30 September 2016

Rashevsky: Heat supply can be a source of economic growth

Speaking at the Sochi international investment forum "Sochi-2016", SUEK CEO Vladimir Rashevsky remarked that heat supply can be a source of economic growth, but the industry is underinvested by at least RUB 2.5 trillion.

"For energy companies, heat generation and transmission is unprofitable and the amount of non-payments remains elevated. The industry is undeniably unattractive for investments. This is regardless of the fact that the heating market is a massive and vital sector of the country’s economy, representing more than RUB 2 trillion in revenue, or about 2% of GDP. The absence of an effective model for the thermal energy market translates in at least RUB 2.5 trillion in underinvestment. With adequate economic and investment tracks, this money would come and the heating market could be the strong source of economic growth we are looking for", said Rashevsky.

According to him, the upgrade of heating supply system and utilisation of heating capacity in related industries would provide a multiplier effect to the country's GDP of 0.3 percentage points per year until 2025.

Rashevsky sees the absence of suitable long-term management as the main reason behind this unrealised potential. "It is impossible to make decisions with a one year horizon, based on costs permanently at risk of adjustments. Regulation should provide clear guidance, at least for 10 years ... In the government decree on heat supply pricing mechanism there are nine grounds for annual tariff adjustments, and tariffs are only set for 3-5 years", he said.
Source: RIA Novosti
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