In applying to ERO for a new gas tariff, PGNiG was driven by justified economic reasons. Above all, it was grounded on the growth of the oil‑derived product prices (almost 100% correlated with the crude oil price), which after a few months' time lag translates into increased price of natural gas. The fall of the dollar has not offset the increase in the oil product prices. In addition, the business conditions have changed throughout the entire gas sector, which was due to the alignment with the EU regulations.

In order to avoid losses on gas sales, PGNiG was forced to apply to the President of ERO for a tariff increase by a few percent to reflect the market reality. The today's position of the President of ERO - in the opinion of PGNiG - does not close the procedure in respect of setting of a new tariff, although it makes it postponed. We hope that in the beginning of 2008 our application will be reconsidered and approved.

(A refusal by the President of ERO to approve the new tariffs would mean that PGNiG will run its core activity at a loss).

However, we cannot fully agree with the rationale provided in the communiqué of ERO regarding the substantive assessment of the application and, specifically, the statement that "the application did not meet the expectations resulting from the legal requirements"

In our view, the problem stems from the absence of the relevant regulation, which makes it impossible to fill in the section of tariff application concerning the inclusion of the costs of gas transmission and distribution in the tariff. No such regulation has been sent to us to this date.

In this context, we regret that the President of ERO refuses to accept a legally viable solution, which consists in a change of the gas sales price under the tariffs being currently in force.

Joanna Zakrzewska

Spokesperson for PGNiG