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UPDATE 2-Polish regulator rejects PGNiG plea for tariff hike
September 13, 2012 / 10:06 AM / 5 years ago

UPDATE 2-Polish regulator rejects PGNiG plea for tariff hike

* Regulator URE says price hike unjustified

* Price of PGNiG supplies from Russia lifted by currency changes

* PGNiG says decision will harm results, considers appeal

* Shares fall 0.25 pct, underperform market (Adds company comment)

By Maciej Onoszko and Pawel Bernat

WARSAW, Sept 13 (Reuters) - Poland’s energy market regulator rejected a request by gas monopoly PGNiG to lift its customer prices to offset higher costs for Russian gas purchases.

The state-controlled group buys most of its gas via a long-term contract with Russia’s Gazprom at what it views as a highly uncompetitive rate. The price to customers is capped by the regulator URE.

The rate PGNiG pays Gazprom is linked to oil priced to the U.S. dollar, which has strengthened against the Polish zloty in the past few months and pushed up costs.

“We are aware of what the macroeconomic conditions are like, but the fact that the company is operating under a tariff does not mean it is free from trade risk,” URE spokeswoman Agnieszka Glosniewska told Reuters on Thursday.

PGNiG is deciding whether to contest the regulator’s decision which it said would negatively impact its results.

It added that in the third quarter the price of oil calculated in Polish zlotys was 24 percent higher year on year and less than 1 percent lower than in the second quarter of 2012.

PGNiG tumbled to a net loss of 314 million zlotys ($99 million) in April-June when its margin on gas sales dropped to minus 13 percent, the lowest level since the end of 2008.

“Looking at PGNiG’s awful results, the market speculated they could have softened the URE’s approach, but the regulator maintained its restrictive policy,” said Kamil Kliszcz, analyst at Warsaw-based brokerage DI BRE.

Tariff increases in the past have been agreed only after months of haggling between PGNiG and the regulator, which wants to avoid rises which could affect the chemical sector and consumers, who use gas for heating and cooking. ($1 = 3.1861 Polish zlotys) (Editing by David Cowell)

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