed 10%. "Given that the level of calculation of the population has fallen to 55% - it will be impossible to meet this requirement," the letter said.

The Association stressed that the new PSO introduced by the Government would have ended on September 30, 2021, before the start of the 2021-2022 national district heating season. There is a danger that after the PSO expires, the price of gas will rise, and suppliers will not be able to provide consumers with gas at the price set in the basic annual tariff.