Wednesday, 19 March 2014

Turkmenistan Introduces New Measures to Conserve Natural Gas

Published in Field Reports

By Tavus Rejepova (03/19/2014 issue of the CACI Analyst)

During a Cabinet meeting on January 17, President Berdimuhamedov tasked the Deputy Chairman for Oil & Gas, Baymurad Hojamuhamedov, and Deputy Chairwoman for Culture, Byagul Nurmyradova, to prepare a series of TV programs and newspaper articles on the efficient use of natural gas, provided free of charge for the population since 1993. In addition, the President signed a decree on January 31 raising the cost of natural gas from 2 (US$ 0.70) to 20 manat (US$ 7), including the VAT, for the thousand cubic meters of gas used over the free allowed limit of 600 cubic meters per person and year.

According to the presidential decree, the new price for gas over the free limit came into effect on February 1, 2014. The government will calculate the consumption of formerly unlimited natural gas through the gas meters currently being installed in households across the country. President Berdimuhamedov said that the installation of gas meters will allow people to economically use natural gas and that the payment for using the gas will not create difficulties for the families. The president further stressed that the government will always continue the current policy of social support to the population of Turkmenistan.

Meanwhile, the State Concern Turkmengas purchased over 124,000 units of gas meters and has so far installed 61,000 in households, and has also announced an international tender for the purchase of more gas meters. The government has not given any timeframe for completing the installation of gas meters and the State Concern Turkmengas is calling on all households and organizations to support this initiative and install gas meters. The households who already purchased these gas meters several months ago from Turkmengas say the meters cost up to 800 manat (US$ 280) a piece.      

As per the late president Niyazov’s decrees from September 1992 and August 2003, the consumption of natural gas, electricity, cooking salt, drinking water and a limited amount of gasoline is free for the population of Turkmenistan until 2030. The current administration’s recent measures to introduce new fees for over-the-free-limit gas and install gas meters for efficient and rational use of natural gas are aimed at reducing the possible waste of gas and determine the real amount of gas consumed for domestic purposes. According to the president, “nobody monitors the consumption of natural gas in the country. The amount of free gas consumed domestically is increasing year by year and the government loses its earnings.” According to state newspaper reports, Turkmenistan consumes one and a half times more gas than the free limit of 600 cubic meters per person per year.       

In this connection, President Berdimuhamedov also dismissed Kakageldi Abdyllayev, the former chairman of the State Concern Turkmengas who was transferred to another position, and said that the agency failed to take effective measures to boost the export potential to replenish the state earnings in foreign currencies and no measures were taken to improve the status quo. “For example, one can make lots of earnings by increasing the volume of production and sale of liquefied natural gas, which is in high demand in global markets” said the president. He said Turkmenistan’s other state agencies, on the contrary, managed to accumulate earnings in foreign currencies as opposed to Turkmengas. 

This series of new measures intend to ensure the efficient use of natural gas by the population and regulate the payments for gas. In August 2013, Turkmen parliament passed the first ever bill “On hydrocarbon gas and gas supply,” which aims to create the conditions for a functioning gas market and regulate the procedure of gas supply systems in the country. In addition, the President asked Akja Nurberdieva, the speaker of Turkmenistan’s Parliament, to look into drafting additional laws or regulations that control the efficient and economical consumption of natural gas. 

It is expected that rural areas, where gas is used for heating greenhouses, barns for livestock, cottages and garages, might feel the rise in cost of gas more significantly than the urban residents. This might also have an impact on the cost of products like tomatoes, cucumbers, lemons, potatoes and other food products produced in greenhouses across the country.

The government’s measures to regulate the efficient use of free natural gas for the population also follow the latest increase in the level of gasification of homes, increased use of natural gas for industrial enterprises and electricity generation across the country. In addition, the government made it clear that the domestic subsidies are costly for Turkmenistan’s economy. Turkmenistan currently sells its gas to China, Russia, and Iran, and is in the process of forming a consortium for the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. 

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