Consumer debt remains urgent problem affecting Russian gas market
The Gazprom Board of Directors reviewed the progress of the Company's efforts aimed at addressing gas debt repayment by Russian consumers and improving the payment discipline.
It was noted that the Company fully complied with its obligations to consumers. However, the gas debt of the Russian consumers continues to grow. In 2015, the total overdue debt increased by 19.8 per cent, from RUB 127 billion to RUB 152.1 billion; the gas payment rate decreased by 1.4 per cent to 96.2 per cent. The debt is held mainly by the population, heating companies, and electric power enterprises. Over 80 per cent of the debt is borne by the consumers of the North Caucasian Federal District (RUB 48.6 billion or 81.4 per cent of the total consumer debt in Russia as of January 1, 2016).
In accordance with the instructions received from Russian Prime Minister Dmitry Medvedev after the meeting held in October 2013, Gazprom signed schedules of major consumers' gas debt repayment with 31 constituent entities of the Russian Federation. These schedules were implemented only in four constituent entities, namely the Kaliningrad, Moscow, Ryazan and Voronezh Regions. Twenty-seven regions failed to implement the debt repayment schedules as of January 1, 2016.
In order to deal with non-payment effectively, Gazprom takes the necessary measures provided for in the Russian legislation. For instance, the Company had to reduce or disconnect the gas supply of over 10 thousand legal entities in 2015. The Company stepped up debt collection. In 2015, Gazprom filed lawsuits claiming RUB 99.2 billion, which was RUB 12.2 billion more than in 2014. The judgements were granted for the amount of RUB 73 billion. The litigation over the remaining debt continues.
Based on Gazprom's requests, law enforcement authorities initiated criminal proceedings against the officials of several delinquent companies with substantial arrears, among them TGC-2.
Gazprom continues to cooperate with relevant ministries, agencies and non-governmental organizations in order to improve the legislation regulating the obligations of energy suppliers and consumers.
More specifically, Federal Law No. 307-FZ on the Amendments to Individual Legislative Acts of the Russian Federation for Enhancing the Payment Discipline of Energy Consumers dated November 3, 2015, which entered into full force on January 1, 2016, was developed with due regard to the Company's proposals. The law provides for, inter alia, increasing the amount of the fine for non-fulfillment of contractual obligations relating to gas payments; authorizing gas suppliers to demand from consumers to provide bank, state or municipal performance guarantees in terms of gas payments; and strengthening administrative sanctions for unauthorized gas pipeline tapping.
Gazprom is currently assisting in the development of amendments to the existing regulations with the purpose of implementing the aforementioned law, addressing the causes of debt creation and decreasing the percentage of non-payers. The regulations to be amended include, among others, the Housing Code of the Russian Federation, the Rules regarding gas supply in the Russian Federation, and the Procedure for cutting off or limiting power and gas supplies to organizations in case of failure to pay for the delivered (consumed) energy resources.
The Gazprom Board of Directors instructed the Management Committee to continue working towards gas debt relief, better payment discipline of consumers, as well as cooperation with public authorities in order to improve the current Russian legislation regulating gas payments.