Long term pricing for the services of natural monopolies will make it more difficult to manage them 'manually'

3 november 2016 | Rossiyskaya Gazeta

The rates for the services of natural monopolies are to be set at least for 5 years in Russia. That is the principle at the basis of the new core law being prepared by the Federal Antimonopoly Service. The Ministry of Economic Development backs the proposed reform as well. Rossiyskaya Gazeta decided to get some expert input on the issue.

Tatiana Radchenko
Tatiana Radchenko
Deputy Head

Deputy Head of the Analytical Center Tatiana Radchenko points out the development and investments planning horizon extension as one of evident benefits of the long term pricing for the services of natural monopolies both for natural monopolies and industrial companies that buy their services. This is especially true for companies for which the services of natural monopolies make up a major part of their production costs. “However, if the government is consistent in adhering to this principle, it may significantly reduce the ability of the overall system to adapt to various macroeconomic shocks, such as the fall in prices on the domestic and international markets or downturn in industrial output,” she told the newspaper.

It would also make it more difficult, in her opinion, to manage natural monopolies in 'manual mode'. “For example, the sort of freezing of rates across the board or for specific types of consumers of the kind we saw in 2013 and 2014 would be extremely difficult to pull off,” Ms. Radchenko explains.

Source: Rossiyskaya Gazeta