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Regulator cuts PGNiG gas tariff by 9.13%

Poland’s energy regulator has cut the gas tariff for gas monopoly PGNiG by 9.13% on average because of falling import prices, the head of the company’s regulatory department said on Friday

PGNiG has up to six weeks to implement the long-delayed tariff reduction, for which negotiations began in mid-March. It will be valid through March 2010, although it can be adjusted sooner if market conditions change significantly.

“Due to a rise in distribution fees, the final prices (for consumers) will drop by 3.3% on average,” Andrzej Janiszowski told Reuters. The prices for consumers are a mix of the gas tariff and other fees charged by PGNiG, its subsidiaries, and state-owned gas operator Gaz System.

Economists said that the cut in gas prices may help ease Polish inflation.

However, analysts said the cut in consumer prices would mean PGNiG will continue to lose money on Russian gas imports in the short term as the price they plan to charge consumers will not cover the prices it is paying for the fuel.

“According to our estimates the company will make a profit on imports starting in the third quarter, assuming the zloty does not weaken in the meantime,” BZ WBK analyst Pawel Burzynski said.

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. While the price off oil has dropped significantly over the past year, that has been offset by a more than 20% weakening of the zloty since last summer. (Reuters)