Mariana Kukusheva: The sharp increase of price of natural gas will result in bankruptcies of producers and job cuts

Photo: BGNES

The latest increase of the price of natural gas in Bulgaria will have a detrimental effect on Bulgarian manufacturers, the Chairperson of the National Branch Union of Bakers and Confectioners Mariana Kukusheva told Radio Bulgaria. ”In the past 10 to 12 years many Bulgarian producers have gasified their production facilities and a lot of them have been using methane cars in their logistics. For instance, if a given gasified company was paying EUR 25,000 per month on gas bills, from now on, after the 30% increase of the gas price, it would start paying EUR 32,500 for the same period. In other words, that producer will have to cut its labor costs, reduce the number of employed and refrain from stimulating its workers with higher wages”, Mariana Kukusheva said and added:

“The manufacturers’ expenditures become even bigger if we calculate the money paid for logistics. Thus, the Bulgarian producers are becoming less competitive and are endangered of bankruptcies. Some manufacturers will have to cut jobs and become part of the gray economy. The price of the raw material has already gone up. Meanwhile, there is a large retail chain on the market which raised the price of bread and the Easter cake to the end client. However, that retail chain does not allow the supplier to change its supply price for one whole year. In other words, we are obliged to purvey below cost, in order to fulfill the requirements of that retail chain set in our contract. That will cause a domino effect, because after Easter it will turn out that a lot of money will still be owed to sub providers of raw materials.  At a meeting with colleagues we estimated that some 10,000 job positions may be closed in the processing industry and the agriculture field.”

In Mariana Kukusheva’s words, the sharp increase in the price of natural gas is “a decision of a state commission whose members and chairman do not adhere to the methodology related to amendments of current prices of energy sources and adoption of new prices.”

“This commission has dared protecting interests of lobbyist, because in the recent years it turned out that the higher the prices in Bulgaria, the bigger the indebtedness of all state-owned companies including Bulgargaz, heating companies and water companies. The imposition of monopoly prices by a state commission reduced the economic index of the country and makes the situation in Bulgaria uncertain and unpredictable. The business needs predictability and right direction, rather than money. ”

Mariana Kukusheva refused to forecast whether the price of bread would go up after the latest sharp increase in the price of natural gas. In her view, not all manufacturers will be able to amend their prices. “The business environment is so competitive that it would hardly bear new prices”, Mariana Kukusheva said and added:

“I expect that the new National Assembly and cabinet will pay special attention to the way the State Energy and Water Regulatory Commission functions. I also expect that the court would accept the objections of all who have been protesting against the ungrounded increase of the price of natural gas. I expect that the social partners would also join us, because their task is to take care and protect people’s jobs. Meanwhile, we expect that the measures against gray economy and unfair commercial practices will become drastic. The fact that gray economy amounts to 50% of the country’s economy is absolutely unacceptable on the eve of Bulgaria’s Presidency of the EU, when one of the country’s priorities is related to increase of peoples’ incomes.”

Meanwhile, Bulgargaz published an announcement about the prices of natural gas in Bulgaria in the recent years. In 2015 and 2016 the price of natural gas adopted by SEWRC decreased with over 52%. Bulgargaz specified that the increase of gas price in the second quarter of 2017 would not have been so significant if the state regulator agreed to increase prices with 13.53% on January 1. However, gas prices saw a 5% increase in that period. The National Statistical Institute provided data to Radio Bulgaria on the price of few types of industrial bread in 2015, 2016 and the first months of 2017. In 2015 the average sale price of the white bread amounted to 1.33 leva (EUR 0.67). One kilogram of Dobrudzha bread was sold at an average of 1.27 leva (EUR 0.64) and a kilo of brown bread was sold for an average of 1.44 leva (EUR 0.72). In 2016 the price of white bread saw a slight decrease and one kilogram of that product was sold for 1.31 leva (EUR 0.66). The price of one kilogram of Dobrudzha bread remained unchanged at 1.27 leva (EUR 0.64) and the price of a kilo of brown bread fell to 1.38 leva (EUR 0.69). In the first two months of 2017 the price of the White bread remained unchanged as compared to 2016, whereas the price of Dobrudhza and brown bread fell slightly with half of the Eurocent per kilogram.

English version: Kostadin Atanasov  

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