The danger of price regulation is that it not only preserves old problems but also breeds new ones
The government’s decision to fix the gas price will have only a temporary effect, freeze the market, and not only will it not solve the market’s problems but also create new ones, DiXi Group Research Director Roman Nitsovych said during an expert survey held by Espresso TV channel.
“The government’s decision to fix the gas price is of solely temporary nature, because it does solve the market’s problems,” he stressed.
Thus, the expert said, the problems that lead to suspicions of abuse by certain market players (for example, setting unjustifiably high price markups) will not go away.
“The domination of existing suppliers affiliated to oblgaz companies, i.e., gazzbut companies, will continue, and there is no guarantee of any shifts in this regard,” Mr. Nitsovych said.
He also pointed out the problems that began to appear with changing a supplier.
“There are reports that certain oblgaz companies obstruct the change of supplier, charge temperature coefficients, etc.,” the expert stressed.
According to Mr. Nitsovych, few people are aware at all that the gas market was launched in Ukraine and that they are now able to select a supplier and compare different price offers.
“The work on raising consumer awareness should have started back in summer,” he said.
“The government and consumers must understand: this is only a temporary measure; after that, there will be gas market anyway, and therefore, we will have to work on ensuring that everyone is aware of their rights and opportunities and is able to change the supplier without any obstacles and manipulations,” the expert emphasized.
He also pointed out the danger of the occurrence of new price regulation-related problems in the market.
“Consumers won’t have much incentive to change the supplier. They were sort of assuaged that there will be this fixed price, and that’s it. The domination of existing suppliers affiliated to oblgaz companies, i.e., gazzbut companies, will continue, and there is no guarantee of any shifts in this regard,” he warned.
Mr. Nitsovych also stressed that any regulated price is not necessarily a market price.
“If market has higher prices, there is always a temptation to manipulate with the volumes of gas intended for household consumers at the regulated price, and sell that gas to other consumers at the market price and pocket the difference. It was one of the major risks that existed under the previous resolutions which regulated this price, because it wasn’t always matching the market price or didn’t always catch up with the market dynamic,” the expert pointed out.