Page 149 - RusRPTJan23

RZD is struggling financially and had to be propped up by the federal government with RUB300bn ($4.7bn) earlier this year (with an additional more than RUB200bn capital injection planned for the near future). Never mind the urgent need to expand its capacities in the Far East, into which it is planning to invest more than a trillion rubles in 2023, reports FPRI BMB.
The expansion of export infrastructure to the East is a priority, but the federal government is eager to offload part of the burden on regions, highlighting the frictions between federal and regional governments and businesses that sanctions create.
In the second week of December, the government recommended that the Irkutsk and the Kemerovo Regions increase electricity tariffs for industrial users. Kemerovo has already done so (from 9 to 14%). The proposal can be regarded as a sort of “hidden taxation,” shifting part of the burden of Russia’s “eastern pivot” to businesses. This can further hinder the recovery of energy intensive industries and predictably trigger opposition from businesses. In order to help balance RZD’s books, train tickets for passengers will also become more expensive in January (after several price hikes earlier this year).
The Ministry of Industry and Trade is considering various options for measures to reduce the tariff burden on metallurgy. According to the deputy minister, now the situation in the industry is improving significantly: compared to June and July, the average metallurgical capacity utilisation has increased from 80% to 87%, including at the largest plants, which had around 65% utilisation in June. Evtukhov stressed that the constant indexation of Russian Railways tariffs, including the maintenance of an 8% export surcharge, "imposes an additional financial burden on the industry."
Since 2013, Russian Railways has been able to independently, without applying to the Federal Antimonopoly Service (FAS), regulate the level of tariffs for cargo transportation within the so-called tariff corridor. Within its framework, the maximum level of the surcharge on the freight rate is 10%, and the maximum discount is 50%.
A source in the metallurgical company told Vedomosti that in mid-November, First Deputy Prime Minister Andrey Belousov outlined the need to support non-commodity non-energy exports as a priority.
Vedomosti's source in the railway operator noted that the company supports the initiative, since the high transport component does not allow an increase of the exports of metals to the east. According to him, in 2023, without subsidies, loading could be reduced by 10-14%.
According to Russian Railways, loading on the networks in October 2022 fell by 3% y/y to 107mn tonnes. In the first ten months of 2022, 1bn tonnes were
149 RUSSIA Country Report January 2023 www.intellinews.com