ENERGY SUBSIDIES IN RUSSIA Size, Impact, and Potential for Reform Apurva Sanghi and Jevgenijs Steinbuks Annexes December 2021 Annexes to Chapter 1. Quantifying Energy Subsidies in Russia | A1–A ENERGY SUBSIDIES IN RUSSIA Size, Impact, and Potential for Reform Chapter 1. Quantifying Energy Subsidies in Russia Annexes Annex 1A. Natural gas price formation in the Russian domestic market Gas Producer, Characterization Pricing Procedures at the Exit Point of Gas Delivery of Supply the Trunk Gas Pipelines (Wholesale Price) Basic trading mechanism: a contract concluded outside organized tender Gazprom and its Supply to population Regulated wholesale gas prices for the supply of gas to the affiliated companies population Active FAS orders (applicable in 2021): • Regions connected to the UGSS: Order No. 636/20, dated July 10, 2020 • Kamchatka krai: Order No. 637/20, dated July 10, 2020 (the same price for the population and other consumer groups • Amur region: Order No. 204/20, dated March 2, 2020 (the same price for the population and other consumer groups) • Primorye Krai, Sakhalin region: Order No. 582/19, dated May 13, 2019 (the same price for the population and other consumer groups) Supply to other Regulated wholesale gas prices consumers regarding Active FAS orders (applicable in 2021): volumes specified in • Regions connected to the UGSS: Order No. 639/20, dated delivery contracts July 10, 2020; before July 1, 2007 • Kamchatka krai: Order No. 637/20, dated July 10, 2020 (taking into account (the same price for the population and the other consumer legal succession), the groups); so-called limit gas • Amur region: Order No. 204/20, dated March 2, 2020 (the (amount of guaranteed same price for the population and other consumer groups); supply by Gazprom at • Primorye krai, Sakhalin region: Order No. 582/19, dated tariff approved by the May 13, 2019 (the same price for the population and other Federal Tariff Service) consumer groups). as well as to consumers in the Kamchatka krai, Amur region, Primorye krai, Sakhalin region Supply to other regions Upon agreement with the parties within the regulated regarding volumes not maximum and minimum caps of wholesale prices specified in the delivery Active FAS order (applicable in 2021): contracts before July No. 638/20, dated July 10, 2020, the minimum cap is 1, 2007 (taking the consistent with order 369/20; the maximum cap exceeds the legal succession into minimum cap by 2 percent account) (continued) A1–2 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Annex 1A. Continued Gas Producer, Characterization Pricing Procedures at the Exit Point of Gas Delivery of Supply the Trunk Gas Pipelines (Wholesale Price) Owner of the - Regulated wholesale gas prices regional gas supply Active FAS orders (applicable in 2021): systems • Rosneft, to consumers of the Sakhalin region and the Khabarovsk krai: Order No. 1730/18, dated December 11, 2018; (differentiated tariffs have been implemented for the population and other consumers) • YATEK, Order No. 1284/20, dated December 25, 2020 (differentiated tariffs have been implemented for the population and the other consumer groups starting from 2021) • ALROSA-Gas, Order No. 1111/20, dated November 10, 2020 (differentiated tariffs have been implemented for the population and other consumer groups) • Norilskgazprom, Order No. 707/19, dated May 31, 2019 • Sakhalin Oil Company, Order No. 873/20, dated September 23, 2020 (differentiated tariffs have been implemented the population and other consumer groups) • Kamchatgazprom: FTS Order No. 480-e/10, dated December 24, 2009 • Sibneft-Chukotka: FTS Order No. 528-e/6, dated December 24, 2010 • Pechorneftegazprom: FTS Order No. 10-e/2, dated January 22, 2013 Companies not listed Supply to the Limitation within the retail price above (the so-called population independent gas Supply to other Agreement of the parties without any legislative restrictions producers) consumers (however, with ‘natural’ market limitation with the price of Gazprom Basic trading mechanism: a contract concluded at the organized tender All companies Supply to other Exchange pricing mechanism consumers Annexes to Chapter 1. Quantifying Energy Subsidies in Russia | A1–3 Annex 1B. Methodology for natural gas subsidies quantification The sum of direct subsidies was calculated using the fol- The netback parity approach lowing formula: As has been mentioned earlier, for the regions con- nected to the UGSS is calculated using an alternative gas , where cost based on the principle of netback parity. At the statutory level, this principle has been formal- is the amount of direct subsidies in wholesale gas ized in Federal Tariff Service Order No. 1142-e, dated prices for the i-th group of consumers (households, oth- July 9, 2014, upon approval of the Provisions for deter- ers) in the j-th Russian region. mining the gas price formula. The amount of direct