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PGNiG asks for 8.5-9% cut in gas tariffs

  Polish gas monopoly PGNiG has given in to pressure from the energy market regulator and asked for an 8.5-9% cut in the gas tariffs it charges, the company said on Tuesday.

The regulator had asked the company twice to cut its tariff expectations, saying a reduction close to 10% would be more appropriate than keeping the tariff unchanged, as the company had wanted. The cut, if approved, would be still lower than some analysts had feared earlier this year, but more severe than the monopoly had hoped for.

“If we look from the company’s standpoint and original proposal of keeping the prices flat, it’s bad news,” KBC Securities analyst Olena Kyrylenko told Reuters. “But it was speculated the cut would be double-digit (percentage), and from that perspective it is good news for the company.”

PGNiG, which is currently importing gas at higher prices than it sells, wants the URE to reduce prices for individual clients by 8.5% on average and by 9% for industrial clients. Kyrylenko expects the tariff will be lower than import prices at least until October, if the zloty does not weaken further.

PGNiG imports about two-thirds of the 14 billion cubic meters of gas it sells, at prices tied to oil prices with a nine-month delay, but the drop in oil prices has been offset by a 25% weakening of the zloty since the summer of 2008.

PGNiG shares have slightly underperformed Warsaw’s main WIG20 index this year, losing 2.5% since Jan. 1, while the market has lost 0.3%. (Reuters)