After negotiations with the Russian side, Bulgargaz managed to quell the increase in natural gas. Who will win?

Georgi Velev

Surprisingly, instead of the expected price increase of over 30%, the natural gas sold by Bulgargaz will be cheaper by 1.5% compared to October. After negotiations with the Russian supplier Gazprom Export, Bulgaria managed to negotiate a reduction in the price of natural gas for the month of November, representatives of the energy and social sector in Bulgaria announced at an extraordinary briefing at the Council of Ministers. Thus, as of today, the price of natural gas is reduced by approximately BGN 1.35 / mWh and the natural gas in Bulgaria will now cost BGN 93.19 / mWh, announced the executive director of Bulgargaz Nikolay Pavlov. He clarified that an agreement was reached with Gazprom Export on controversial issues, as a result of which it was considered that additional cheap quantities of natural gas could be supplied to our country. We immediately notified the Energy and Water Regulatory Commission as a regulator, which decides how and when to reflect changes in prices for consumers, Pavlov explained.

Thus, the decision was made to reduce the price by BGN 1.35 / MWh for all consumers, compared to the current price for October. We remind you that in October the price of natural gas in Bulgaria was BGN 94.54 / MWh. Bulgargaz's initial request was for a new price increase of nearly 30 percent. If we define this as "saving" and add the reduction achieved compared to October, it turns out that the Bulgarian industry, district heating and direct gas consumers in households will be able to take a breath in November.

Following these negotiations with Gazprom Export, this reduction was achieved. This saves $ 40 million to natural gas consumers in the country, Pavlov said. He added that the negotiations for the additional quantities of natural gas and the achieved reduction have been conducted within the last month or two. Pavlov did not give more details as to what Gazprom Export's gesture to the Bulgarian side was due to. According to the head of Bulgargaz, the achieved reduction will allow a new reduction in the price of natural gas from December. For now, the forecasts are that the prices will be below BGN 93 / MWh, Pavlov said and explained that the achieved price for our country is EUR 47.65 per MWh. Compared to the prices on the European gas markets, this is almost 2 times cheaper. Deliveries to Europe are about 91 euromvh in November, Pavlov explained.

A breath of fresh air for district heating

Achieving price maintenance at October levels is very important for both business and the average consumer. With today's decision, the EWRC will not have to set new, significantly higher heating prices at the beginning of the winter season. The current rise in prices, which has been significant in the last few months, is maintained, but the expected further increase in gas supplies is avoided.

The slight decrease in the price compared to October and the unexpected expected rise in prices is welcome for the large industry - mining, metal processing, cement plants, as well as for the agricultural sector, as greenhouses are heated exclusively with natural gas.

The current decision is very important for the district heating companies in our country, many of which are already working on natural gas, explained during the briefing the chairman of the Commission for Energy and Water Regulation Assoc. Prof. Ivan Ivanov.

"The impact on heating will be direct, because 80% of the price of heat is formed by the price of energy, namely - natural gas," said Ivanov. "Bulgarian consumers can be completely calm until the New Year, and what is being done today is primarily in favor of district heating companies," he added. According to him, the EWRC is working intensively on the measures that need to be taken to protect Bulgarian household consumers from a shock rise in electricity and heating prices from January 1. "We will fulfill our task as an energy regulator and there will be no such price increases," Ivanov assured.

"The goal is to prevent during the heating season high and unaffordable heating prices and unaffordable costs of district heating and gas distribution companies," said Deputy Prime Minister and Minister of Social Affairs Galab Donev.

"Bulgarian consumers must be calm that there will be no price increase," the EWRC chief assured. He specified that in early December there will be information on how the prices of heating and electricity will change from the 1st of January. According to Ivanov, the regulator will do everything possible to avoid sharp jumps in the prices of natural gas, heating and electricity.

The surprise with the reduction of the price of gas is also favorable for direct consumers of gas in the household.

Another issue is that temporarily more affordable gas prices are unlikely to leave more money in the pockets of end users of goods. The companies are still trapped in the price dynamics of the international energy markets and a one-month or two-month slowdown in the price growth of gas will not provide the necessary security, nor will it reduce the losses - financial and labor. So the experts are pessimistic, according to them, the retention of gas prices will not lead to a reduction in the final prices of industrial and agricultural products, and hence there will be no effect on retail prices.

Energy experts predict that the expected drastic rise in electricity and gas prices by 50% in early January will not pass us by.