The head of Transneft, Nikolai Tokarev, Novatek's predecessor Leonid Mikhelson and NLMK's board chairman Vladimir Lisin, recently applied to the government for the transfer of powers on tariff regulation from the Federal Antimonopoly Service (FAS) to the Ministry of Economic Development.

In the letter, Tokarev and the two richest men of Russia point out that "at the present moment, there is a situation in which, due to the lack of coordinated approaches to these issues, the decisions necessary for the development of infrastructure companies and, as a result, individual industries, are not taken". According to the signatories, the lack of system solutions to regulate tariffs does not allow industry companies to plan their activities, which leads to a reduction in the level of investment in critical infrastructure and a reduction in the growth of the entire Russian economy.

The authors of the appeal are noteworthy: Transneft, Novatek and NLMK. If Transneft refers to a natural monopoly entity (and tariffs for oil transportation services are approved by the FAS), Novatek and NLMK can not be subject to tariff regulation, they act as consumers of monopoly services. These are tariffs for the transportation of oil and gas, tariffs for electricity transmission services, tariffs for railway transport services. Thus, there was a paradoxical situation in which both the monopolist and consumers became unhappy with tariff regulation. And the case when it came to appealing to the government is exceptional.

For the emergence of such ideas, there are serious grounds. FAS accepted the powers of the tariff regulator during the crisis of the tariff regulation system, which was characterized by the following features:

Absence of long-term predictability and complexity of regulation: inconsistency in approaches to determining the growth rates of tariffs at the federal level with methods that tariffs consider.
Low quality of the regulatory and legal field (variability, contradictions, ambiguous interpretations, errors in methods).

Emphasis on control over spending of funds, rather than on creating incentives to improve the efficiency of regulated companies.

Low quality of the information environment of regulation (disclosure of a large amount of information without the possibility to assess its reliability).

Over the past three years, during which the FAS exercises the functions of tariff regulation, there has been no qualitative solution to these problems. The main efforts of the regulator were reduced to the declaration of a rather easy-to-perceive "inflation minus" approach, which was massively propagated without a serious analysis of industry specificities and the situation in specific companies. This approach was often implemented contrary to the approved methodology of tariff formation. The FAS-initiated bill on state regulation of prices (tariffs) caused sharp criticism of both monopolists and consumers.

The result - against the backdrop of the preserved regulatory framework, the regulatory system has become even more controversial and unpredictable.

It should be recalled that before the decision on the liquidation of the Federal Tariff Service (FST) and the transfer of its powers to the FAS for several years, the expert council under the government carried out work to improve the system of regulation of natural monopolies. Four models were considered: to improve the existing system on the basis of the FST, to combine FAS and FST, to create several branch or single interdisciplinary regulator. There was no single choice in favor of any model.

If you look at foreign experience, in most countries (almost all states of Europe and the USA) the functions of tariff regulation of natural monopolies are concentrated in a separate independent agency. But decisions are made collectively: taking into account the opinions of other interested ministries and departments. Thus, the balance of interests of different parties is observed.

Will the proposal of Transneft, Novatek and NLMK help improve the situation? On the one hand, if we proceed from the priorities of macroeconomic policy, the analysis of mutual influence of industries and the impact of tariff policy on the competitiveness of consumers, then, of course, this work is closer to the Ministry of Economic Development. On the other hand, if there is a need to correlate price policy with the priorities for the development of regulated infrastructure industries, this is an argument in favor of empowering sectoral ministries (Ministry of Energy, Ministry of Transport, Ministry of Housing and Utilities).

In any case, this will not lead to a coordinated policy in the field of prices and tariffs. The fact is that if the current regulatory agency is given the powers of a tariff regulator, it is inevitable that the tariff regulation should be subordinated to the logic of traditional departmental competencies, which ultimately leads only to distortions and aggravation of the above problems, to the growth of claims of participants in the regulatory process and the degradation of the regulatory system itself.

One thing is obvious: state regulation of tariffs requires special competencies and resources for conducting a balanced and effective tariff policy that ensures a balance of interests of producers and consumers. Unfortunately, after the liquidation of the FTS, almost the entire staff potential has been lost (less than 10% of FST employees have transferred to FAS Russia), which will take years to complete.

Transferring the functions of tariff regulation to the Ministry of Economic Development will not be a solution to all problems. I would like to hope that such a plot will serve as a reason for the government to rethink the significance of the system of state regulation of tariffs and the adoption of decisions on its further architecture. FAS, in turn, should focus its efforts on creating a real competitive environment, energy markets, which ultimately should lead to a reduction in consumer costs and increase the efficiency of natural monopolies.