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Gas – Ministry of Economic Development suggests keep gas tariffs increase below inflation after 2017

 
17.02.2014
According to Interfax, Deputy Minister for Economic Development Sergei Belyakov has suggested limiting the growth in gas tariffs for households from 2017 to the level of the previous year’s inflation. He has also suggested setting the increase in gas tariffs for industrial consumers at 0.7-0.8x the previous year’s inflation from 2017. These proposals have yet to be considered by the government.

We do not expect any changes in the gas tariff dynamics for the next three years. In our model, we forecast domestic gas prices increasing 7.4% YoY in 2014 (no growth in the middle of the year), 2% in 2015, 2% in 2016 and no increase thereafter. We deem our estimates as conservative.

Given that the proposed measures are not due to be implemented in the near future, we do not expect any market reaction. However, more discussions on the subject are likely.

Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova
VTB Capital analyst

Tags:
gas

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