The logic of the exclusive market

The measures taken by the state to improve the quality of life of Kazakhstanis cover various areas, including housing and communal services, where, as part of the execution of the instructions of the Head of State, work continues to reduce tariffs and strengthen pricing transparency. About how successful the past year was in this regard, Asan Darbaev, chairman of the Committee on Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan, shares his opinion.

- Asan Kobentaevich, at a meeting of the committee board held on the eve of the new year, data were provided that in 2019, the country's average utility tariffs were reduced by 9%. In the field of water supply, the reduction was 7.9%, heating - 10.7%, gas supply - 7.4%, electricity supply - 8%. As a result, total consumer savings reached about 40 billion tenge. What measures contributed to this, if at first, as we recall, the monopolists were clearly reluctant to “give up” their tariff lines?

- I will explain with a regional example. In accordance with the Law “On Natural Monopolies”, enterprises in this field are obliged, on the basis of the approved tariff estimate, to carry out the full range of measures provided for by the investment program, as well as provide a report on this work to the authorized body. So, following the results of activities for 2018, 53 reports on the implementation of tariff estimates by 30 enterprises, as well as 8 reports on approved investment programs, were submitted to the regional department for the regulation of natural monopolies in the Kyzylorda region.

In the course of their analysis, the regional authority found a lot of violations related to the misappropriation of cost items for tariff estimates, misuse of depreciation funds, non-compliance with consumption standards for raw materials, fuels and lubricants, electricity and other resources. As a result, in respect of 18 subjects of natural monopolies, 29 temporary compensating tariffs were introduced with a decrease from 0.1 to 88.2%. At the same time, the amount of compensation for damage caused to consumers amounted to 1,269.98 million tenge.

- That is, the essence of the sanctions is to "cultivate" the monopolists, to force them to strictly follow the conditions of tariff estimates and investment programs ...

- One can say so, although in business jurisdictions such concepts as “good faith”, “diligence”, “law-abiding” are more applicable. All these terms as a whole form the necessary system of relations between subjects and consumers, which we focus on in our work with the monopoly and consumer sectors.

The measures taken by us in relation to the subjects of natural monopolies help to prevent unreasonable charging of consumers for regulated services and impede the illegal actions of monopolists.

For example, in the same Kyzylorda region, from August 1, temporary compensatory tariffs for the population were introduced. In particular, for heat supply services per 1 Gcal with VAT Temirzholso-Kzyl-Orda LLP - from 2 583.84 tenge to 2 452.08 tenge, or 5.1%, Syrdarya-Nurdaulet LLP - from 3 757 , 15 tenge to 561.3 tenge, or 85.1%.

To effectively solve the tasks set by the regional authorized body, control over monopolists has been strengthened. For non-fulfillment of tariff estimates 22 subjects of natural monopolies were held liable with administrative fines in the amount of 25.4 million tenge.

In Atyrau region, temporary compensatory tariffs were introduced for 18 types of services to 12 subjects of monopolies for a total amount of 236,831.47 thousand tenge. The utility company “Atyrau su Arnasy” has a compensating tariff of 161.17 tenge⁄m3 with a decrease of 7.15% from the previous one (173.59 tenge⁄m3).

- How much did the tariff burden on consumers decrease?

- For the population, this level amounted to 92.63 tenge per cubic meter of water with a decrease of 8.59%, for other categories of consumers - 297.62 tenge⁄m3 (previously applicable tariff - 316.72 tenge⁄m3) with a decrease of 6.03 % At the same time, the total amount of money refunded to consumers, taking into account the refinancing rate of the National Bank, amounted to 168,445.54 thousand tenge. In general, the damage caused to consumers was compensated in the amount of 236,831.47 thousand tenge.

- What is the situation in this regard in Almaty and other regions?

- Based on the results of the activities, the subjects of the monopolies of Almaty submitted 128 reports, 111 of which included expert analysis of the implementation of tariff estimates, and 17 of them - investment programs. Based on the results of this work, compensating tariffs were introduced to 20 monopolies for 26 services for a total of 839,287,200 tenge.

