Gas Market Facing Collapse?

By 10 January 2022
Gas Market Facing Collapse?
Photo: Igor Soban/PIXSELL

ZAGREB, 10 Jan 2022 - Gas suppliers in Croatia are on their knees and due to an enormous increase in prices of that energy product on European stock markets, many of them are facing ruin, with the collapse of the entire system being the worst-case scenario.

This conclusion is based on a dramatic notification sent in mid-December to the HERA energy market regulator and the Ministry of Economy and Sustainable Development by the Croatian Chamber of Commerce (HGK) association of gas suppliers and distributors, the Jutarnji List daily reported on Monday

Even though the impending increase in gas prices, expected on 1 April, has been announced for a long time, the dimensions of the problem were not presented as clearly as in this notification.

According to the association of gas suppliers and distributors, the regulated price of natural gas for the period from 1 April 2022 to 31 March 2023 will be around €43.91 per megawatt hour, which is as much as 133% more than in the current gas year (lasting until 1 April). When all other costs that make up the final consumer price are added to this, it would eventually result in 59-86% higher gas bills for residential consumers, depending on which part of the country they are located in.

This is a huge increase but the suppliers' problem lies in the fact that not even such an increase can guarantee them viable operation. Moreover, since the market purchase price of gas in the same period is estimated at around €79.41 per megawatt hour, suppliers would lose around €35.5 per megawatt hour of gas that they sell, with the loss in the segment of household supply alone amounting to one billion kuna.

It is quite clear that suppliers - very often municipal companies owned by local government units - cannot survive such losses and that their collapse would threaten gas supply security, says the daily.

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