Consumer debt and non-fulfillment of liabilities by regions hampering gasification in Russia

It was noted that this work was among the Company’s priorities in the domestic market. From year to year Gazprom fully meets its obligations under the Gasification

Between 2005 and 2014 Gazprom earmarked some RUB 242.5 billion to the Program implementation (excluding the funds allocated for constructing gas branches and gas distributions stations, which are an integral element of the regional gasification). Within this period, 1,802 gas pipelines with the total length exceeding 25 thousand kilometers were constructed, first gas was supplied to over 700 thousand apartments and households as well as to more than four thousand boiler houses. As a result, Russia’s average gasification level rose from 53.3 to 65.4 per cent.

In 2015 the Company plans to complete the construction of 133 gas branches with the total length exceeding two thousand kilometers, inter alia, in the Far East. This will create conditions for the gasification of over 60.5 thousand apartments and households as well as more than 320 boiler houses.

In the meantime, the increase in non-payments for the supplied gas and the failure of regional authorities to fulfill the liabilities on consumer preparation for gas supplies, remain the most urgent problems hampering gasification in Russia.

Between January and July 2015 the overdue debt of all consumer groups in Russia to Gazprom rose by 21.8 per cent to RUB 154.4 billion.

The liabilities of regional authorities for preparing gas grids, households and boiler houses for gas supplies are fully met only in 15 regions: the Astrakhan, Belgorod, Kemerovo, Kirov, Kursk, Lipetsk, Penza, Ryazan, Tyumen, Vologda Regions, the Republics of Bashkortostan, Kalmykia, Mari El, Mordovia as well as St. Petersburg.

The Kaliningrad, Moscow, Novgorod, Rostov, Saratov, Volgograd Regions, the Krasnodar, Khabarovsk and Stavropol Territories, the Republics of Adygea, Karelia and Komi considerably lag behind with their liabilities. The liabilities are not fulfilled by the Republics of Dagestan, Ingushetia, North Ossetia – Alania and Karachay-Cherkessia.

The regions with the highest gas debts and non-fulfilled liabilities for consumer preparation for gas supplies see a reduction of Gazprom’s investments into the gasification development. Funds are being allotted only for finishing the construction of facilities which is already underway. In this context, the Company is addressing the issue of adjusting the volume of investments into the Gasification Program in 2015, which was originally planned at the level of RUB 28.8 billion.

At present, Gazprom is engaged in long-term planning of gasification activities in Russian regions between 2016 and 2020.

The Board of Directors tasked the Company’s Management Committee to go on with the work aimed at Russian regions gasification in 2016. Within the first six months of 2016 Gazprom Mezhregiongaz will file a report on the work being done to reduce the gas debt of Russian consumers and will present it at the meeting of the Board of Directors.