In the North Kazakhstan region, the execution of 49 tariff estimates of regulated services for 2018 was analyzed. At the same time, it was decided to approve 19 temporary compensating tariffs for a total of 331,030.8 thousand tenge, including for water supply services through distribution networks.

These measures were introduced to compensate for losses incurred by consumers by 15 entities of natural monopolies as a result of misuse of depreciation funds, failure to implement measures approved in investment programs and included in the tariff. Among such enterprises, Aydin Service LLP - 250.42 thousand tenge, Kamkor Yesil - 1 800.7 thousand, Mamlyutskoye-1 - 13 739 thousand, Poltava - 416.39 thousand, Denmark-2014 ”- 11,408.3 thousand,“ Ivan Zenchenko ”LLP - 329.62 thousand tenge.

The antimonopoly body of the Turkestan region introduced compensating tariffs for 45 monopolists totaling more than one billion tenge.

Here 87 reports were presented, 63 of which were analyzed for the implementation of tariff estimates, and 24 - investment programs. 34 entities did not report on time. All of them were brought to administrative responsibility for a total of 13.4 million tenge. According to the results of the analysis for non-fulfillment of tariff estimates that exceed the level allowed by the legislation, compensating tariffs for 54 services to 45 entities for a total amount of 1,292.9 million tenge were introduced. Damage caused to consumers will be fully repaid within a year.

- Asan Kobentaevich, at the moment the heating season is in full swing, and consumers are paying for heat supply services. What are the innovations in this area?

- Under the new legislation on natural monopolies, the consumer is obliged to conclude individual agreements with the subject of natural monopolies for each type of regulated service in accordance with standard agreements approved by the authorized body. According to the model agreement (order of the Minister of National Economy of the Republic of Kazakhstan dated June 24, 2019 No. 58), the supplier is obliged to provide the consumer with thermal energy in accordance with the concluded agreement.

According to the sanitary rules of October 26, 2018, the calculated air temperature in the premises of residential buildings in the cold period should be at least 20 degrees Celsius. If it is lower, the consumer has the right to demand from the supplier a recalculation of payment for heat with compensation for real damage. For each hour of non-compliance, its payment should be reduced by 0.15%.

In such cases, consumers should contact KSK and ask their chairman to contact a service company for troubleshooting.

- And what if the KSK starts, figuratively speaking, “pulling the rubber”?

- Then consumers should go directly to the control and quality control of the urban environment at the local executive bodies, which are responsible for the quality of work of KSK.

In order to make laboratory microclimate measurements in apartments, you need to resort to the help of regional departments of the Committee for Quality and Safety of Goods and Services of the Ministry of Health of the Republic of Kazakhstan at the place of residence or accredited laboratories.

- Apparently, the monopolists are clearly nostalgic for the old days, when they could put all their costs, including due to squandering and gagging, on the shoulders of consumers. Moreover, any tariff growth is accompanied by the same pretext - the depreciation of capacities. Isn't it time for them to first demonstrate to the population the level of compliance with the criteria of integrity, diligence and law-abidingness, before speaking of an increase in prices?

- It is well known that without investment there is no modernization and growth in the quality of services provided, including utilities. The quality of life of the population, which the state is making great efforts to improve today, is also impossible to achieve without capital investments in the sphere of communal infrastructure. And here, whatever you say, but acting against the logic of the objective development of the market is impractical.

In the coming period, it is planned to attract about 2.2 trillion tenge of investments into the infrastructure of natural monopolies, including 854 billion in housing and communal services. Of these, electricity networks account for about 500 billion, water supply - about 120 billion, heat supply - about 200 billion tenge.

As for tariffs, last year 23 applications were received for approval of new tariffs, of which 16 were notified of the refusal. One application is pending in the regional department. Tariffs and tariff estimates were approved only for 6 applications, in particular, for 3 subjects tariffs were approved in a simplified manner, and for 3 - on the contrary, with a reduction in existing tariffs from 34.6 to 74.1%.

The amount of savings of consumers from considering applications for approval of tariffs for 2019 amounted to 7.9 billion tenge. In January 2020, tariffs for heat, water, wastewater and electricity remained unchanged at the current level.

Source: kazpravda.kz