subsidies is calculated for each According to this document, the gas price that pro- Russian region where the fuel balance contains gas, and vides equal revenues from supplies of gas to consumers in statistical data on gas consumption in 2019 was collected. foreign markets and supplies of gas to domestic consum- Total sums of direct subsidies are aggregated by macrore- ers is calculated as an average value using the following gions (according to the treatment of the Russian regions formula: as macroregions under the Strategy for Spatial Develop- ment of the Russian Federation) and for the entire Rus- , where sian Federation. is the alternative cost of gas in the j-th Russian re- is the gas price that provides equal revenues from gion, rubles/1,000 m3 without VAT: gas supplies to consumers in foreign markets and supplies of gas to domestic consumers. • For Russian regions connected to the Unified is the price of gas supplied to consumers in for- Gas Supply System (UGSS): based on the calcu- eign markets in the ruble equivalent, rubles/1,000 m3. To lated alternative cost of gas using netback parity calculate the price for 2019, the price from the official data approach. of Gazprom (Gazprom in Figures book) was used. • For other Russian regions: on a case-by-case basis, is the customs duty rate (30 percent under Rus- for details, see Annex 2. sian Government Resolution No. 754, dated August 30, 2013). is the wholesale price for gas for the i-th consumer Rfc is the average cost of gas transportation and group in the j-th Russian region, rubles/1,000 m3 without storage across/in foreign countries, in ruble equivalent, VAT. rubles/1,000 m3. The value specified in Russian Govern- Wholesale gas prices are determined based on the FAS ment Resolution No. 107, dated February 10, 2015, was of Russia. The average price was adjusted for seasonal used in the calculations. fluctuation of gas consumption based on Rosstat data. is the difference between the average cost of gas is annual gas consumption of the i-th consumer transportation from where it is produced to the border of group in the j-th Russian region, according to Rosstat data. the Russian Federation and the average cost of gas trans- It is important to note that the methodology assumes portation from where it is produced to consumers in the that the regulated wholesale gas prices are close to the Russian Federation, rubles/1,000 m3. Data on distances gas prices established by independent gas producers. The and specific cost of transportation referred to in Federal amount of gas delivered by independent gas producers Antimonopoly Order No. 775/17, dated June 13, 2017, in the domestic market in the regions connected to the was used. UGSS is slightly above 50 percent. So we consider this as- The following approach was adopted to calculate a sumption reasonable given that independent gas produc- relevant price for each Russian region connected to the ers use regulated wholesale prices as a “market benchmark.” UGSS ( ). A1–4 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Table 1B.1. Information on the Russian regions not connected to the Unified Gas Supply System that receive pipeline gas Share in total consumption, actual for 2019 Russia region Macroregion R.F. (%) Macroregion (%) Nenets autonomous district Northern 0.26 8.41 Krasnoyarsk krai Angara-Yenisei 0.81 45.2 Irkutsk region Angara-Yenisei 0.98 54.8 Republic of Sakha (Yakutia) Far East 0.71 20.4 Kamchatka krai Far East 0.07 2.1 Primorye krai Far East 0.24 7.0 Khabarovsk krai Far East 0.51 14.6 Amur region* Far East 0 0 Sakhalin region Far East 1.97 56.0 Chukotka autonomous district** Far East 0 0 TOTAL Angara-Yenisei 1.79 100 TOTAL Far East 3.51 100 * Supplies began in 2020 ** The region did not report consumption to Rosstat was reduced by the cost of gas transportation to routing is the commercially classified information of Gaz- domestic market consumers connected to the UGSS, and prom and changes from year to year. calculated based on data on average distances and average specific cost of transportation referred to in Federal Anti- 1. Nenets autonomous district monopoly Order No. 775/17, dated June 13, 2017. Gas production and supply was reduced by the cost of gas transportation to The Vasilkovskoye gas-condensate field (developed in domestic market consumers connected to the UGSS, and 2001; Pechorneftegazprom) is of local importance. Gas is was increased for each Russian region by the cost of gas supplied to consumers in the town of Naryan Mar and transportation to consumers in the j-th Russian region. nearby villages. We have information that this gas can be In this case, the cost of gas transportation for consum- exported from the district to be sold in the LNG markets; ers in the j-th Russian region connected to the UGSS was however, this information is based on hypotheses. calculated based on the tariffs to transport gas by