Translated material
Tariff plan for Putin
The government of Viktor Zubkov will lay the foundation for high inflation in the coming years
The outgoing government of Viktor Zubkov will relieve incoming Prime Minister Vladimir Putin from the need to make unpopular decisions that affect the incomes of almost all citizens . Today it will make these decisions itself. Namely: tariffs for services of natural monopolies and housing and communal services, starting from July of this year, as stated by Deputy Minister of Economic Development and Trade Andrei Klepach, “will increase significantly.” But Vladimir Putin’s cabinet will have to fight inflation with the new tariffs.“We were not the initiators of these proposals,” Mr. Klepach made excuses for the cabinet. And he pointed his finger at the three main monopolies - Gazprom, RAO UES and Russian Railways. Nevertheless, the deputy minister explained that two ministries (the Ministry of Industry and Energy and the Ministry of Transport) particularly lobbied the interests of the monopolists, and the rest (including the Ministry of Finance and the Ministry of Economic Development and Trade) were forced to agree with the grain of truth that was found in this lobbying.
However, the deputy minister considered the merit of the financial and economic block to be not complete, but only partial satisfaction of the requests of natural monopolies. He said so: “If we had directly accepted the wishes of our monopolists, it would probably have caused a terrible reaction.” And so, according to Mr. Klepach, “the proposed dynamics of tariff increases are of a compromise nature.”
At some point, the official became confused, trying to explain which of the initiators of the sharp increase should be presented as the “main monster.” But then, apparently, he decided that the head of RAO UES, Anatoly Chubais, didn’t care, because he was leaving his post in July due to the dissolution of the company (while the chairman of the board of directors of Gazprom, Dmitry Medvedev, was elected president, and the head of Russian Railways, Vladimir Yakunin, is listed as a friend future Prime Minister Vladimir Putin - it will be awkward).
“Electricity tariffs were adjusted most of all,” Mr. Klepach began the story of the new sad figures. According to his estimates, in four years (until 2012) the forecast for electricity prices will double. For the population, prices will increase in the following proportion: in 2008 - by 14% (as planned), in 2009 - by 25% (instead of 15%), in 2010 - by 25% (instead of 18 %), in 2011 - by 25% (this figure has not yet been calculated in the plan). In other words, a housewife can budget for 2011 a figure that is 2.5 times higher than her current electricity bill.
As Mr. Klepach recalled, from 2009 the state will regulate only heat energy tariffs in the housing and communal services sector, the rest will be left to the regional authorities. And this is a new plus to the expenditure side of the home budget.
For those passengers who travel in reserved seat carriages, the increase in tariffs will remain within the previously approved limits: in 2009 - by 13%, in 2010 - by 12%, in 2011 - by 14%. But freight traffic, which on April 1, 2008 had already increased by an additional 1%, will increase by another 8% from July 1. Which in a year will give growth of 16.3% instead of the planned 11%. In 2009, growth is expected to be 17.1-18.7% (instead of the previously projected 9%), in 2010 - by 9.7-13.7% (8%), in 2011 -- by 10--14%. “I think we will have a conversation around the lower limit of the tariff,” Mr. Klepach hoped. But, apparently, such an increase does not seem satisfactory for Russian Railways. And the company, as usual, argues for further increases with the most humane goals: to repair rolling stock, reconstruct roads so that citizens do not get into accidents, and increase wages for their sometimes-on-strike workers. And all this is either at the expense of the budget or at the expense of the tariff. Russian Railways promises discounts, for example, when transporting grain - 50%. And also for cement, crushed stone and other scarce materials. Under a separate agreement. Apparently, this is why Mr. Klepach is almost sure that “this increase in tariffs for freight transportation does not create any critical costs for the economy.”
In the area of regulating gas prices, the Ministry of Economic Development proposes to the government (and it seems that it has managed to convince the country’s leadership that it is right) to abandon the decisions made in November 2006. Instead of an unconditional transition in 2011 to determining the price of gas for industrial consumers according to the formula of equal profitability with export supplies, written in five-year contracts with Gazprom, there will be “only” an indexation of 40%. As Mr. Klepach explained, “what is expensive must be expensive.” True, now no one - neither the Ministry of Finance, nor Gazprom - can answer how expensive gas may cost in Europe in three years. If the European price (tied to the cost of a basket of petroleum products) remains at least at this year’s level, then according to the equal profitability formula, Russian industrialists would have to pay no less than $250 per thousand cubic meters. This would mean at least a twofold increase compared to 2010, which was previously considered the last year in the growth chart of regulated prices. Therefore, according to Mr. Klepach, the government decided to play it safe and not completely lower gas prices.
The bargaining chip in the bargaining with Gazprom, which insisted on the unconditional implementation of previously adopted decisions, was the accelerated increase in gas prices for the population. They will increase even faster than for industry. So, in 2009 they will grow by 25% (for industry by about 22%), in 2010 - by 30% (by 21%), and in 2011 - by 40%.
And this is not the entire “tariff plan” for the coming years. The increase in tariffs for the provision of local telephone connections, taking into account the fee for the subscriber line, in 2009 will be 7.5%. In 2010 and 2011, tariffs are planned to increase by 6% annually. At the same time, there are no plans to change tariffs for long-distance communication services, and prices for intra-zonal connections are even expected to be reduced annually by 3%. The cost of installing a telephone is also expected to be reduced by 10% annually. The government proposes to change tariffs for these services in the second half of the year preceding the next regulation period.
In addition, the government intends to increase tariffs for communication services for the distribution of all-Russian television and radio programs by 15% in 2009, by 6.5% in 2010, and by 6.5% in 2011. The last time the main monopolists in the field of fixed communications - interregional companies of the state holding Svyazinvest - revised tariffs for local telephone communications was on February 1, 2007, when three mandatory tariff plans were introduced for citizens.
According to Mr. Klepach, increasing tariffs for the services of natural monopolies in this form will not give the largest increase in inflation. In 2009, this share will be at least 1.2%, in 2010 - 0.6%, in 2011 - 1.3%. Mr. Klepach considered it necessary to remain silent about the upper limit of the possible “contribution” of monopolists to price increases. Given the scale of the discrepancy between reality and government inflation forecasts, this silence seems completely natural.