New decision of Azerbaijani Tariff Council aimed at improving efficiency in housing and communal services - Expert

By Trend

The new decision of the Azerbaijani Tariff Council is aimed at increasing efficiency in the housing and utilities sector, analyst of the Center for Analysis of Economic Reforms and Communication Aykhan Satiji said, Trend reports on July 1.

"The wholesale and retail prices for natural gas in the country have changed in connection with the decision of the Tariff Council dated June 30, 2021," Satiji said.

"The changes were made in accordance with the economic policy of the country, based on such key factors as ensuring the sustainability of energy security, purposeful and efficient use of resources, coordination of the interests of consumers and producers, economic profitability, social orientation, gradual formation of market relations in the field gas supply and elimination of subsidies from the state budget," analyst said.

"The most important point here is that the changes did not affect the tariff for natural gas in the volume of up to 1,200 cubic meters per year for some consumers and the price was kept at the level of 0.10 qepik (0.05 cents) per cubic meter, which covers 51 percent of the population, that is, five million people," Satiji said.

"At the same time, the price of a cubic meter of natural gas is set at 0.20 qepik (0.11 cents) for a part of consumed gas with a volume of up to 1,200-2,500 cubic meters and 0.25 qepik (0.14 cents) for a part of gas with a volume of more than 2,500 cubic meters," analyst said.

"This is a vivid example of the social nature of the decision and the protection of the interests of the majority of the population," analyst said. "The gas tariff for the agricultural and industrial sectors remained unchanged - at the level of 0.20 qepik (0.11 cents) per cubic meter to restore the economy."

"One of the nuances is that the rise in energy prices in the world markets was the increase in energy consumption and inefficient use," Satiji said.

"That is why, to ensure the sustainability of the natural gas heating system, as well as to optimize the costs of using the heating system by the citizens of the country, the natural gas tariff for Azeristiliktechizat OJSC, an Azerbaijani heating supply operator, and boiler houses of residential buildings has been reduced from 0.20 qepik (0.11 cents) to 0.13 qepik (0.08 cents)," analyst said.

"Analysis of global trends shows that the centralized heating systems are a priority in terms of energy efficiency," Satiji said. "Moreover, a reduction in tariffs for these purposes will have a positive impact on environmental protection. England can be mentioned as an example. In accordance with the statistics for 2020, 95 percent of the population there uses the central heating system while 86 percent of the central heating systems use natural gas."

The analyst emphasized that while comparing the prices for natural gas which is sold to the population in Azerbaijan with other CIS countries and neighboring countries, one can see that gas is inexpensive even for a part of the population that consumes more than 1,200 cubic meters per year.

"So, the tariff per cubic meter of natural gas per capita was 0.32 qepik (0.18 cents) in Ankara and 32.6 qepik (0.19 cents) in Kiev in 2020," Satiji said.

"Currently, these figures have increased to 0.32-0.40 qepik (0.18-0.23 cents) in Ankara and 0.54 qepik (0.31 cents) in Kiev," Satiji said. "Moreover, these figures range from 19.7 qepik to 29.5 qepik (0.11-0.17 cents) in Georgia, from 9.2 qepik to 34.2 qepik (0.5-0.20 cents) in Belarus and from 11.9 qepik to 16.5 qepik (0.7-0.9 cents) in Russia."

"If we consider the prices in the EU countries, then the figures vary from 0.29 qepik (0.17 cents) to 0.68 qepiks (0.4 cents) per cubic meter of natural gas in Latvia, Lithuania, Hungary and Romania," analyst said.

"The electricity tariffs for information centers that consume electricity through 110 kV transmission lines, have a stable load during the day and use at least five million kWh of electricity per day for production purposes, have been differentiated by day and night upon another decision of the Tariff Council," Satiji said.

Thus, the tariff is set at 7.3 qepik (4.3 cents) during the day (from 08:00 to 22:00 (GMT+4) while (from 22:00 to 08:00 (GMT+4) - at the level of 3.5 qepik (2.05 cents) at night.

"Thus, the price differentiation according to the time of day regulates the daily load schedule, as well as creates incentives to use electricity at low prices, reduces the load during peak hours and reduces the need to invest in an additional volume of electricity generation," analyst aid.

"No changes were made to the electricity tariffs for the population and subscribers carrying out activity differing from that mentioned above, which also shows the effectiveness and social nature of the decision," Satiji added.