MOSCOW- Russian Railways proposed to increase freight rates by 6.4% in 2022 instead of an earlier planned 4.3% which the state-owned monopoly believes should help it to compensate for the industrial prices growth, a document seen by Reuters showed.
The government-set freight tariffs in Russia must be upgraded by the level of consumer inflation minus 0.1 percentage point each year, according to the policy adopted in 2018.
Russia's economy shrank by 3.0% last year, its sharpest decline in 11 years, and its speedy recovery this year, helped by strong oil prices, is fuelling inflation. The central bank sees inflation at 5.7-6.2% this year, before returning to 4.0-4.5% in 2022.
"The current model of tariff regulation needs further development to compensate for the prices pressure on the company and to attract investments and service debts," Oleg Belozerov, who heads the Russian Railways, said in a letter to President Vladimir Putin.
More than a half of the costs depend not on consumer, but on industrial inflation, Belozerov said in the Sept. 10 letter.
In 2017-2021, the freight rates grew by 24% while the industrial price index increased by 44%, the letter said, forcing the Russian Railways to increase its borrowings to meet the 3.2 trillion rouble ($44 billion) investment plan.
Cargo revenues account for more than 80% of Russian Railways' revenue. Last year, the monopoly received 1.5 trillion roubles from its industrial clients, most of them coal, oil and metal producers.
The letter was redirected to the government, it shows. A government official who was speaking on conditions of anonymity, confirmed the letter.
Russian Railways, the government and the Economy Ministry which is regulating tariffs, all declined to comment.
($1 = 72.7800 roubles)
(Reporting by Gleb Stolyarov and Darya Korsunskaya, Editing by Louise Heavens) ((gleb.stolyarov@thomsonreuters.com;))
