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No Preconditions for Reducing Transneft's Tariffs

Date of publication: 22 August 2018 Printable version

According to Transneft, there are no preconditions for reducing tariffs for its services: in an interview with RIA Novosti, Igor Demin, advisor to the president of the Russian pipeline company, said that the company's foreign currency debt had been fully repaid, however, the loan debt burden had not decreased.

On Tuesday, Rosneft published a statement on its website, in which it welcomed the information on early repayment of foreign currency debt by Transneft, and expressed the hope that this should lead to a reduction in prices for the services of the pipeline monopoly.

'First, our foreign currency loan has indeed been completely replaced by the rouble one, however, the loan debt burden has not decreased. We will continue to sell our services for roubles and will repay our rouble loans,' Demin commented.

'Moreover, we believe that tariffs should include the high dividends paid by the company. Indexation, which was provided for by the government’s order, did not take such a significant increase in the amount of dividends into account. Such changes always have tangible consequences, so, unfortunately, we were forced to make a significant reduction in our capital expenditures,' he said. Mr Demin said that if the amount of dividends remained at the current high level (up to 50% of the consolidated profits) and would not be accounted for in the revenue from the provision of services, the company would probably be forced to continue reducing its investments.

On Monday, Nikolay Tokarev, the head of Transneft, gave an interview to the Expert magazine and said that in July 2018 the company had prematurely repaid its Chinese loan, that had been issued in 2009 for the development of the Eastern Siberia – Pacific Ocean pipeline system, in the amount of USD 10 billion, and had also paid USD 1.5 billion for Eurobonds. Thus, the company fully repaid foreign currency borrowings and from that moment will only have to pay its rouble debts.

According to Mr Demin, Transneft has demonstrated that it is much more profitable to have debts in the main operating currency.

 

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