The Gazprom Board of Directors reviewed the information about the strengthening of the financial discipline with regard to domestic gas supplies and about the Company's efforts aimed at addressing gas debt repayment.

It was noted that, as in previous years, the Company had fulfilled all of its obligations for reliable gas supplies to domestic consumers over the course of 2016.

However, the high level of the Russian consumers’ overdue debt for the gas delivered by Gazprom remains a pressing issue. In 2016, the total outstanding amount added some 6 per cent and reached RUB 161 billion as of January 1, 2017. Over 83 per cent of the debt is held by heating suppliers, the population, and electric power companies.

Gazprom implements a set of measures to improve the financial discipline. As a result, 2016 saw a marked decrease in the growth rate of overdue debt compared to 2015, when the growth rate stood at about 19 per cent.

Legal claims proved to be one of the most efficient measures taken by the Company. In 2016, Gazprom collected RUB 94.7 billion (an 18.7 per cent increase from 2015) as a result of court proceedings and transfers of debt claims. The Company continued to collaborate with law enforcement agencies and Russia’s Federal Bailiffs Service. The total amount of compensation received last year by Gazprom thanks to its cooperation with judicial bodies, law enforcement agencies, and executive authorities stood at RUB 146.3 billion.

In order to coordinate the joint efforts of the Company and Russian regions in improving the payment situation, last year Gazprom signed schedules for gas debt repayment with 24 constituent entities of the Russian Federation. The companies included in the schedules were supposed to cut their outstanding debt by RUB 10.9 billion. However, the completion rate for the schedules was as low as 29 per cent, with the debt cut by around RUB 3 billion.

It was noted at the meeting that Gazprom’s investments into regional gasification programs were determined on the basis of financial discipline and fulfillment of commitments by regional authorities on preparing consumers for gas supplies.

Gazprom continues to cooperate with ministries, agencies and non-governmental organizations to improve the national legislation governing consumer payments for gas. Specifically, the Company took part in the preparation of proposals for amendments to the Federal Law on Gas Supply in the Russian Federation and the Housing Code of the Russian Federation.

The Gazprom Board of Directors instructed the Management Committee to work further toward strengthening the financial discipline of consumers with regard to domestic gas supplies and addressing gas debt repayment.