Gazprom Gives Russians the Lowest Tariffs in 14 Years
The Federal Antimonopoly Service of Russia (FAS) has decided that, from July, household gas is to rise in price by 3.9 percent. It sounds a lot, but if you "divide" this throughout the whole year, it turns out that the growth of the tariff will be lower - 1.8 percent.
Whatever the grannies say in their entrance-hall gossip sessions, Russians have not seen such a low price growth in at least the last 14 years. According to the Gazprom data, the last time wholesale prices for gas were so raised was in 2002 - by 1.6 percent.
In December, monopoly supplier came out with predictions for the next few years: “tariffs will grow by 3-3.5 percent per year,” Andrei Kruglov, Gazprom's Deputy Chairman of the Board, told journalists. The company's recent calculations confirm this and the documents they submitted are already being approved by the Ministry of Economic Development. In 2018, the cost of "blue fuel" will increase by 4 percent, and in 2019 - by 3.3 percent. For industrial consumers, including large gas thermal power plants, the increase in the cost of gas will be identical, says Gazprom.
That said, the calculations prescribed by Gazprom are still too early to be sure: by law, the FAS and its territorial associations are engaged in establishing tariffs for housing and communal services. Therefore, the size of the value must be coordinated with them accordingly. The service itself, however, has always been on the consumer’s side, guided by the rule "inflation minus". In all likelihood, the growth of tariffs will be lower or equal to the proposal of Gazprom.
The growth of the wholesale price for gas is planned to be slightly higher - by 3.4 percent in 2018 and by 3.1 percent in 2019.
If Gazprom’s proposals are approved, gas will rise in price more slowly than other goods and services - according to forecasts of the Ministry of Economic Development of the Russian Federation, the future will see inflation drops of 4.5 percent (2018 ) and 4 percent (2019). Other basic utilities, such as heating, water supply and electricity, will grow at the level of inflation - in 2017 by 4.9 percent, in 2018 - by 4.4 percent, and in 2019 - by 4.1 percent.
“Last autumn, Gazprom had a long polemic with the government and demanded a tariff increase above inflation. The fact that the company itself is offering a tariff lower than inflation is a victory for the FAS in the hardware battle with the largest of the resource holders,” notes director of the Energy Development Fund, Sergey Pikin.
It is unlikely that such a generous offer can be associated with difficult times in the economy - they have always been difficult. Since the middle of 2015, when it began functioning as a tariff regulator, the FAS has been struggling with the issue of tariffs, “as such the victory over Gazprom was, of course, was very important [for them],” Pikin said.
“In Europe, as in Russia, there has been a tendency to lower gas prices,” notes leading analyst at Gas Infrastructure Europe, Bradley Barron. “However, the reasons for this are different - the fall on gas prices following oil [gas prices react to oil quotas with a delay of 6-9 months] reduces the cost of gas for the population by 10-20 percent”.
In future, though, prices are still expected to grow: the share of imports is growing, as are oil prices, so it must be expected that over time, gas prices for EU residents will go up. “This happens not of importers’ will, or that of the primary gas suppliers; it happens because of the EU authorities - about 60 percent of the price of gas is taxed,” Barron says.
Russia, however, will unlikely face such growth - the Federal Antimonopoly Service (FAS) looks at tariffs more strictly than the more flexible Federal Tariff Service (FTS). “It is hardly worth expecting that not only in the next three years, but in general in the foreseeable future, we will return to the same furious rise in gas prices,” Pikin concludes.
Dimitri Dolaberidze