Government to consider changes in natural monopolies' tariffs to be made in 2002-2003

The question of changes in natural monopolies' tariffs to be made in 2002-2003 will be discussed at a Russian government meeting on June 20. A representative of the Economic Development and Trade Ministry of Russia told reporters that natural monopolies had been insisting on a 26% rise in gas prices beginning January 1, 2001. They also suggested a 54.5% increase in service charges within the RAO UES system next year. The price of electrical power supplied from the federal wholesale market (FOREM) is to grow by 18.1%, and the fee for freight transportation by rail would be up 14%.

The ministry's representative pointed out that the inflation rate was to fall to 10-12% in 2003, whereas the corresponding government estimate for this year was 14%. Nonetheless, if these proposals by natural monopolies are accepted, the inflation rate can reach 13-15% in 2003. Therefore, experts of the Economic Development and Trade Ministry insist on limiting the rate of growth in natural monopolies' tariffs. Any increase in these tariffs should not lead to higher inflation, and these tariffs' contribution to the general inflation level should not be more than 3-4% a year. In this connection, the ministry suggests that gas prices should grow by not more than 20%. Moreover, experts of the Economic Development and Trade Ministry believe that such a rise would increase costs in the energy sector by only 5-6%. Additionally, the price of electrical power supplied from FOREM, as well as service charges of RAO UES should grow by not more than 14-16%, and the maximum rate of growth in railway fares for freight transportation should be 12-14%.

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