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. Last Updated: 07/27/2016

UES, Railways Ministry Trade Blows

Electricity supplies to indebted railroads across Russia will be cut off unless the Railways Ministry pays Unified Energy Systems 3.5 billion rubles ($126 million), UES said on Friday as a war of words between the two bodies escalated.

The ministry disputes the amount it owes the national power grid, but UES insists the ministry keep an agreement it signed Jan. 26 that obliges both companies to pay on time and in cash.

"Their debt has increased by 2.4 billion rubles and reached 3.5 billion rubles since then," said UES spokeswoman Tatyana Milyayeva.

"Their debt alone is enough for us to buy up to 2.5 million tons of fuel oil for our power stations, which is almost enough to survive through the winter," she added.

In July, UES said it would teach its 7,500 debtors scattered throughout Russia by turning off power in order to recover debts of 140.5 million rubles. UES said it owes its own creditors about the same amount of money as it is owed.

According to UES, by July 1, municipal organizations in Russia owed UES 22.4 billion rubles, federal organizations owed 15.5 billion rubles and companies that resell energy owed 32 billion rubles.

Since then, a Far East hospital reported a newborn baby died because a hospital had no power; cargo trains this week had to be pulled along a section of the Trans-Siberian Railroad by coal-fired locomotives in the Zabaikal region because 300 kilometers of rails were left powerless and 10,000 passengers were temporarily stranded near Omsk in their trains.

The Railway Ministry suffered bitterly: For several days this week, some regional railway companies have had no electricity.

Their losses amounted to more than 100 million rubles, Deputy Railway Minister Alexander Misharin said Friday at a news conference. Misharin denied the ministry owes 3.5 billion rubles to UES, saying the debt is only 500 million rubles. Turning off electricity for the regional railways "is unlawful," he said, adding that the ministry had appealed to Prime Minister Mikhail Kasyanov to make sure trains keep running.

Misharin said the ministry had paid UES 6.8 billion rubles in the first half of the year. He did not say how much it was supposed to pay.

UES’ Milyayeva said the holding’s regional subsidiaries are in a difficult situation because of the "parasite attitude" of some consumers, who just don’t pay because they can get away with it.

Arkhenergo, which supplies power to Arkhangelsk, said Friday in remarks reported by Prime-Tass, that because of unpaid bills it has no stock of fuel for the winter, which starts in the northern region in six weeks. Clients owe it 3.18 billion rubles ($114 million), it said.

Milyayeva said most of those threatened by UES clients paid "either immediately or just after their electricity was turned off for the first time."

"We are not declaring a war. We just want them to pay. And we know they have the money. Railways Ministry profits were 116 billion rubles [$4.2 billion] in the first half of this year," Milyayeva said, referring to a report by Railways Minister Nikolai Aksyonenko’s on results for the first half of the year.

However, Aksyonenko was not reporting the profits but income of 116 billion rubles, which, he said, was 60 percent higher than in the same period of 1999.

The Railways Ministry traditionally does not report its profits, and spokeswoman Yelena Kulakova said in July, "It is secret information."

Kulakova said the ministry expects losses of 32.7 billion rubles ($1.2 billion) by year-end because tariffs on cargo and passenger transportation are set by the Anti-Monopoly Ministry and they are too low to cover costs.

The result of the opposition between the nation’s two biggest monopolies is yet to be seen: The ministry’s Misharin said a meeting Tuesday with UES will settle the dispute. But UES’ Trapeznikov said no preliminary work had been done on the agreement.