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. Last Updated: 07/27/2016

Come On Guys: Play Fair

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At the end of last year President Vladimir Putin had a bone to pick with Railways Minister Nikolai Aksyonenko: "Nikolai Yemelyanovich, you know that rascals are abusing your export tariff." Rumor has it that Putin wouldn't have said anything about the tariff if Aksyonenko's relationship with Siberian Aluminum boss Oleg Deripaska had not begun to sour.

At that time the cost of shipping by rail varied according to destination: Domestic shipments were charged one rate, payable in rubles, while those bound for export were charged an international rate, which was three times higher. Commands came down from the highest levels to remedy the situation, and a federal interagency tariff commission headed by Deputy Prime Minister Viktor Khristenko made it happen. As of Aug. 1 the railways will charge a single rate for cargo shipments.

As a result of the new unified tariff, the Railways Ministry reckoned that it would lose 19.8 billion rubles ($675 million) in revenue this year. And naturally the ministry decided to make up the difference. Rail shipping rates rose on average by 21 percent. For his role in initiating tariff liberalization, Deripaska earned the ministry's special attention: Domestic rates for aluminum producers doubled overnight. Soon angry letters from aluminum industry "workers" appeared in the Kommersant and Vedomosti newspapers. These workers — actually the managers of factories controlled by Oleg Deripaska — protested the excessive new tariff.

The loss of 19.8 billion rubles in revenue is a serious matter, of course. But there is reason to suspect that the Railways Ministry is losing money for reasons not linked to the Khristenko commission. There are, for instance, the so-called "operator companies" attached to the Railways Ministry — Iriston, Yunitrans and Evrosib, to name but three. Evrosib is run by the minister's nephew, Sergei Aksyonenko. This retinue of operators enjoys a discount rate — as high as 40 percent — on rail shipments. But this has never been counted as lost revenue.

And such special rates are extended not only to the "operator companies." According to the Audit Chamber, average discounts last year amounted to 40 percent on coal shipments, 70 percent on coke, and 40 percent on ferrous metals. The official explanation is that these discounts are granted "to support domestic producers," but industry insiders say this support is really an incentive used to secure new shipping contracts. Others tell how "operator companies" approached them and offered to let them share in their huge shipping discount in exchange for kickbacks.

The discount, then, is a financial instrument for transforming friendly relations between shippers and the Railways Ministry into a source of under-the-table income. The "operator companies," in turn, are simply a means of carving up the shipping industry: Private operators collect the revenue, and the Railways Ministry carries the expenditures.

If discounts in this scheme are the carrot, then the shortage of rail cars is the stick. If a shipper doesn't play ball, the trains don't show up. If he buys his own cars, they wind up on a siding somewhere.

I can understand why Deripaska's relations with Aksyonenko went south. It would appear that the appetite of companies friendly to the Railways Ministry was so voracious that Russian Aluminum couldn't get the discount dictated by its size and stature. And Oleg Deripaska has an old habit: If the game isn't lucrative for him, he calls on everyone else to play by the rules.

Deripaska got a crash course in how the Railways Ministry works last year during a sudden shortage of rail cars at the Novokuznetsk Aluminum Plant. As it happened, Siberian Aluminum at that moment was trying to acquire the Novokuznetsk plant, and Roman Abramovich was trying to keep the company out. Now something has to give: Either the aluminum producers will start having shipping problems or Aksyonenko will lose his job.

It's surprising, all the same, that instead of quietly reaching an arrangement with the ministry, Deripaska has launched an attack in the mass media — a losing gambit in a country where the president never makes decisions based on public pressure and corruption is no cause for government officials to step down.

Yulia Latynina is a journalist with ORT.