As Ukraine open the market of gas for the population: European lessons

Consumers expect from the open natural gas market, first of all, the ability to freely choose supplier. It gives the right to choose the best service, more convenient conditions, receive additional services and most importantly the price is lower. That Ukraine is blocking the emergence of a market for gas for the population of the state speckbacherstube, subsidies or the price of gas? Price aspect

According to the Council of European energy regulators (Council of European Energy Regulators, CEER), the decision of consumers to switch supplier is influenced primarily by price.

For the same reason the consumer does not change its supplier — no sufficient financial benefit from it.

CEER produces statistics on transitions of consumers from provider to provider, from 2008 to 2014. The highest activity (at 5-10% per year), in countries where prices are unregulated.

Conversely, in Eastern Europe, where most of the preserved state regulation of prices, the consumer rarely change supplier. When the price for the population below the market and strictly regulated by the state, there is no reason to change supplier. Ukrainian peculiarities

Back to Ukraine: today there is a very competitive market of gas suppliers to the industry. The price is formed on a competitive basis and is an indicator of market price. But the price of gas for the population is lower and consequently, no competition between suppliers can not arise.

Even now, the legislation gives consumers the opportunity to switch to another supplier, but benefits from the change of supplier he will not have the right to use it not interested. State regulation to the consumer is the market of one supplier — that is, he already has.

Besides the question of pricing, there are technical issues related to the operation of the market. For example, a subsidy system that needs radical reform.

First, it is necessary to verify that no grants were received by people whom don’t need them.

Secondly, it is necessary to monetize at the level of the consumer. State aid is aimed at the consumer, and it needs to be an equal player in the market, like the rest. Getting “real money”, he efficiently disposes: he doesn’t need to burn gas to use the grant. With money in hand he refers to subsidies carefully and enter into productive conflict with the supplier: if the supplier wants to sell more, consumer wants to consume less and keep the money.

In 2017, the amount of subsidies to more than 70 billion UAH. Last year, they accounted for about 50 billion while a small percentage of this amount aimed at the verification of subsidies could save billions.

Recording of Alexei Habitue at the International conference “Oil and gas complex of Ukraine on the way of reforming, modernization and development.”