Gas tariffs for Russians to be increased to record high to "patch up" Gazprom's budget

The Russian authorities are preparing an increase in gas tariffs for the population that is the highest in the past 11 years in order to fill the budget of Gazprom, which has lost three-quarters of its revenue in the key – European – market.

Source: The Moscow Times

Details: Wholesale gas tariffs for the population will increase by 11.2% from July 2024, and by another 8.2% from July 2025, according to the forecast of the socio-economic development of the country published by the Ministry of Economy of the Russian Federation.

"As a result, gas will become more expensive for citizens by 20% in two years, and by 34% since the beginning of the war: tariffs were indexed twice last year – by 3% in July and by 8.5% in December. In 2023, indexation was not carried out," writes the publication.

At the same time, gas prices have never increased so rapidly in recent years: in 2021, indexation was 3%, in 2020 3% as well, in 2019 it was 1.4%, and in 2018 – 3.4%.

The last sharp increase in gas tariffs – by 15% per year – took place in 2013.

"But now the authorities are returning to increasing the burden on consumers against the backdrop of a sharp deterioration in Gazprom's financial situation."

"Last year, the company sold abroad the least gas since the last years of the USSR (100 billion cubic metres), and in 2023, gas exports from Russia to Europe fell to the lowest level since the second half of the 1970s – 12.1 billion cubic metres in the first half of the year," the message says.

It is noted that in the second half of 2022, when almost all European countries were successively disconnected from Russian gas, Gazprom suffered a net loss of 1.3 trillion roubles [about US$21.4 billion – ed.].

"In 2023, the company managed to turn a profit, which, however, turned out to be five times less than last year – 296 billion roubles [about US$3.9 billion – ed.]. The cash reserves on Gazprom's accounts have shrunk by three times since the beginning of the war: from a cash cushion of 2 trillion roubles [about US$20.9 billion – ed.] at the beginning of July 2023, a little less than 700 billion [about US$7.3 billion – ed.] remained," the publication summarises.

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