trunk gas pipelines approved by Federal Tariff Service Order Price setting No. 216-e/1, dated June 8, 2015, On approval of tariffs for The wholesale price is set for Pechorneftegazprom, which services to transport gas by Gazprom gas pipelines that form is a gas supplier. Retail gas prices for the population are part of the Unified Gas Supply System for independent enti- set without indicating the supplier. Works to connect con- ties, based on the assumption of the average distance of sumers to the gas networks are performed by state unitary transportation from the gas fields to the Russian region enterprise NAO Nenets Utility Company. described below. The average distance of transportation from gas fields Budget subsidies to the Russian region is assumed to be an arithmetical av- No funds were allocated in the 2019 budget in direct sub- erage of the distances of all routes used to transport gas to sidies to compensate for the difference between the actual this Russian region at tariffs set by Federal Tariff Service price and the economically justified gas price (though the Order No. 216-e/1, dated June 8, 2015. Note: data on gas budget has relevant items for other utility resources and Annexes to Chapter 1. Quantifying Energy Subsidies in Russia | A1–5 solid fuel). The budget had an expenditure item to finance Bratsk). Currently, the prospects of increasing produc- subsidies for the organization of electric power, heat, gas, tion in the field are not being discussed.1 Dry (pipeline) and water, in addition to sewage supply for the popula- gas is also supplied from refineries (Irkutskoblgas). Gas tion. This was to prepare communal infrastructure for the infrastructure development is planned for the long term autumn-winter period in the amount of Rub 45 million through Gazprom projects related to oil production at the without breaking that down by activity or subsidy type, Kovyktinskoye field.2 to compensate household costs for connection to the gas networks. Price setting Wholesale prices are not set. Retail prices for the popula- Proposal for calculation tion are set for gas supplied by: To regard the approved prices as justified and take subsi- • Bratskecogas (“justified” and actual retail prices, dies as zero. with compensation of the difference from the bud- get; price level: justified prices were around 4.5 ru- 2. Krasnoyarsk krai bles/m3; actual retail prices were around 2.5–2.6 Gas production and supply rubles/m3); Gas is produced and supplied only in the Norilsk node • Irkutskoblgas (justified prices were around 13–13.5 by Norilskgazprom (production, trunk pipelines, distri- rubles/m3). bution network, and sales to industrial consumers). Three deposits out of four are old with declining production Budget subsidies (except for the Pelyatkinskoye gas condensate field, gas No specific funds were allocated in the 2019 budget to deliveries began in 2013). On the whole, gas is considered finance natural gas subsidies; it contained only one expen- to be of local importance. We have information that this diture item to compensate for the shortfall in revenues gas can be exported from the region to be sold in the LNG regarding all resources (however, the budget allocated markets (through Dudinka); however, this information is funds for subsidies, which is confirmed by the tariff de- based on hypotheses. cision regarding Bratskecogas). According to financial re- ports, other revenues of Bratskecogas in 2019 amounted Price setting to Rub 3,826 million. Net losses of the company in 2019 The wholesale price is set for Norilskgazprom without amounted to Rub 155 million. differentiation by consumer groups. Retail gas prices for the population are not set. Actual consumption by house- Proposal for the calculations holds in 2019 was recorded in Rosstat as zero. Not to include the price in the calculation, and to accept subsidies as Rub 3.8 MM (and allocate all subsidies to Budget subsidies households). No funds were allocated in the 2019 budget for direct subsidies to compensate for the difference between the 4. Republic of Sakha (Yakutia) actual price and the economically justified price (though Gas production and supply such expenditures for other utility services were included). Currently, gas to consumers is being supplied by: Proposal for the calculations • YATEK (Srednevilyuiskoye, Mastakhskoye, To- To regard the approved prices as justified and take subsi- lonskoye fields, 86 percent of all gas produced in dies as zero. the republic is provided to the central districts of Republic of Sakha (Yakutia) and Yakutsk); 3. Irkutsk region • Sakhatransneftegas (supplies of gas produced by Gas production and supply YATEK, as well as gas from Srednetyungskoye Today gas is produced at the Bratsk gas condensate field by Sakhatransneftegas to the central districts of (Rosneft Group’s Bratskecogas supplies pipeline gas to Republic of Sakha (Yakutia) and