Russia » Economics
Author`s name Ольга Савка

Russian Fuel and Energy Industry Declining

Russian Clearing House auditors came to sad conclusions

The Russian government believes that the fuel and energy Complex is supposed to become the driving force for the Russian economy within the scope of the energetic strategy. However, the Russian Clearing House believes that the energy industry is declining. Auditors of the Clearing House have recently studied the situation in the fuel and energy complex of the Russian Federation.

According to the information from the press service of the Clearing House, the analysis of the Russian fuel and energy complex has been conducted according to the application from the Public Security Committee of the Russian Security Council. Auditors came to conclusion that the Russian fuel and energy industry was declining. The Russian oil industry was developing in 1991-2000, but the raw materials quality was constantly worsening. The funding for crude and gas geological and exploration works in 2001 totaled 46,2 billion rubles in 2001, but then it decreased by 31,2 percent in 2002 and made up 31,77 billion rubles. However, the crude output and export was growing all that time.

It is hard to understand, why the Russian government believes that the energy industry will become the driving force for the development of the national economy. Clearing House auditors came to conclusion that mergers and takeovers of companies in the industry did not justify hopes for development either. A big part of the Russian fuel and energy complex has been privatized, although the fact of private ownership does not provide a better industrial output or a better profit for the federal budget. In other words, the state let a successful industry go, and oligarchs made it experience numerous problems and troubles. Attempts of the state to privatize the state-owned part of the industry failed to bring any results.

The Clearing House checked the pre-sale preparations for the joint-stock company Eastern Oil Company. As a result of the company's privatization, the federal budget did not receive up to $425 million. However, the company was privatized almost completely - 85 percent of its stocks are owned privately at present. Clearing House experts believe that the same thing happened during the privatization of the state company Slavneft, which had been acquired by TNK and Sibneft. Almost 75 percent of Slavneft's shares was put up for auction, the starting price made up $1,77 billion dollars. However, the Clearing House recommended the starting price should be at least $800 million as high. Russian officials explained that such a low price had been set because a foreign investor might have purchased the company. Yet, the State Duma's decree struck out the Chinese company CNPC from the list of auction participants.

The analysis of the Clearing House also criticized the way Russian oil companies run their businesses. Auditors believe that the use of intra-corporate prices exerts an extremely negative influence on budgetary revenues of Russian Federation units. For instance, large oil companies extract more than 55 percent of crude in the Khanty-Mansyisk region. The regional budget lost 158,1 million rubles, 4,8 billion rubles and 26,9 billion rubles in 1998, 1999 and 2000 respectively. The growth of budgetary losses as a result of Russian oil companies' activities testifies to the fact that directors of those companies ignore state interests. One may say that they run their business on their own, without the state's participation.

Oligarchs' plot against the state is probably a political hoax. However, it is not ruled out that the state would pay a major attention to raw materials companies in the nearest future. Elections are coming.

On the photo: Sergey Stepashin, the chairman of the Russian Clearing House

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