PGNiG has applied to the Polish regulatory office URE to maintain current gas price tariffs until September 30, PGNiG's spokesman Tomasz Fill told Interfax on Friday. The URE's decision is expected to be made by mid-March. The current tariff, approved in December 2006, which was estimated to raise the wholesale gas prices by 9.9%, expires on March 31, 2007. The new tariff implemented as of 2007 was estimated to increase prices by 4.0%-5.9% for final non-industrial customers.
Our view: The market already has started speculating that URE will decrease the retail price of natural gas for PGNiG reflecting the drop in crude oil prices in December. Also the strong Polish Zloty gives the additional reason for URE to lower the tariffs. However, the Poland is still far from the EU standards for the liberalized energy market and by leaving the retail prices on their current level, the government has a possibility to step closer to these requirements. In case of lowered tariffs for 2Q07 we foresee a negative market reaction.