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Price rise of gas in Azerbaijan is to increase financial opportunities of gas sector - interview with the secretary of Tariff (price) Council

02.07.2009

Azerbaijan, Baku, July 2/Trend Capital, correspondent I.Khalilova/

Tariff (price) Council of the Republic of Azerbaijan passed the resolution on raising gas price 2,1 times for consumers at the meeting held on June 30. According to the resolution passed by the Council price of 1000m3 of gas was raised from AZN 42,7 to AZN 100. Objective of the tariff rise is to improve natural gas supply for population. The resolution has taken force since July 1, 2009.

Interview of Trend Capital with the secretary of Tariff (price) Council Elshan Asadov

- Mr. Elshan, what is the reason for change of gas price?
“Azerigaz” CSC addressed to the Tariff (price) Council of the Republic of Azerbaijan to reconsider price of gas sold to the consumer group of population. In the appeal it was noted that, current gas price for consumer group of population doesn’t cover the cost of gas sale. Simultaneously it was noted that, operation on gas supply in 2008 caused AZN 32,7 million losses and these losses are expected over current year as well. New tariffs to be determined were necessary for above mentioned issues, as well for execution of necessary investments to improve gas supply, paying totally for cost of natural gas, implementation of obligations on the budget and realization of other measures. It is true that above mentioned measures were solved by means of state allocations, partial payment to the budget for bought natural gas. Of course this is not normal. Therefore, proposals were discussed to solve current problems. Price of 1000m3 natural gas was fixed to AZN 100 for population consumer group taking into account influence of tariff changes to the solution of above-mentioned issues.

- How different is gas price and natural gas consumption of every subscriber in comparison with other countries?

- Natural gas consumption in our country increase year by year recent years. General gas consumption increased by 10,5% in 2008 compared to 2007, consumption of population consumer group increased by 20%. Consumption volume of several subscribers increased by 13,4% over relevant period. Now need for energy resources increase in the world and therefore energy resources are used economically. In such situation, gas is squandered, and instruments not meeting standards are used. Natural gas consumption in Turkey, Slovakia, Hungary, Kyrgyzstan, Georgia and in other European countries is 2,0-2,9 times more than Azerbaijan.
Moreover, diverse tariffs to be applied for other groups in comparison with consumer group of population pave the way for natural gas squandering and price manipulation.
At the same time, we shouldn’t forget that, natural gas price in Azerbaijan is 3-11,7 times less than in Turkey, Kazakhstan, Ukraine, Latvia, Georgia, Moldova and other European countries.  
 
- How will the new tariff of natural gas influence people, to your mind? 

- First of it is worth to note that, expenses of refugees and compelled migrants’ gas consumption is paid by the state within the framework of determined limits. Therefore new tariffs won’t influence this group of population. Number of subscribers of this group is consists of 71,5 families. It means, approximately 336 thousand persons. 
About poor group of population, I want to note that measures are undertaken to increase level of need criterion (extra AZN 5) to appoint targeted social aid to poor group.  This increase will be applied from July of current year.
Pursuant to the accounts, natural gas consumption expenses considered in consumption basket per capita will increase monthly to AZN 1,1. It shows that only AZN 1,1 of increased need criterion will be spent for this payment.
Now there are 165-170 families in Azerbaijan that get social aid. It makes 750-800 thousand persons with family members. 

How will the tariff changes impact the development of gas sector?

- Financial opportunities of gas sector will increase due to the tariff changes.  This factor will create an opportunity to renew infrastructures of transportation, distributive network and storing, to reconstruct systems of measure, report and accounting on the basis of modern technologies, to improve reliability of maintenance, to minimize loses, to enhance further qualitative and reliable gas supply of population. Finally, new tariffs serve for qualitative and reliable gas supply of population. 

Simultaneously new tariffs will pave the way for improvement of social  situation of the employees operating in gas sector.  
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