Gas rate concern for budget
Finance Ministry officials are fretting over the trajectory of the fuel’s price for next year
Despite the slight decline in the international natural gas rates, the government is awaiting a European Union decision on whether to introduce a price cap. Otherwise, the state budget will be thrown off kilter, especially if the average August rate of 236 euros per megawatt-hour (MWh) returns.
The draft budget was drawn up on the basis of the international TTF (Title Transfer Facility) rate of €185/MWh on average for 2023. If the price runs upwards for the whole year, additional resources will be needed and obviously a supplementary budget.
According to a senior government official, if the TTF for the whole of 2023 is set, for example, at €235/MWh, the budget will need an additional €500 million to support households based on what has already been announced. It is noted that the budget has set aside €1 billion to support households and general government entities (€700-800 million for households and €200-300 million for the state). In the event that the price of natural gas climbs to the aforementioned levels, the cost to the budget will reach 1.5 billion euros.
If the TTF moves below €150/MWh for the year, there will be no need to use the €1 billion provided for in the draft budget and household costs will be covered by the Energy Transition Fund.
If the EU decides on imposing a price cap on natural gas, the budget reserve would also not be required. In that case, and with the measures already announced by the government to support households and businesses, bills will be lower than last year, according to Finance Ministry calculations.
Based on current data, the big problem remains natural gas. Consumers facing a rate of €175/MWh will be asked to pay €85/MWh, compared to €70/MWh last year, as the DEPA subsidy comes to €90/MWh. In the event that a price cap is imposed, the rate paid by the 700,000 domestic consumers will drop below €70/MWh.
The same government official does not rule out, however, that in the event the price of oil continues going up, there be additional interventions with an increase in subsidies.
