It was already known that the measure was coming, but did not know the shape and content. In April, the Minister of Energy announced that the Government wanted to lower gas rates, forcing Galp to share with consumers the gains between 2006 and 2012, with the resale of natural gas from Algeria and Nigeria thanks to contracts signed long-term while still the utility of this business in Portugal.
The way to get there was never disclosed, but yesterday was broken part of the mystery: the measure will cost 150 million e uros to Galp and go through the inclusion of these four contracts for the purchase, import and supply of natural gas in the active list on are covered by the extraordinary contribution of the energy sector (EESC), which is in effect for 2014 and 2015 (and with which the Government wants to raise 150 million each year). The same Galp has said it intends not pay to be convinced of the “illegality of the tribute.”
In November, both the oil as REN failed the period of settlement of the fee for 2014, with payments prowled 35 and 25 million, respectively. But now the government claims more than 150 million, extending the EESC (which already focuses on the distribution networks, power plants and refinery assets) to so-called take or pay contracts (which require Galp to buy pre-established quantities of gas, even if has not consumption).
The value will be used exclusively in the reduction of tariffs “too high” that Portuguese consumers pay, assured yesterday the Energy Minister Jorge Moreira da Silva, at a press conference. Claiming to be sure of “legislative choice made,” the minister explained that the objective is that market prices fall between 3% and 5% for domestic consumers and industrial, the next three years, starting in April when the regulator energy sector (ERSE) to approve the new tariffs, he said. Pay the fee “is a legal obligation,” he said.
Galp had “significant advantages” with these contracts that were not shared with consumers, defended the minister, adding that “robust estimates” indicate ” higher total earnings “to 600 million euros. “Assuming an equitable sharing between the company and its suppliers, we are talking about 300 million, at least,” capital gains for Galp he added.
But the allocation should be made with consumers “does not focus on past gains” but “on the economic value of the contracts,” said the minister. “What does the past allows us to check in terms of the benefits that have been conferred on Galp and were not shared with consumers, is that these contracts are an asset,” he added. These contracts were with Galp even when in 2006 the gas market has been restructured and the company was left with only the distribution and marketing of gas and transport has to REN. At that time “the system safeguarded the risks of the contracts, but not cautioned the benefits that have been generated” from the resale, said the minister. Contacted, Galp chose not to comment. “Galp Energia has no knowledge, in addition to press reports, the measure announced today [yesterday] by the Government and can not assess their impact or to rule on the matter,” said an official source of the company.
When the crisis brought down the consumption of natural gas in Portugal, Galp diverted part of supplies from Algeria and Nigeria to Asian markets (where demand grew), benefiting from rising prices in international markets. It is the difference between the purchase price and the price at which sold the gas that the government is the benefits that Galp not shared with consumers. This international retail activity is already one of the company’s largest revenue sources led by Ferreira de Oliveira.
When it ruled on the issue, the manager said he was unaware the metrics used by the Government to calculate the gains Galp and argued that were sales to Asian markets that prevented this cost is reflected in the making of the Portuguese.
Arguments abound to be wielded by the parties. In the middle of this equation there is another element to consider: based on the relationships between Galp and the government is also reviewing the law of oil bases, to be released soon and that may have implications for the company
The revision of the law, and in particular the need to ensure third party access to transport infrastructure and storage of fuels (where Galp has a dominant position), is one of the recurring themes in the analysis of competition to the market fuel and has also been proposed by the Government TNGC.
News updated at 21.10
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