Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Miners Demand Subsidies in Court Action

Russia's miners took court action Wednesday in order to make the government pay subsidies that they say the coal industry needs to survive in the wake of the freeing of coal prices.


The Russian Miners Union appealed to the Moscow city court Wednesday, asking it to force the government to honor a deal on subsidies struck with unions in February. A decision is not expected for at least a week.


President Boris Yeltsin signed a decree earlier this month freeing coal prices from July 1 in a move designed to earn Russia's struggling coal mines extra income.


The government also agreed to pay miners 50 billion rubles ($46 million) in back wages but Ivan Mokhnachuk, deputy chairman of the Russian Miners Union, said in court that the government still owed 2. 5 trillion rubles.


The government, led by Finance Minister Fyodorov, has resisted miner's demands for extra subsidies as part of a campaign to reduce the budget deficit for 1993.


But industry sources claim that the freeing of coal prices will boost inflation, raising costs in the power generation, metallurgy and transport sectors.


Last week chairman of the Russian Coal company Rosugol, Yury Malyshev, said that coal prices could easily go up five times which would increase electricity prices by two and a half times and double oil prices.


Mokhnachuk predicted only about 30 percent of the best-equipped mines would survive after prices are freed. But he said that in many cases it would cost the government more to close down mines than to continue subsidies because it was committed to rehousing and retraining coal miners.


He also said that a new 3-percent "coal tax" contained in the budget submitted to the Russian parliament Wednesday would cover only half the costs of restructuring the industry.