DUSHANBE, December 29, 2009, Asia-Plus — Tajik state natural-gas distributor, Tojiktransgaz, and Uzbek natural-gas supplier, Uztransgaz, have singed an agreement on Uzbek gas shipments to Tajikistan in 2010.
The agreement was signed in Tashkent, Uzbekistan last week and under this document, Tajikistan will import 250 million cubic meters of natural gas from Uzbekistan next year.
The Tojiktransgaz head Saidmamat Sharofiddinov told Asia-Plus today that gas price will vary quarterly depending on the on world market trends. “The gas price for the first quarter of 2010 will become known only in early January,” Sharofiddinov said.
Moreover, Tajikistan will buy Uzbek gas under a take-or-pay principle. Under this principle, importer country pays 95 percent of the state volume of natural gas irrespective of the fact whether it receives the stated volumes completely or not, according to Sharofiddinov. “The conditions remain the same – we will make prepayments every ten days,” he noted.
According to definition of a take-or-pay contract provided by Wikipedia, the take-or-pay contract is a rule structuring negotiations between companies and their suppliers. With this kind of contract, the company either takes the product from the supplier or pays the supplier a penalty. For any product the company takes, they agree to pay the supplier a certain price, say $50 a ton. Furthermore, up to an agreed-upon ceiling, the company has to pay the supplier even for products they do not take. This “penalty” price is lower, say $40 a ton.
Advantages of this kind of contract include reduction in risk to the company”s supplier, in return for which they can ask to pay less and reduction in a rival’s incentive to come after the company”s customers by making retaliation a near certainty. The main disadvantage is the fact that it Increases severity of price war if deterrence fails
We will recall that this year, Uzbekistan has supplied natural gas to Tajikistan at the rate of 240 U.S. dollars per 1,000 cubic meters of gas and Uzbekistan wanted to keep the 2009 gas price, while Tajikistan expected Uzbekistan to decrease its price for gas by 30 percent.
