Limited bacchanalia

The President's ideas for curbing tariffs are only suitable for non-monopoly sectors of the economy

Vladimir Putin yesterday, at a meeting with members of the government, announced the need to stop the “orgy” when setting tariffs for transport, housing and communal services and communications. “The right to determine the size of tariffs in these areas should, of course, be given to the bodies of the constituent entities of the federation, but not higher than the limits established by the federal government,” the president said.

Nowadays, only electricity tariffs are set this way - i.e. the activities of energy monopolists are being regulated. However, in transport there is only one monopoly - the railway one, in communications - only Rostelecom, which provides long-distance and international communication services, and in housing and communal services all monopolies are local. Tariffs for non-monopoly types of services (phone subscriptions, transportation in public transport, etc.) are regulated in accordance with the presidential decree and government decree of 1995. Experts have no idea how everything can be unified at the federal level, especially in two years (and this is the period for which the president is making plans). Although they agree with Vladimir Putin that tariff reform is absolutely necessary.

Tariffs in the regions are growing at a high rate, primarily because, says the head of one of the private companies operating in the housing and communal services market, there is unsettled debt from previous years to service providers, as a rule, regional monopolists. At the same time, he believes, the only thing that can be done in this situation is to restructure this debt (approximately according to the same scenario as the restructuring of budget debt took place several years ago). But not for a year or two, since it is impossible to achieve anything in such a short period, but for eight to ten years, depending on the region and the size of this debt. And further regulation of tariffs will be carried out depending on the conditions of this restructuring. This will allow enterprises to plan capital investments in the quality of service delivery.

Tariffs will rise in any case, the entrepreneur believes. However, they will encourage the population to move away from the standardized volumes of services and switch to meters and zonal payment in transport. As a result, the poor will save and pay less (as an option, the local budget will subsidize them), and the rich will pay exactly as much as the service costs.

This can only be achieved if the government prepares a methodology for restructuring tariff debt, and locally it is adjusted depending on the conditions (since this is a matter of regulated entities --- as a rule, municipal enterprises, each of which has its own financial situation and its own volume of accounts payable , it is impossible to develop conditions for each of them from the center).

Vladimir Putin believes that the situation can also be corrected by structural reforms: “I instruct the government to prepare amendments to the legislation, and the regional authorities to substantively deal with the demonopolization of housing and communal services, the public transport and communications system. Monetization alone is not enough here... Without competition, only prices and tariffs will continue to increase, but not the quality and variety of services themselves.” However, it is clear that such measures can only change anything in non-monopoly segments (transport, communications, certain housing and communal services). For locally monopolistic types of services (heat supply, water supply, partly sewerage, etc.), these recipes are not suitable. On the other hand, the government has not yet been given instructions to change anything.

Nikolay GORELOV