On the transfer to long-term transport and energy rates, and on natural gas pricing using commodity exchange mechanisms and an e-trading platform

The implementation of methods aimed at regulating long-term energy rates has enabled power supply networks to raise over 250 billion roubles in borrowings to finance their investment programmes.

Furthermore, the Government has approved the Strategy for the Development of the Power Supply Network, which covers the period up to 2030, includes a timetable for issuing regulations regarding its implementation and is aimed at improving long-term tariff regulations.

The Government is also devising a new model for the energy (capacity) market, which is expected to make it possible to make long-term forecasts of energy prices.

The transfer to long-term tariff setting practices in rail shipments within the framework of the Action Plan to Introduce Five-Year Rail Freight Rates involves analysing the potential output of the Russian economy, evaluating output volumes for the key cargo-generating industries and the potential demand on Russia’s target export markets, taking into account the plans of competing countries.

In addition, a model has been devised for regulating long-term tariffs for cargo shipments, which is based on the following principles: tariffs shall be set for a period of at least five years, tariffs shall be based on the investment programme of Russian Railways , which amounts to 2.7 trillion roubles until 2018, and the ROI (return on investment) method shall be used to guarantee the repayment of borrowings contracted for carrying out the investment programme.

Amendments to rail shipping regulations shall be based on the proposed principles, which will pave the way for introducing long-term rail shipping tariffs for a long-term period of at least five years starting 2014.

With regard to pricing natural gas using commodity exchange mechanisms, the Government is making the necessary efforts to launch the gas trading exchange. For instance, the Ministry of Energy is drafting a roadmap to promote gas trading exchange with input from federal executive bodies, representatives of commodity exchanges and gas producers.