Transneft’s tariffs to grow only by 5.76%

The Russian FAS has decided to earn a reputation of a hard regulator by its first tariff decision: the tariff of Transneft will be increased by only 5.76% in 2016. It is even less than the lower limit of the discussed range. Now Transneft will think for three weeks about where it can take funds to expand ESPO, under which Rosneft has already concluded contracts with the Chinese. According to analysts, the state-owned company will have to either cut other expenses, or increase the debt.

Tbe FAS has decided to index the rate of Transneft for oil pumping by only 5.76% in 2016, the Service reported to the Kommersant and this was confirmed by Transneft. The indexation was below the darkest expectations of the state-owned company, because until now the rate growth by 6.12% was considered as the lower boundary, while Transneft itself wanted 10.7%. According to the Kommersant’s information, the logic of the FAS was in the fact that according to the government decree dated March 2014 the company’s rate should be indexed by 90% of the expected inflation. Recently, the Ministry of Economy decreased its inflation forecast for 2016 from 6.8% to 6.4%, so the rate will increase less. The company itself stresses that in 2015 the inflation was expected at the level of 7.5%, and in reality it will be 12.2%, i.e. the rate should be indexed according to the actual inflation rate.