RULES FOR PLAYING IN THE GAS SECTOR DRAFTED
The State Commission for Energy Regulation (SCER) presented for public discussion during the week the draft of the new ordinance for regulating natural gas prices. As a whole the document does not substantially differ from the Ordinance on Electricity Prices, published in the beginning of 2004. The most important change here is that a new method of price regulation will be introduced - from cost-oriented prices to norm of return on capital (the so-called plus proceeds). Through the new methodology the regulatory body will be keeping track of the energy enterprise and their components within a certain period, not shorter than a year. In that time the prices could be changed only under circumstances which had not been foreseen when the rates were approved. Expenses for gas transiting and the proceeds from sales to privileged consumers won't be calculated in the formation of the end price of the fuel. Natural gas prices won't include either the taxes connected with the corporate income taxation of profit, sanctions, fines, forfeits or interest for delayed payment. The fuel could be sold at different prices to the various groups of consumers (household, industrial and administrative). Tariffs for each of them shall be proposed by the energy enterprise and approved by the SCER. Meanwhile, the energy commission approved on Monday (March 29) the gas prices for the second quarter of 2004, proposed by Bulgargas, and the new rates entered into effect as of April 1. The end price was reduced by 3.03%, or BGN6.18 per 1,000 cu m (before VAT). Consumers within the gas transiting network already pay BGN213.09/1,000 cu m (before VAT) down from BGN219.27/1,000 cu m (before VAT) in the first quarter of the year. The price for clients of the gas distributing network went down from BGN226.99/1,000 cu m (before VAT) to BGN220.81/1,000 cu m (before VAT). The change was necessitated by the 5.5% depreciation of the forex rate and the prices of alternative fuels, SCER's member Svetla Todorova explained. Natural gas prices were cut down for the second time this year. The first 8.6% reduction was as of January 1, 2004.The prices of natural gas, purchased from Bulgargas by local producers, were also cut down. The reduction for the British company Petreco which is going to launch drilling operations in the gas deposit near the Galata cape on the Black Sea coast this quarter, is 5.2 per cent. This is because of the provisions in the contract irself. Under its terms, the current purchase price is formed as the average of all Bulgargas's contracts plus the negotiated trade discount, Ms. Todorova explained. In the same time, the gas produced by the Pleven-based Oil and Gas refinery, has remained unchanged. However, the price of the main quantity of gas, consumed in the country, has even been hiked 2 per cent. The fuel is delivered to Bulgaria under the contract with Overgas, signed in August 2003. The quantity of natural gas, transited through our country in the first quarter of 2004, decreased by 180,000,000 tons, and domestic output dropped 49.7 per cent.