On maintaining wholesale prices for liquefied gas for household needs

Currently state regulation of liquefied gas prices is built up on the principles outlined in the Concept for developing the liquefied gas market for the household needs, approved by No. 908-r Order of the Government of the Russian Federation of 3 July 2003. The Concept provides for reducing the regulated wholesale prices for liquefied gas to the level of market prices with further abolishing state regulation of wholesale prices for liquefied hydrocarbon gas. State regulation of liquefied gas prices is conducted in accord with the guidelines for regulating wholesale prices for liquefied gas for the household needs, approved by No.312-e/8 Order of the Federal Tariff Service of 28.11.2006 (registered by the Ministry of Justice on 27 December 2006 under Registration Number: 8675).

In 2015-2016, the balance targets to manufactures for supplying liquefied gas at regulated wholesale prices were abolished. Majority of regions do not have liquefied gas, supplied at regulated prices, which forced suppliers to buy it at non-regulated prices. Due to the seasonal fluctuations, non-regulated wholesale prices are lower than regulated wholesale end-prices in view of delivery and the content of GPS from third parties. As a consequence, the Regional Energy Committees and Departments of some regions approached FAS for explanations about the procedure on accounting the costs of gas purchasing: whether the gas-purchasing costs, determined on the basis of contractual prices, are subject to accounting in the absence of possibilities for purchasing gas at regulated prices.

The current price, set in accord with No. 143-e/6 Order of the Federal Tariff Service of 15.05.2015, is 11265 RUB per ton.

FAS monitoring of the level of ex-works prices from manufacturing plants shows the following range of market price fluctuation in January - June 2016:

- Based on exchange trading at “SPIMEX” CJSC: from 9348 RUB per ton to 12397 RUB per ton; the average weighted price is 11338 RUB per ton;

- According to the results of registering transactions on the basis of the data supplied by EOIL.RU, average prices / producer offers varied from 8297 RUB per ton to 11958 RUB per ton; the average weighted price was 9839 RUB per ton.

Thus, evaluating the situation with liquefied gas supplies in an integrated manner, FAS believes that the most expedient would be to preserve the maximum wholesale prices for liquefied gas for the household needs at the current level.

When retail prices for liquefied gas increase by 2% in accord with the Forecasting parameters, executive bodies are able to factor in the costs of gas-distribution companies for modernizing the balloon stock, which must be carried out under Clause 485 of the Rules of industrial security of hazardous industrial facilities, approved by No.116 order of the Federal Services for Environmental, Technological and Nuclear Supervision of 25.03.2014.

Further on, achieving the parameters of liquidity, uniformity and regularity of exchange trading, required in accord with the Joint Order - No. 3/15 FAS Order and No.3 Order of the Energy Ministry “On approving the minimum amount of oil products sold through exchange, as well as particular categories of products made of oil and gas, and the requirements to exchange trading, in the course of which transactions are concluded with oil products as well as particular categories of goods made of oil and gas by economic entities that have the dominant position on the relevant markets; and invalidating No. 313/13/225 Order of FAS and the Energy Ministry of 30.04.2013” of 12.01.2015 creates preconditions for abolishing regulation of prices for liquefied gas.