December 02, 2008

Rail and electricity charges to go up in Russia

Interfax reported that 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.

Mr Elvira Nabiullina economic development and trade minister of Russia said that the revised natural monopoly tariffs was approved at a government meeting, 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.

Mr Nabiullina in a report said that 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. He added that 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.

He added that high profitability sectors such as production of coke, nonmetal and mineral goods and the steel industry would show a respective decline of 0.8% points for this period.