Yakutsk; gas A1–6 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes produced at the Otradninskoye gas condensate 5. Kamchatka krai field is supplied to Lensk); Gas production and supply • ALROSA-Gas (Srednebotuobinskoye oil-gas con- Gas is produced by Gazprom and Kamchatgazprom, densate field, gas is supplied to settlements located in which is its subsidiary (Kshukskoye, Nizhnekvak- the western district of Republic of Sakha (Yakutia). chinskoye fields). Gas is supplied via the Sobolevo-Pet- ropavlovsk Kamchatsky gas pipeline. Plans to connect Gas infrastructure development is linked to: the region to the mainland gas transportation system or to produce LNG for export have not been disclosed to • Development prospects of the Chayandinskoye the public. Gas is distributed and supplied by Gazprom field by Gazprom Gas Distribution and Gazprom Mezhregiongas in the Far • Development prospects of the Power of Siberia East, respectively. pipeline (pipeline branches for gas infrastructure development in the settlements located in the Price setting southern districts of Republic of Sakha (Yakutia) Wholesale prices are set for Gazprom and Kamchatgaz- to supply gas from the Chayandinskoye field plus prom (without differentiation by groups, and separately, the field developed by YATEK for the Sobolevsky district), the retail price is set for the • Construction of an LNG plant in the town of population, components of the retail price; that is, gas dis- Ayan in the Khabarovsk krai (YATEK) with a pos- tribution tariffs, a charge for supply and sales services are sibility of supplying gas produced at the Republic also set. The wholesale price level is comparable with the of Sakha (Yakutia) fields to the Asian markets average netback for the whole of Russia. • Gas distribution networks are operated by Sakha- transneftegas (the main part of the gas infrastruc- Budget subsidies ture area) and by ALROSA-Gas (western districts No funds were allocated in the 2019 budget for direct of Republic of Sakha (Yakutia)), which also pro- subsidies to compensate for the difference between the vide services related to connection to the gas distri- actual price and the economically justified price (such ex- bution networks penditures were provided separately for other utility ser- vices and the entire communal services sector.)3 Price setting Wholesale prices are set for YATEK and ALROSA-Gas. Proposal for the calculations Retail prices for the population are differentiated by the To regard the approved prices as justified (while the field supplier; that is, they are set separately for the Mirny and the gas pipeline are relatively new, costs must be district (ALROSA-Gas), the Lensk district (Lensk- higher; however, their objective level is not concealed) and Gas, Sakhatransneftegas Group), and the rest of the take subsidies to be zero. area (Sakhatransneftegas, predominant consumption), respectively. 6. Primorye krai Gas production and supply Budget subsidies Today this region receives only gas produced by Gaz- No funds were allocated in the 2019 budget for direct prom under the Sakhalin-3 project. Gas is supplied by the subsidies to compensate for the difference between the Sakhalin-Khabarovsk-Vladivostok trunk pipeline (owned actual price and the economically justified price (such ex- by Gazprom). Gas is distributed and supplied by Gaz- penditures are provided only for the electric power sector). prom Gas Distribution and Gazprom Mezhregiongas in the Far East, respectively. Proposal for the calculations The Sakhalin-Khabarovsk-Vladivostok trunk pipe- To regard the approved prices as justified and take sub- line can be connected to the Power of Siberia gas pipeline sidies to be zero (while excess gas remains on the captive sometime in the future. market, it has no alternative cost). Annexes to Chapter 1. Quantifying Energy Subsidies in Russia | A1–7 Price setting Budget subsidies The wholesale price for gas delivery to the region is set No funds were allocated in the 2019 budget for direct sub- only for gas produced by Gazprom (around 4.8 rubles/m3, sidies to compensate for the difference between the actual which is below average netback for Russia). The retail price and the economically justified price (though such ex- price for the population is not set (the actual supply of gas penditures were provided for other utility resources). to the population in the 2019 balance sheet is zero). Proposal for the calculations Budget subsidies The alternative cost of gas supplied to the region today No funds were allocated in the 2019 budget for direct sub- can be determined based on the LNG market price, al- sidies to compensate for the difference between the actual though the estimate based on average netback for all of price and the economically justified price (though such Russia seems to be acceptable. See a separate section of the expenditures were provided for other utility resources, in- document. Please see “Calculation of alternative gas cost cluding bottled gas). The budget includes expenditures for for the LNG market” below. gas infrastructure development. 