Russian minister comments on higher rail, electricity charges
Rises in railway freighting charges and electricity prices to be in effect from 2008 under new Russian government regulations, will undercut the profits of Russian enterprises, Economic Development and Trade Minister Elvira Nabiullina said according to Interfax.
Revised natural monopoly tariffs approved at a government meeting on Tuesday, mean electricity prices in both the regulated and free markets will rise by averages of 16.7% in 2008, 26% in 2009, 22% in 2010, and 18% in 2011.
The meeting also raised rail freighting charges 8% with effect from July 1. This means freighting charges will go up by an average of 16.3% for 2008. Railway transportation is carried out by monopoly company Russian Railways (RTS: RZHD).
Higher electricity prices would deal their heaviest blow to the production of aluminum, to manufacturing - to sectors such as the chemical industry and production of ferroalloys and cement - and to poultry farming, Nabiullina said in a report to Tuesday's meeting.
The increased railway charges would have their heaviest impact on sectors such as coal and ore mining, the timber industry, construction, and the chemical industry.
However, all industries would be affected, the Economic Development and Trade Ministry argued.
In low profitability sectors such as woodworking, agriculture and the chemical industry, 2011 profit rates would be 0.7 percentage points down on 2007.
High profitability sectors such as production of coke, nonmetal and mineral goods and the steel industry would show a respective decline of 0.8 percentage points for this period.
At the same time, the higher charges would become a powerful energy-saving stimulus, the ministry argues.