The rise in wages will not be able to compensate for the rise in prices for utilities

Baku/18.10.21/Turan: On October 16, by the decision of the Tariff Council, changes were made to the prices for electricity and natural gas. The rise in prices affected both the population and other consumer groups.

So, since November 1, the price per cubic meter of natural gas consumed by the population up to 1200 m3 has increased by 2 kopecks. At the same time, prices for gas for industry and agriculture, sold by Azeristiliktejhizat OJSC, mahalle boiler and gas filling stations of the LNG type, as well as Azerenerji, rose.

As for electricity, since November 1, the tariff for used electricity up to 200 kWh has been set at 8 kopecks, from 200 kWh to 300 kWh-9 kopecks, and over 300 kWh-13 kopecks. For trade and services, the tariff increased from 9 kopecks to 11 kopecks, and for other industries - from 9 kopecks to 10 kopecks.

The Tariff Council explains this by such factors as ensuring energy security, creating favorable conditions for a dynamic and intensive development of the economy, targeted and efficient use of resources, harmonizing the interests of consumers and producers, and eliminating subsidies from the state budget.

Natural gas prices in Azerbaijan have increased for the second time this year. But why is the price of gas sold to the local population rising so often in an energy producing country? Is the government shifting the burden onto the shoulders of its citizens by cutting subsidies to companies? Why are prices in Azerbaijan not falling when energy prices are falling in the world?

According to the State Statistics Committee, in January-August 2021, 27 billion 917.4 million cubic meters of gas were produced in Azerbaijan. Including, the production of commercial gas amounted to 20 billion 593.4 million cubic meters.

During the reporting period, the production of natural gas in annual terms increased by 11.3 percent, and commercial gas - by 14.6 percent. According to SOCAR, part of the gas price that Azerkontrakt receives from the companies is regulated by the state. depends on market prices, and with an increase in market prices, the cost and price of this gas increase. "This has certain consequences, that is, it creates an additional burden on the state budget and looks unstable in the long term”.

At the same time, the Azerigaz production association reported that after the latest price changes, the population will see an annual growth of 24 manats. “51 percent of the population consumes up to 1,200 cubic meters of gas per year. With annual withdrawal, this amount is 24 manats."

The department noted that recently the prices for natural gas on the world markets have increased. “Compared to last year, these prices have increased 24 times. Of course, this affected production and prices in Azerbaijan.”

It was emphasized that most of the basic materials and equipment used in mining are imported from Europe. “In the same place, due to the recent rise in gas prices, the prices for this equipment have sharply increased. It also affected the cost of production, the cost of gas, and at a later stage, the wholesale and retail prices for gas. This also affected the investment package of Azerigaz.

According to the production association, both external and internal factors influenced the rise in gas prices. “Gasification continues in the country; the number of subscribers is growing. Stable, reliable operation of the gas network depends on these prices."

Azerishig Joint Stock Company was told Turan that  earlier they paid 14 manats for 200 kWh, now it is 16 manats. "The number of the population using electricity up to 200 kWh is 63 percent. The least growth was felt among subscribers from this category. Under the previous tariff rates, the share of subscribers who crossed the preferential tariff limit for the population in relation to the total number of subscribers fluctuated within 19- 21 percent. Once prices change, that percentage will also change."

The ministry stressed that tariff regulation helps to improve the quality indicators of utilities. "To expand the ongoing infrastructure work, to provide the population and other subscribers with high-quality, uninterrupted energy, as well as to cover additional costs caused by changes in the price of natural gas used for energy production, it became necessary to regulate electricity tariffs."

Economist Natig Jafarli noted that the explanation by the Azerbaijani government of the rise in gas and electricity prices by the processes taking place in world markets does not reflect reality. “Because we are not an importing country. The processes taking place in the world markets have an impact on the importing countries. Azerbaijan exports both natural gas and electricity, and their exports have grown significantly in recent years."

The expert noted that there is also associated gas in Azerbaijan. “For many years, part of the associated gas from the Azeri-Chirag-Guneshli field has been provided by BP SOCAR free of charge. Since the launch of the project until today, about 40 billion cubic meters of gas have been supplied free of charge. Every year this figure fluctuates between 1.5-3 billion cubic meters. This free supply of liquefied natural gas was supposed to act as a price stabilizer and soften the government's hand in relation to electricity and natural gas prices in general, so as not to raise prices for citizens."

In his opinion, under the pretext of the processes taking place in the world, they can continue to increase prices. "The main reason for the rise in prices is related to the reduction in subsidies to state-owned monopoly companies. Subsidies from the state budget have decreased. Instead, when these companies cut their costs, they put these subsidies on the shoulders of citizens with the increase in prices, and not with the optimization of management."

According to Jafarli, over the past 5-6 years, energy prices on world markets have repeatedly dropped. “Why, then, the prices for utilities and gasoline are not getting cheaper in Azerbaijan? Because the policy pursued by the government in this area has nothing to do with the processes taking place in the world markets. "

He noted that the increase in salaries, pensions and benefits announced next year will not be able to compensate for the increase in prices for utilities. “Now the official inflation in Azerbaijan is 5 percent. The growth rate of the average monthly wage is about 1 percent. This means that the real incomes of citizens have decreased."

In his opinion, if next year pensions and wages increase by 10 percent, then this may to some extent compensate for the rise in gas and electricity prices. “But the rise in prices has affected not only utilities, prices for food and medicine have increased. On the other hand, the number of people from this category in Azerbaijan is about 2 million. But what about people working in the private sector, agriculture? "- 0 -