8. Amur region Proposal for the calculations The Far East macroregion: gas supplies began in the The alternative cost of gas supplied to the region today can 2020s. The amounts for 2019 are zero. These amounts be determined based on the LNG market price; however, for 2019 were not yet captured by Rosstat.6 All gas in the the estimate based on average netback for all of Russia macroregion is consumed in the regions not connected to seems acceptable. Please see “Calculation of alternative gas the UGSS. cost for the LNG market” below. Gas production and supply 7. Khabarovsk krai Supplies of gas by Gazprom started in 2020 (via the Gas production and supply Power of Siberia pipeline, gas comes from the Chayan- Today, this region receives only gas produced by Rosneft dinskoye field in Republic of Sakha (Yakutia)). under the Sakhalin-1 project.4 Gas is supplied via the Sakhalin-Khabarovsk-Vladivo- Price setting stok trunk pipeline (owned by Gazprom) using multiple Wholesale prices for 2020 are set with a breakdown by trunk pipeline sections owned by different companies. municipality (prices are clearly reduced7) without a break- Sakhalin also has resources to supply gas to Gazprom down by consumer groups. No prices and tariffs were set (Gazprom supplies its gas to consumers in the Primorye for 2019. krai and the Sakhalin region by this pipeline). The Sakhalin–Khabarovsk–Vladivostok trunk pipe- Budget subsidies line can be connected to the Power of Siberia gas pipeline No funds were allocated in the 2019 budget for direct sub- sometime in the future. sidies to compensate for the difference between the actual price and the economically justified price (though such Price setting expenditures were provided for other utility resources). The wholesale price for gas delivery to this region is set Funds are being allocated for gas infrastructure develop- only for gas produced by Rosneft (the level of prices is ment and conversion to gas. 2–3 rubles/m3, which is below the average netback for the whole of Russia). The pricing system of the trunk pipe- Proposal for the calculations lines includes several owners5 (transportation costs de- To disregard the region in the calculations of subsidies for pend on the location of the consumer; that is, a settlement, 2019. and, for this reason, will vary). The pricing system for gas distribution networks (transportation and connection to the network) also includes several owners. A1–8 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes 9. Sakhalin region Price setting Gas production and supply The wholesale price is set for the supplier, which is Sib- Gas is produced and supplied by Gazprom Gas Distri- neft-Chukotka. Retail gas prices set for the population are bution (gas produced under the Sakhalin-2 and Sakhalin not approved. The district government agrees (rather than 3 projects; and gas supplied by Gazprom Gas Distribu- approves) the wholesale gas price. The size of subsidies is tion and Gazprom Mezhregiongas in the Far East, re- determined based on the difference between this price and spectively), Rosneft (gas production under Sakhalin-1, the approved wholesale price. There are no tariffs for con- gas distribution, and supply), and Sakhalin Oil Company nection to the gas networks (relevant tariffs are not set). (onshore gas production, gas distribution, and supply). There are other gas distribution companies, gas to popula- Budget subsidies tion is also supplied by Sakhalinoblgas. The 2019 budget includes subsidies to compensate for the difference between the actual price and the economically Price setting justified price for Sibneft-Chukotka in the amount of Rub Wholesale prices are set for Gazprom, Rosneft, and 75,493,100. Sakhalin Oil Company. Retail prices for gas delivered to the population are set Proposal for the calculations for Gazprom, Sakhalinoblgas, and Sakhalin Oil Company. Disregard the price and take subsidies as equal to the Wholesale price level: 2–3 rubles/m3, which is below amount included in the budget as a direct expenditure the average netback for the whole of Russia. item (and fully assign them to the other consumer groups). Budget subsidies Calculation of alternative gas cost for the Subsidies to compensate for the difference between the ac- LNG market tual price and the economically justified price for pipeline (Sakhalin region, Khabarovsk krai, Primorye krai; gas to gas itself are not included in the 2019 budget (funds to these regions is supplied from the Sakhalin deposits via finance these expenditures are provided for other commu- the Sakhalin–Khabarovsk–Vladivostok trunk pipeline). nal resources and the entire communal services sector).8 The program for LNG production