FAS, THE GOVERNMENT OF THE PERM REGION AND GAS SUPPLIERS CONCLUDED A REGULATORY CONTRACT

The agreement is designed to attract additional financing to the regional gasification programme and accelerate its implementation

On 10 September, Head of FAS Igor Artemiev; Governor of the Perm region, Maxim Reshetnikov; General Director of “Gazprom Gazoraspredelenie Perm” JSC and “Gazprom Mezhregiongaz Perm” Ltd., Sergey Cherezov signed a regulatory contract in gas supply in the region.

The regulatory contract will help attract additional financing - 510 million RUB in five years for construction of seven gas-distribution pipelines. Three facilities will be built in Perm, and the other four – in Dobryansky, Nytvensky, Oxansky municipalities and the Perm district. Some funds will be used to develop the gas-supply system in Solikamsk. Facilities construction will enable technical conditions to connect 12 142 household to gas. The total length of the gas pipelines will be around 56 km.

During the singing ceremony, Igor Artemiev pointed out: “Several advanced regions, including Perm, together with FAS have been able to reach arrangements on signing regulatory contracts with “Gazprom”, the main gas supplier. The contracts introduce a special statutory tariff surcharge, facilitating additional investments in gas supply development without inflation-overrunning tariff growth, in order to complete construction of gas pipelines, distribute and bring gas directly to people”.

He added: “We intend to extrapolate this practice of regulatory contracts and additional resources to electric power supply, water supply and drainage, so that everything is built and the effect is achieved, for the sake of which all this was started: that people get gas, clean water and reliable electric power supply”.

Maxim Reshetnikov emphasized: “A special mark-up introduced in the Perm region enables to develop gasification, built low-pressure networks in settlements and towns and deliver gas to houses. This is a big step. The agreement allows allocating additional funds for gasification, reaching half of a billion RUB in five years. This is a significant resource”.

“Today the vector has changed radically: in 2017-2018 we connected 12 000 facilities and I believe that we will connect 8000 more this year. Perm has not has such gasification rates”, concluded Governor.

Sergey Cherezov pointed out that “the Gazprom goals in the Perm region cannot be achieved without additional investments formed through the regulatory contract. Undoubtedly, the contract means new gasified apartments in the Perm region”.

Anatoly Golomolzin and Vitaly Korolev, Deputies of Head of FAS also took part in the event.

Background:

To gasify the region, apart from a special surcharge to the tariff for gas transportation via gas-distribution networks, the regulatory contract provides for additional sources of financing, determine under the frame of approving the tariffs  for the next long-term regulatory period (in 2019 - 2023 inclusive).

The main objectives of regulatory contracts are:

• ·         Directing additional funds from tariff proceeds of regulated organization  (due to reduced operational costs) to gasification of towns and rural settlements;

• ·         Formalizing and implementing all basic FAS principles in tariff regulation: long-term tariffs (at least 5 years), “inflation minus”, justifying costs elements using benchmarks, excluding non-mandatory costs, analyzing whether procurement comply with the Federal Law “On procurement of goods, works, services by particular types of legal entities” (No.223-FZ Federal Law);

• ·         Employing the “one-window” principle in the work with consumers

• decreasing and costs and timescale for connecting consumers to gas-distribution networks.