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. Last Updated: 07/27/2016

Fuel, Rail Price Cuts Proposed

COMBINED REPORTS


Russia's Fuel and Energy Ministry sent a draft resolution to the cabinet Thursday to cut gas, power and railway tariffs with the aim of boosting tax revenue.


"We think that the rate of price rises for power and services of other natural monopolies, primarily railway transportation, does not correspond to the interests of national economic development," Fuel and Energy Minister Pyotr Rodionov told a news conference.


The draft plan provides for a 15 percent cut in gas prices, a 20 percent cut in electricity prices and up to 20 percent cuts in railway transportation charges, he said.


Rodionov said a fall in prices would make consumers more likely to pay and help untie the knot of non-payments crippling Russia's economy, and thus raise tax payments.


"It will not, of course, solve all problems, but this is the first necessary step to change the trend in the national economy," Rodionov said.


He said the economics and finance ministries fiercely opposed the draft plan, while the national gas monopoly Gazprom, the national power grid Unified Energy Systems and the Railway Ministry supported the plan.


Rodionov said the energy sector was both the biggest contributor and the biggest non-payer of federal taxes.


Oil and gas enterprises had paid 51.4 trillion rubles of taxes so far this year, slightly ahead of projections and more than 70 percent of all budgeted revenues from industry, the minister said. Otherwise, industry and agriculture had paid only 19 trillion rubles of a targeted 70 trillion rubles, he said.


But Rodionov said the energy sector's non-payments amounted to 25 trillion rubles, including 15 trillion rubles in fines.


Other enterprises owe oil and gas companies a total of 300 trillion rubles, twice the amount at the start of the year, Rodionov said. (