Page 79 - RusRPTAug20

the beginning of April, the Federal Anti-Monopoly Service (FAS) published draft decrees on Gazprom’s regulated gas tariffs for the population and industrial users that envisage 3% tariff indexation from 1 July 2020. However, the decrees have not yet been signed, registered and officially published. When publishing the drafts, FAS proposed to the government not to raise tariffs for the population in 2020. During his press conference, the Head of FAS, Igor Artemyev, said that the discussion concerning the indexation of gas tariffs in 2020 was ongoing, but there was a high chance it would happen as it is part of the base case macro and government budget forecasts.
Russian petrol stations’ margins in Russia become negative due to wholesale motor fuel price growth in Russia. ​The Russian Motor Fuel Union (an industry union of independent petrol stations in Russia) has submitted a complaint to the Federal Anti-Monopoly Service (FAS) about high wholesale motor fuel prices and the disparity between retail and wholesale prices, Kommersant reports. The union is asking FAS to increase onexchange motor fuel sales and to expedite the lifting of the ban on importing motor fuel into Russia or, possibly, to introduce reference prices for small wholesale sales of motor fuel, as occurred in 2018.
Domestic gas tariffs for the Russian population are to rise 3% ​on 1 August, Interfax reports. The decree on this was officially published yesterday. The decision on increasing gas tariffs for industrial consumers has also been made, but the respective decree has not been passed yet.
The Ministry for the Economy thinks that it is feasible to lower Transneft’s oil transportation tariffs, while the Federal Anti-Monopoly Service, Ministry of Energy and the Ministry of Finance oppose such a step​, Kommersant reports. According to the MinEconomy, Transneft’s net profit margin, excluding the oil sale contract with China, is quite high (22.6% in 2019) for a natural monopoly and might be reduced to 5% by 2025 while lowering transportation tariffs for oil companies. At the same time, the Ministry agrees that such a step would negatively affect Transneft’s dividends. In response to this proposal, Transneft has commented that the Ministry’s calculations of the margin relate not only to the regulated part of the company’s business, while a 5% net profit margin would not be sufficient to provide an adequate return on capital investment.
9.1.2 ​Automotive sector news
The decline in Russia's car and LCV sales continued to moderate in June
against the backdrop of the gradual easing of coronavirus-related restrictions.
According to the Association of European Businesses (AEB), sales fell 14.6% YoY to 122,622 units in June (excluding Mercedes and BMW) vs. a 72% YoY decline in April and a 52% YoY decline in May.
During 1H20, sales were down 23.3% to 635,959 units (including Mercedes and BMW).
Despite some improvement, the market remains weak – especially given such supporting drivers as the pent-up demand, health security concerns and the government support. We forecast that the market will decline 18% YoY in FY20F.
79​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com