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Private debt in domestic market reaches RUB 179 billion

Release

The Gazprom Board of Directors Commission on Strengthening Financial Discipline for Domestic Gas Supplies held its first meeting today.

It was noted that the growth in outstanding debt payable to Gazprom by consumers remained one of the most topical issues in the Company’s domestic activities. From January through July 2017, the aggregate outstanding debt for gas deliveries due to non-payments had added RUB 18.2 billion, reaching RUB 179 billion.

Over two-thirds of the debt was accumulated by private consumers and heat supply companies. At the same time, most generating companies uphold the principles of the financial discipline. In the first seven months of 2017, those consumers repaid RUB 6.5 billion of their outstanding debt, reducing it to RUB 12.6 billion.

The meeting reviewed a number of measures aimed at improving the financial discipline for domestic gas supplies. It was stressed that the legislative measure to increase the tax fine had caused gas payments to nearly triple in case of consumers who had used the accounts payable to the gas provider as working capital. Also effective are administrative sanctions against the non-payers who refuse to limit their gas consumption.

In addition, financial discipline benefits from cuts in Gazprom’s investments into gasification programs for delinquent regions.

“Over the past 12 years, Gazprom invested RUB 292.5 billion into regional gasification programs. Those are direct investments the Company made to develop Russia’s regional economies and improve people’s quality of life.

However, the growing debt defeats the purpose of further investments into regional gasification programs, as new gas infrastructure could generate new debt. This is why the socio-economic development of many Russian regions hinges on whether their authorities can promptly handle the issue of non-payments for gas,” said Viktor Zubkov, Chairman of the Commission and of the Gazprom Board of Directors.

The Commission commended the Company for its joint efforts with ministries, agencies, and NGOs aimed at streamlining the Russian legislation concerning gas payments and outlined the steps Gazprom could take to make its cooperation with executive and legislative powers more efficient, as well as additional measures to combat non-payments.

Background

The Gazprom Board of Directors made the decision to create the Commission on Strengthening Financial Discipline for Domestic Gas Supplies in the Russian Federation on July 14, 2017.

Viktor Zubkov, Chairman of the Gazprom Board of Directors, and Alexander Babakov, Member of the Federation Council of the Federal Assembly of the Russian Federation, were elected as Chairman and Deputy Chairman of the Commission, respectively.

The Commission was established for the additional coordination of efforts undertaken by Gazprom to improve the situation with regard to payments for gas deliveries. The new body monitors consumer debt in Russian regions and develops proposals and measures for debt reduction.

The Commission operates on a permanent basis. Its findings will be regularly reviewed by the Board of Directors.

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