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Gazprom Puts Possible Tariff Freeze Losses at $16 Bln – Report

© Sputnik / Ilya Pitalev / Go to the photo bankGazprom Puts Possible Tariff Freeze Losses at $16 Bln – Report
Gazprom Puts Possible Tariff Freeze Losses at $16 Bln – Report - Sputnik International
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Russian state monopoly Gazprom says it could stand to lose 510 billion rubles ($15.8 billion) over three years if the government freezes domestic gas tariffs, Kommersant newspaper reported Monday, citing a letter from the company’s deputy head.

MOSCOW, September 16 (RIA Novosti) – Russian state monopoly Gazprom says it could stand to lose 510 billion rubles ($15.8 billion) over three years if the government freezes domestic gas tariffs, Kommersant newspaper reported Monday, citing a letter from the company’s deputy head.

The government is considering freezing tariffs set by state monopolies, including Gazprom and Russian Railways, in 2014 and keeping tariff growth at the inflation rate for 2015-2016 in the hope of boosting other industries, especially metallurgy, agrochemistry and coal production. The Economic Development Ministry expects inflation in 2013 to stand at 6 percent.

On Monday, Russia’s Kommersant newspaper published a report based on a letter it says Gazprom’s deputy head Andrei Kruglov sent the Economic Development Ministry, Energy Ministry and Federal Tariff Service on September 6, slamming the potential impact of this initiative.

In addition to slashing Gazprom’s projected revenues, a tariff freeze would cause layoffs of up to 70,000 people per year and cost the state budget 100 billion rubles ($3.1 billion) each year in lost tax revenue, Kommersant reported Kruglov’s letter as saying.

He also stressed that the benefits from any such freeze would be slim – cutting production costs by 0.3 percent, Kommersant reported, adding that Gazprom increases its domestic gas tariff 15 percent a year, the most recent hike taking place in July.

Kruglov also said that, as a result of a freeze, Gazprom’s investment program would contract by 407 billion rubles ($12.6 billion) over the period, the newspaper reported.

Gazprom would respond to any gas tariff freeze with a call for a freeze on the mineral extraction tax, currently set to rise from 602 rubles to 788 rubles per 1,000 cubic meters of gas by 2015, the Kommersant report said.

The Economic Development Ministry, Energy Ministry and the Federal Tariff Service did not respond to emailed requests for comment in time for publication.

 

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