I.O.'S ORDER OF THE CHAIRMAN OF THE AGENCY OF THE REPUBLIC OF KAZAKHSTAN ON REGULATION OF NATURAL MONOPOLIES AND PROTECTION OF THE COMPETITION

of December 12, 2003 No. 309-OD

About approval of the Method of calculation of rates for transportation services of natural gas on distribution pipelines

According to the subitem 4) of article 13 of the Law of the Republic of Kazakhstan "About natural monopolies" and the Program of enhancement of tariff policy of subjects of the natural monopoly for 2002-2004 approved by the order of the Government of the Republic of Kazakhstan of October 15, 2002 N 1126, I ORDER:

1. Approve the enclosed Method of calculation of rates for transportation services of natural gas on distribution pipelines.

2. To department of administrative and territorial work of the Agency of the Republic of Kazakhstan on regulation of natural monopolies and protection of the competition (Dosan B. B.) to bring this order to the attention of structural divisions and territorial authorities of the Agency of the Republic of Kazakhstan on regulation of natural monopolies and protection of the competition.

3. I reserve control of execution of this order.

4. This order becomes effective from the date of signing.

Approved by the order of the Agency of the Republic of Kazakhstan on regulation of natural monopolies and protection of the competition against December 12, 2003 No. 309-OD

Method of calculation of rates for transportation services of natural gas on distribution pipelines

1. General provisions

1. This Method of calculation of rates for transportation services of natural gas for distribution pipelines (further - the Technique) is developed according to the Law of the Republic of Kazakhstan "About natural monopolies", the Program of enhancement of the tariff policy of subjects of natural monopolies for 2002-2004 approved by the order of the Government of the Republic of Kazakhstan of October 15, 2002 N 1126 and other regulatory legal acts of the Republic of Kazakhstan.

2. The technique determines the mechanism of calculation of rates for transportation services of natural gas for distribution pipelines and extends to all organizations providing these services to third parties irrespective of patterns of ownership.

3. In the Technique the following concepts are applied:

the consumer - the physical person or legal entity using services of the gas-distributing organization;

the gas-distributing organization - the organization performing development and operation of distribution pipelines, constructions on them which are in property or on other legal causes, rendering transportation services of natural gas on these networks based on the available license for this type of activity;

the gas supplying organization - the organization performing sale to consumers of the purchased natural gas;

above-standard (commercial) losses - the losses of natural gas connected with servicing of distribution pipelines, exceeding the normative technical losses approved by competent authority;

normative technical losses - the losses connected with maintenance of distribution pipelines, approved by competent authority.

Other concepts and terms used in the Technique are applied according to the current legislation of the Republic of Kazakhstan.

2. Mechanism of calculation of rate for transportation services of natural gas for distribution pipelines

4. The basic principles of calculation of rate are:

1) the rate for transportation services of natural gas on distribution pipelines shall be not lower than the cost of the costs necessary for provision of services and consider possibility of profit earning, the gas-distributing organization providing effective functioning;

2) the rate for transportation services of natural gas on distribution pipelines is established single for all consumers regardless of transportation distance.

2.1. Calculation of rate for transportation services of natural gas for distribution pipelines

5. The rate for transportation services of natural gas on distribution pipelines (T) is calculated by formula

where:

Z - economically reasonable costs of the gas-distributing organization for rendering transportation services of natural gas (in tenge) calculated taking into account requirements of Rules about the special procedure for forming of costs applied in case of approval of rates (the prices, rates of charge) on services (goods, works) of the subjects of natural monopoly approved by the order of the Agency of the Republic of Kazakhstan on regulation of natural monopolies and protection of the competition against July 30, 2003 of N185-OD (further - the Special procedure);

Р - profit (in tenge);

V - the total predicted annual amount of the rendered transportation services of natural gas on distribution pipelines (in 1000 m 3).

2.1.1. Forming of costly part of rate for transportation services of natural gas on distribution pipelines

6. Forming of the costs considered when calculating rates for transportation services of natural gas for distribution pipelines is determined according to the Special procedure.

7. The material costs included in costly part of rate are determined proceeding from the expense rates of raw materials, materials, fuel, energy on release of unit of service approved and which passed expert evaluation in competent authority and also based on the planned according to plan precautionary repairs, capital repairs which are not leading to value addition of fixed assets and the prices of the material resources determined by results of the tender (competitive) purchases which are carried out according to the procedure, established by the legislation of the Republic of Kazakhstan.

8. Costly part of rate for transportation services of natural gas on distribution pipelines does not join the costs connected with the capital repairs which are not leading to value addition of fixed assets.

9. The expenses connected with normative technical losses join in costly part of rate. Normative technical losses affirm competent authority.

2.2.2. Determination of amounts of rendering transportation services of natural gas on distribution pipelines

10. When calculating rate, the amount of the rendered services is determined by contracts with the gas supplying organizations and (or) consumers of gas.

The gas consumption used by the gas-distributing organization for technological (own) needs and 0,8 of % of amount of above-standard losses (in the presence of the investment project approved with authorized body directed to decrease in above-standard losses), does not join in amount of the rendered services, and gas purchase costs on these purposes are considered in costly part of rate.

11. The directions of use of gas by the gas-distributing organization for technological (own) needs:

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