Dmitry Litvinovich: The new tariff policy of the Russian government

Yesterday's session of the government was totally devoted to the issue of tariff raise on the services of the natural monopolies. RAO United Energy System of Russia (RAO UES of Russia), Railway Ministry and Gazprom were expecting the positive answer from the government, taking into consideration the fact that the government decided to set the minimum tariff rise limit on the level of 35% (that was decided in December).

In the beginning of the session, before the speech from German Gref, (the Minister for Economic Development and Trade), the chairman of the Russian government dotted all the “i’s.” Mikhail Kasyanov said that the natural monopolies should not solve all of their questions at the expense of the consumers only. Kasyanov set the pitch of the session, which meant that the monopolists were not going to be happy in the end. Their worst suspicion became true after German Gref’s speech.

Gref said that the tariffs on electric power would gain 17.9% in the country. The tariffs on the railway cargo transportation will increase from February 15 – by 16%. The unification of domestic and foreign transportation will be carried out at the second half of the current year, but there will be no extra indexing. At the same time, as Gref said it, the issue pertaining to another correction of tariffs could be raised again after the budget of the Railway Ministry for this year was presented to the government.

The gas in Russia will become 20% as expensive in Russia from March 1. Gref said, the government could get back to the issue of gas tariffs indexing.

Gref said those figures were a compromise decision, which was not good for the natural monopolies, but the government believed that the tariffs could not be raised further at the moment.

Gref’s calculations have this motive: the natural monopolies will be able to implement the planned investment programs, but not in the complete volume.

The minister called upon the monopolies to cut their spending. For example: if the natural monopolies you have planned the salary raise for their attendants on the level of 30-60% this year, Gref thinks it is too much, because the wages will not be growing that fast in the industry. Gref believes there is also a point in giving another consideration to the investment policy, aimed at the development of the monopolies: the Railway Ministry has already refused from the construction of the railway bridge, leading from the mainland to the island of Sakhalin.

Presidential aide for economic issues, Andrey Illarionov, was not concealing his satisfaction with the decision of the government to limit the tariff growth on the production and services of the Russian natural monopolies. Illarionov said to the journalists that the common sense and the sober economic assumption have finally prevailed. Illarionov refused to consider the political side of the question, having noticed that German Gref’s position changed really drastically - it can even be perceived as a sensation, as a significant turn in the economic policy.

I have to say that such similar points of views between liberal Gref and ultraliberal Illarionov is a very relevant moment. At the same time, it does not at all mean that the fight on the tariff front is fading away – it is just getting started. Something else is very likely to follow soon.

The new Russian Railway Minister, Gennady Fadeyev is now yielding. Fadeyev agreed to reduce the funding of the railway reform. This can not be said with precision about Gazprom, though. There are so many issues to think over: scandal with Sibur, the construction of the pipeline to China, the Blue Stream projection, and so on and so forth. Most likely, the government will make a decision about another gas tariff raise.

On the whole, it can be said that the government did not decide to raise the tariffs on the maximum level, since it will be another shock for the Russian economy. The consumers will not survive such a blow - the inflation in this case will go far ahead of the planned 12-14%, which is disastrous for the economy.

Dmitry Litvinovich PRAVDA.Ru

Translated by Dmitry Sudakov