Energy Tariffs To Grow in Russia

The Russian economy does not stand still

It seems that dollar and euro fluctuations, the unexpected strengthening of the Russian ruble have made Russian people forget about all other economic problems. However, the economy does not stand still. President Vladimir Putin sent a budget message to deputies, Vice Prime Minister Aleksey Kudrin started pre-budget consultations with "all interested sides," the government limited natural monopolies' tariffs growth. Georgy Krutovoy, the head of the Federal Energetic Committee, supported Anatoly Chubais's (the head of the energy giant RAO UES of Russia) suggestion to set fixed tariffs on electric power for three years in advance. This measure is allegedly supposed to become convenient to everyone.

Georgy Krutovoy expressed his opinion at the second international conference for energy markets. "Precise obligations of energetic companies will let industrial companies develop certain reliable plans. If RAO UES of Russia and the Russian government conclude such a contract, it will exert a stabilizing influence on the economy," the head of the Federal Energetic Committee stated.

This brings up a question, why the country's economy "needs more stabilization." Moreover, President Putin has recently urged to "strengthen" and "tense" everything. A stability will not double the GDP - that's a fact. In addition to it, the stability of energy tariffs will most likely be of the uneven character. The Russian government has already determined the limit for natural monopolies' tariffs growth in 2004. Natural gas prices may gain 20 percent, electric power prices may grow by 16 percent and the railway freight transportation may become 12 percent as expensive.

These limits mean that Russian industrial enterprises will have to save more patience, taking into consideration the fact that natural monopolies mentioned the increase of prices on the level of 30 percent. Yet, the economic situation does not stand still. Imports have been growing lately, and the government is ready for anything to restrain consumer prices in order not to let the home market collapse. Therefore, the spending can not reduce under such conditions - it can only grow.

Russian Focus news agency reported with reference to the conclusion of the governmental center for the economic conjuncture, that there could be four inflation periods traced in the new Russian history. In January 1992 - December 1994, natural monopolies' tariffs were growing a lot faster than the prices of industrial production manufacturers. The increase of industrial production prices and energy tariffs were balanced during January 1995 - August 1998. The Russian government restrained the growth of energy tariffs in August 1998 - December 1999. Energy tariffs have been growing again since 2000. Governmental analysts believe that Russia will have to experience the same situation as it was in the beginning of the 1990s. Although, history will probably repeat itself as a tragedy this time.

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Author`s name Olga Savka