The Russian Government has ‘recommended’ that regional leaders in the North Caucasian Federal District ensure repayment of overdue debts for energy supplied by Gazprom and Rosseti and their subsidiaries.

In a meeting chaired by Prime Minister Dmitry Medvedev on 11 July, the results of which were announced on Monday, the government said that North Caucasian officials had been ‘ineffective’ in ensuring energy debts were paid.

According to the results of the meeting, if a region cannot pay off its debts it must transfer ownership of energy network assets, to be evaluated at market value, in order to do so.

‘The regions are put in deliberately failing conditions’

At the beginning of June, Kabardino-Balkaria owed more than ₽4 billion ($64 million) in overdue gas payments, according to Region Online, ₽1 billion ($16 million) of which was from the first half of 2018 alone.

A senior source within the management of the Nalchik Heat Supply Company (NHSC), which serves Kabardino-Balkaria’s capital Nalchik, told OC Media that while their debts to Gazprom’s local subsidiary had reached ‘almost ₽1 billion ($16 million)’, consumers owed the company only ‘about ₽400 million ($6.4 million)’. The majority of these debts were from residential buildings, he said.

Asked whether the company would be able to repay its own debts if consumers paid what they owed the company, the source said ‘we must act on the basis of current economic realities. All the rest is not within our competences’.

Mukhadin (not his real name), a specialist at the NHSC, told OC Media it is not possible to collect debts by disconnecting peoples gas supplies, ‘as this is not provided for by Russian law; only legal entities can be disconnected’. The only remedy, he said, was to collect debts through the courts. But since tens of thousands of residents of Nalchik owed the company, he said the company did not have enough lawyers for this.

He said companies such as the NHSC, will ‘go through the procedures of bankruptcy, and their functions will be transferred to the ownership of Gazprom’s subsidiaries’. Once the gas supply network is removed from the jurisdiction of the regional authorities, he said, Gazprom will begin to recover debts using all the resources at their disposal.

Mukhadin blamed the current situation on Gazprom and Rosseti for selling gas at a much higher price in areas where they do not control the gas distribution network. ‘Thus, the regions are put in deliberately failing conditions, where sooner or later they will have to pay with their assets, and with this, lose their phantom independence from Moscow’.