Tariff Freeze Winners and Losers

RUSSIA ENERGY / FINANCE - Report 19 Oct 2013 by Marcel Salikhov and Leonid Grigoriev

Executive Summary Next year, for the first time in 15 years, the Russian government will freeze gas, electricity and rail transport tariffs. The so-called “inflation minus” formula will drastically alter the rules for setting regulated tariffs over the medium term. Although this could trigger a decline in capital investment in infrastructure, and hurt investment in general, it’s a crucial departure from the drumbeat of constant indexation. The decision to freeze tariffs in 2014, and efforts to limit their growth thereafter, will produce both winners and losers. Companies in machine-building...

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