development in the Russian Federation9 that has been forwarded provides Proposal for the calculations estimates of Russian LNG production cost (on average The alternative cost of gas that is being supplied to the for all projects implemented in Russia) for comparison region today can be determined based on the LNG mar- with competitors from other countries. Production cost ket price; however, the estimate based on the average net- without delivery to the international markets is esti- back for the whole of Russia seems acceptable. Please see mated at $2–4 per BTU ($56–112 per 1,000 m3 or Rub “Calculation of alternative gas cost for the LNG market” 3,623.2–7,246.4 per 1,000 m3 at the 2019 exchange rate). below. Production cost with delivery to international markets is estimated at 3.7–7 $/BTU (103.6–196 $/1,000  m3, or 10. Chukotka Autonomous District Rub 6,702.92–12,681.2 per 1,000 m3 at the 2019 ex- The Far East macroregion: the region did not provide change rate). data on gas consumption in 2019 to Rosstat. All gas in the Given the lack of data on LNG production cost specif- macroregion is consumed in the regions not connected to ically for Sakhalin projects; insufficient data on differences the UGSS. in the cost of transporting natural gas to the studied re- gions from the Sakhalin deposits, plus the costs of LNG Gas production and supply production from natural gas produced in the Sakhalin gas The West Ozernoye gas field has been developed since deposits; high volatility in the LNG markets, including 2003. It is of local importance. Gas is supplied mostly to the Asian market; the sensitivity of market conditions Chukotkaenergo. to supplied volumes (once the Sakhalin projects are fully on stream, business conditions in the Asian market can Annexes to Chapter 1. Quantifying Energy Subsidies in Russia | A1–9 be adjusted), and currently limited gas export volumes 4 The Far East LNG Project is being implemented by Rosneft to from the Sakhalin deposits of substantial reserves, we monetize gas under the product sharing agreement of the Sakha- lin-1 project. This project includes construction of an LNG plant think it possible to calculate the alternative cost of gas in in the Far East of Russia with a capacity of 6.2 MM tons per year, the studied regions based on the average netback for the as well as a sea LNG terminal and a relevant gas transportation whole of Russia. Average netback was at Rub 5,986.19 per infrastructure. 1,000 m3 in 2019 (it falls within the range of the estimated 5 The prices for gas transportation via trunk pipelines are set for cost of production under the Russian LNG projects with- the following companies: Sakhalinmorneftegas, Gazprom (the main out delivery to the international markets at the 2019 ex- trunk pipeline and facilities under the Sakhalin-2 project), Gaz- prom Transgas Tomsk (with branch pipelines in the Khabarovsk change rate). krai), Gazprom Gas Distribution Far East (with branch pipelines in the Khabarovsk krai), and Far East Generating Company (with branch pipelines in the Khabarovsk krai). 6 The natural gas consumption limit for the Amur region in the Notes period until 2026 is 3.5 bln m3/year: 2.96 bln m3/year will be con- 1 Oil production for 2019 (Rosneft data) amounted to 17 MM m3, sumed by large companies (Amur gas chemical plant, Svobodn- whereas consumption in the region stood at 4.8 m3 (Rosstat data). enskzya TPP, Skovorodino methanol manufacturing plant); 0.476 2 This prospect directly depends on the commissioning of the Power bln m3/year will be consumed by housing and utilities sector facil- of Siberia pipeline section extending from the Kovytkinskoye field ities, industrial companies and other organizations in the region in (to the Chayandinskoye field (gas from the Kovytkinskoye field 2021–2025. can be transported to the East by the Power of Siberia gas pipeline, 7 3,629 rubles/1,000 m3 for the Tynda district and the Skovorodino whereas separate trunk gas pipelines are needed to develop the gas district; 3,903.4 rubles/1,000 m3 for other districts infrastructure in the Irkutsk region). 8 Theoretically, subsidization and pipeline gas supplies are possible 3 Theoretically, subsidized gas supplies are possible as well; however, as well; however, decisions on approval of retail prices for the popu- the approved retail prices have been regarded as ‘economically jus- lation do not contain relevant norms; for this reason, the likelihood tified’ in the decision; for this reason, the likelihood of gas supply of pipeline gas supplies is low. subsidization is low. 9 Russian Government Resolution No. 640-r, dated March 16, 2021. A1–10 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Annex 1C. Quantification of price imbalances in wholesale gas prices for households and other consumers with an estimation of amounts of cross-subsidization in these imbalances The amount of the price imbalance in