The new tariff policy will factor in modern approaches to invest into infrastructure

Experts discussed state-of-the-art experience of investing into the infrastructure of regulated activities at a meeting of the Network of Economic Regulators, at the Organization for Economic Cooperation and Development (OECD).

OECD identifies 6 stages in the infrastructure lifecycle: assessing the need, making decisions and ranging projects, preparing projects, construction, operating, decommissioning. Regulators are not involved in all stages and participate in different forms.

OECD has various mechanisms of stimulating infrastructure investments by direct support; using traditional public procurement procedures; possessing infrastructure by companies with state participation; public-private partnership or concession and privatization.

The survey findings showed that most regulators are not directly involved in infrastructure control; however, they are well aware about the challenges facing industries. Such challenges include: the need to increase capacities to satisfy demand, reconstruction and modernization, investment to satisfy additional demands (safety, environment, etc.), operating, implementing new technologies, enhancing the quality of services, decommissioning.

Deputy Head of FAS, Anatoly Golomolzin emphasized that OECD experts consider these issues as a responsibility of the operators that operate and develop infrastructure facilities. Regulators should not substitute for economic entities. There is no need to return to the regulatory model of public utilities under the cost-plus pricing method. The role of regulators is to form a development business-model, structural transformations on the market and creating favourable institutional environment for investors. Certainty is required for an investment climate in general and the conditions for investing in specific projects in particular. Regulators should monitor whether rational conditions are created for entry of new participants and stimulating efficiency of incumbents.

Anatoly Golomolzin pointed out that observing such conditions there should be not problems with attracting investments. Moreover, countries and infrastructure operators compete between each other on the capital market. Representatives of Austria gave an example of various needs in facilities for attracting investments in the electric power industries in Western and Eastern Europe. In the first case it concerned developing electrical communications, and in the second – it was planned to develop generating capacities.

Deputy Head of FAS stated: “A similar situation is formed in Russia. Possibilities of beneficial tariff decisions stimulate investments in forced generation, while the issues of efficient development can be solved by order-smaller investments into the grid complex”.

According to Anatoly Golomolzin, the issues discussed at the meeting of the Network of Economic Regulators will be reported at a session of the Capital Working Group at FAS Methodological Council. Consultations are being held with the key speakers of OECD Paris session for them to participate in a meeting of the Methodological Council.