Sectoral hike wave in natural gas prices

Mehmet KARA

BOTAŞ changed the tariffs for natural gas consumer prices. According to the information received from BOTAŞ, the sales prices to be applied to certain customer groups, effective as of October 1, 2022, are indexed to the Daily Reference Price (GRF) determined in the Turkish Organized Wholesale Natural Gas Market. In addition, two new consumer groups were defined as Tier 1 Accommodation and OIZ Tier 1 Accommodation. BOTAŞ implemented the application as “With the new price mechanism, our country energy In line with the goal and vision of becoming a central hub, it is aimed to present a market-based, sustainable and predictable price structure to natural gas users”.

However, with the implementation of the application, the natural gas prices applied to consumers in the period of October 2022 actually increased. According to the new mechanism and tariff application, the price of natural gas to be consumed by various business lines, excluding electricity generation, has increased by up to 50 percent compared to September 2022, although it varies from sector to sector. According to the tariff table, CNG sales prices were increased by 7.8 percent.

“Level 1 Accommodation” and “OIZ Level 1 Accommodation” consumer items added to the natural gas sales tariff table include accommodation facilities. The tariff to be applied to these facilities was determined as 8.906244 TL per cubic meter. This price corresponds to an increase of 25 percent over Level 1, which is 7,124995 TL per Sm3. In other words, from the new pricing mechanism of BOTAŞ. tourism industry received a surprise hike. Hotels, holiday villages, boutique hotels, private accommodation facilities, motels, hostels and aparthotels that consume natural gas within the scope of these two items will be faced with a 25 percent higher bill in October 2022 compared to September, even if their consumption amounts remain the same.

High increase for high consumption

For users (Tier 2) with an annual traction of more than 300 thousand cubic meters, the price tariffs seem a little more complex and higher. The price in the tariff will be applied to 60 percent of the actual gas consumption of Tier-2 customers, excluding electricity generation purposes. The part above this is Energy Markets Operations Inc. The arithmetic average of the Daily Reference Prices (GRF) formed in the first 25 days of September 2022 in the Organized Wholesale Natural Gas Market (OTSP) operated by (EPİAŞ) will be applied. The calculations made by the Energy Daily based on the GRF data in question show that the gas bill of the said consumer group will increase by nearly 50 percent compared to September. This also applies to free zone consumers with the same consumption amount. One of the most critical results of BOTAŞ’ new pricing mechanism and new price tariff concerns companies in heavy industry branches. The pricing method indexed to GRF, which is applied to 40 percent of the consumption of companies that consume more than 300 thousand cubic meters of gas per year, is applied for the entire consumption of companies in some business lines. If the GRF average of September 2022 is compared with the figures in the tariff table, the gas bills of the companies in question will increase significantly. Tier-2 customers at this location gold, aluminium, copper, boron, zinc, iron/steel, silver, chromium, lead and magnesium production, oil refining and petrochemicals are listed as companies operating in the sectors. The average of the reference prices of the days formed in the free market in the first 25 days of September 2022 will be applied to the gas that these companies will use in October.