World gas prices have grown by 20-30 times compared to last year, Ibrahim Ahmadov, deputy head of the department for organizing events and public relations of the Azerbaijani state oil company (SOCAR), told Trend on Oct.16, commenting the recent decision of Azerbaijani Tariff Council to raise the domestic gas tariffs.
According to Ahmadov, tariffs for gas sales in Azerbaijan are regulated by the state and determined based on the cost of gas.
"In previous years, the wholesale purchase and sale of gas was carried out by SOCAR. As it’s known, not only SOCAR, but also other companies produce gas in the country. Therefore SOCAR received natural gas from other companies to meet the needs of Azerbaijan. In particular, we received gas from of the Shah Deniz consortium," he said. "However, most of the countrywide purchases and sales of gas have been carried out by Azercontract for almost a year. This is also a state-owned company, but completely independent of SOCAR. The company buys gas from SOCAR and other gas producers at wholesale prices and sells it to gas distribution networks, Azerenergy and other companies."
"One part of the price on gas purchased by Azercontract from various companies, including SOCAR, is regulated by the state, and another part may change depending on market conditions. That is, for example, a part of gas purchased from the Shah Deniz consortium depends on market prices, and as market prices rise, the cost of this gas rises," the representative of SOCAR explained.
Ahmadov stressed that as a result, the costs of the buyer of gas, the state-owned company, are also increasing, and it is impossible to compensate for these costs without changing the tariffs for the sale of gas.
'In this case, either the state should provide subsidies, which has certain consequences, creates an additional burden on the state budget and looks unsustainable in the long term, or prices should be increased, and this is the main reason for the rise in the tariffs. As to date, world gas prices have increased by 20-30 times compared to last year. Therefore, of course, the price of gas purchased by Azercontract from other companies has been slightly raised," he concluded.
As earlier reported, at new meeting held on Oct.16, Azerbaijan’s Tariff (Price) Council decided to raise tariffs for consumption of up to 1,200 cubic meters of gas per year from 10 qapiks (5.9 cents) to 12 qapiks (7.1 cents).
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