According to Vedomosti, Russian Railways might increase the transportation tariff for diesel by 12% in 2014. According to the media, the company is trying to offset the upcoming growth in diesel prices (consumes 3mnt of diesel per year).
The hike in diesel transportation tariffs, if it materialises, would likely be transferred on to domestic wholesale and retail prices. This would partially protect the refining margins of Russian Oils, we believe. Export deliveries, on the other hand would likely face a negative effect from growth in transportation expenses. However, the impact on the EBITDA for the companies under our coverage in 2014 would be around 1%, we estimate, which is insignificant. The effect on domestic retail prices would be below 2%, according to our calculations. All in all, the news is neutral for Russian oils.
Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova
VTB Capital analyst
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