Barter Use Triples for Gazprom Customers

Beset by higher tariffs, consumers are finding it increasingly difficult to pay for their natural gas in cash, reversing a three-year trend, government statistics show.

While gas monopoly Gazprom's revenues are on the upswing, a greater share of those receipts is being paid through mutual cancellation, barter and veksels, or promissory notes.

Barter payments tripled from July to August, according to State Statistics Committee figures issued this week. The proportion of veksel payments increased 58.2 percent, and mutual cancellation of debts increased 11 percent.

However, it is unlikely that these numbers point to a trend, a Gazprom spokesman said Thursday.

"The share of barter is very tiny in any case," the spokesman said. "It could very well be that one large settlement caused such a sharp rise in the figure."

As Russia's largest company and taxpayer, Gazprom is watched by analysts as a barometer for the health of the economy. Not only would a continued drop in cash payments have consequences for the company's liquidity, it would place a question mark on the government's ability to carry out natural monopoly reforms.

Wholesale gas prices, which are state controlled, have risen 38 percent this year, and a 20 percent hike is scheduled for 2003.

Cash collections, which deter corporate fraud, rose under the new Gazprom management, installed by the Kremlin in 2001. Gazprom's cash collections have risen from 15 percent of total receipts in 1997 to 82 percent in 2001.

"[We do] not want a repeat of what happened in 1996 and 1997, when collections fell as a result of high gas prices," said Adam Landes, a gas analyst at Renaissance Capital.

Recent collections have exceeded 100 percent, meaning that old debts are being paid off, Landes said. Management, however, has not said what percent of these payments are done via barter.

Lower cash collections do not necessarily mean that consumers do not have the ability to pay higher tariff rates, said a source close to Gazprom, 38 percent of which is owned by the government.

Astrakhan, Kursk, Lipetsk, Moscow, Ulyanovsk, Nizhny Novgorod and Chelyabinsk regions have lower than average rates of payment for natural gas.

"This is strange," the source said. "In southern Russia, per capita income is higher than in central Russia, but payment levels are lower. First of all, this points to poor collection techniques on the part of local resellers. And second, it shows the federal government's politicized approach to certain regions where it wants to maintain the loyalty of the population and the local elite.

"In these cases, the government just chooses not to exercise its right in limiting gas supplies."

There are also other more banal reasons for non-payment.

Government agencies and organizations budget the costs for their gas usage based on a certain price. If this price rises during the year, they have no recourse for further funds.

"Here, there is an easier solution," the source said. "It would be nice to know what the price increases are going to look like one year ahead of time. Five years would be even better."