ELENA FILASHINA PRESENTED A REPORT “ON THE STATE OF COMPETITION ON THE AGGREGATES MARKETS”
The Economic Commission of the CIS Economic Council had a meeting on 6 May 2018 in Moscow at the CIS Executive Council
Deputy Head of FAS Department for Industry Control, Elena Filashina presented a Report “On the state of competition on the aggregates production markets in the CIS member-states”, drafted in accord with a decision of the 41st session of the Interstate Council on Antimonopoly Policy (ICAP).
She said that the purpose of the Report was to identify problems and restrictions with regard to market performance and their solutions, as well as possible violations of the antimonopoly law.
Deputy Head of FAS Department for Industry Control emphasized the significance of aggregates: “It is one of the most important base markets of construction materials, satisfying the needs of several sectors (production of ready-mix concrete, reinforced concrete structures, asphalt concrete) and the construction complex (housing construction, construction of non-residential and infrastructure facilities)”.
The Report analyzed the laws of the CIS member-states regulating the market and the state of competition on it. Significant differences were revealed between government regulations of these markets. For example, in Kyrgyzia and Kazakhstan, the rights of use are granted based on direct negotiations, which is prohibited in Russia.
The survey also exposed some competition development issues. The main reasons of inefficient use of mineral resources base and underperformance of aggregates markets include: limited resources, unauthorized extraction, administrative restrictions related to licenses for opening a particular deposit (it takes up to three years to obtain approvals), as well as inefficient work of the authorities – absence of transparent tendering for subsoil users, failure to organize auctions in spite of free subsoil areas, and involvement of the state in the person of enterprises subordinate to local executive bodies. The main barrier for expanding, particularly, cross-border trade is a high share of transportation costs.
Competition on the aggregates markets will be facilitated, in particular, by modernizing regulation: first of all, determining subsoil users only through competitive bidding – tenders and auctions. The system of competitive selection of subsoil users should be transparent. Second, stimulating small and medium business on such markets through large infrastructure projects also will be essential.
“All over the world, digital technologies and practices are being actively integrated in the real sectors of the economy. Aggregates should not be left aside. Big volumes of information will help improve extraction technologies and optimize the costs along the entire production-and-sales chain from a quarry to buyers”, summed up Elena Filashina.
The Economic Commission approved the Report and pointed out that ICAP is one of the most active bodies of sectoral cooperation in the CIS that presents the results of the work done on a regular basis.