wholesale gas prices The following approach was used to calculate the set for households, and other consumers, was calculated amount of cross-subsidization: based on the following formula: ( w – w ). pop,j (a) The monetary value of total ‘direct subsidies’ in whole- pop/other P other,j Ppop,j V P. D. j = , where sale gas prices set for the households and other consumers 106 in each Russian region was calculated . is the amount of the price imbalance in wholesale gas prices set for households and other consum- (b) The “rate of direct subsidies” in total gas consump- ers in the j-the Russian region. tion in the Russian region was calculated as a price rate is the wholesale gas price for other con- . sumers and households, respectively, in the j-th Russian region, without VAT. (c) The ‘rate of direct subsidies’ characteristic for the is the annual gas consumption in the j-th Russian wholesale price in the ‘households’ group of the Russian region recorded by Rosstat. region was calculated as a price rate . Traditionally cross-subsidization is exercised through setting “lower” (compared to economically justified) tariffs (d) Based on the difference between the ‘direct subsidy rate’ for certain consumer groups at the expense of others. calculated in points b) and c) and the volume of gas con- However, the netback parity gas price (used as the sumption by households, the monetary value of cross-sub- economically justified price) exceeds the wholesale gas sidization was calculated: price for households and other consumers. Thus, the full amount of the price imbalance cannot specifically be con- sidered cross-subsidization (in this case, lower prices for households are not set by setting higher prices for all other consumers). Annexes to Chapter 1. Quantifying Energy Subsidies in Russia | A1–11 Annex 1D. Quantification of cross-subsidization of electric power between consumer groups Cross-subsidization in electricity was estimated at Rub • Average one-rate tariff for electricity transmission 219.9 billion (0.2 percent of GDP). services established for other (excluding house- The amount of cross-subsidization in the regions of holds) low-voltage consumers adjusted for the Russia is calculated using the following formula: amount of cross-subsidization accounted for tariffs (as an “indicative” of the reasonable tariff level for services of transmission of electrical energy at a low Where is the cross-subsidization amount in the voltage level) i-th region. • Distribution markup and infrastructure payments is the cumulative volume of electricity consumed by households in the i-th region for one year. Average one-rate tariffs for electricity transmission is the value of cost-recoverable price for electricity services for other low-voltage consumers are established consumption for the households. by regional executive authorities in pricing and tariff is the actual value of the electricity consumption regulation. tariff for the households. Price for electricity (capacity) of the wholesale market and data on distribution markup is based on the analytical The cost-recoverable price for delivering electricity to reports of N.P. “Market Council.” households is calculated by summing up the correspond- Thus, to consolidate data for all regions of the Rus- ing price components in each region of the Russian Feder- sian Federation, or separate macro-regions, it is necessary ation. Thus, the average cost-recoverable price of electricity to revise regulations on establishing uniform boiler tariffs for households in the region consists of: for transmission of electrical energy services through the networks for each region. • One-rate cost-recoverable price for electricity (ca- pacity) of the wholesale market for other consum- ers (industrial and other organizations) A1–12 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes ENERGY SUBSIDIES IN RUSSIA Size, Impact, and Potential for Reform Chapter 2. General Equilibrium Effects of Energy Subsidy Reform Annexes Annex 2A. SAM and GTAP Aggregation Table 2A.1. Sectoral Aggregation in GTAP Old code New code Description pdr Agriculture Paddy rice wht Agriculture Wheat gro Agriculture Cereal grains, not elsewhere classified v_f Agriculture Vegetables, fruit, nuts osd Agriculture Oil seeds c_b Agriculture Sugar cane, sugar beet pfb Agriculture Plant-based fibers ocr Agriculture Crops, not elsewhere classified ctl Agriculture Bovine cattle, sheep and goats oap Agriculture Animal products, not elsewhere classified rmk Agriculture Raw milk wol Agriculture Wool, silk-worm cocoons frs Agriculture Forestry fsh Agriculture Fishing coa coa Coal oil oil Oil gas gas Gas oxt Other extracts Minerals, not elsewhere classified cmt Manufacturing Bovine meat products omt Manufacturing Meat products, not elsewhere classified vol Manufacturing Vegetable oils and fats mil Manufacturing Dairy products pcr Manufacturing Processed rice sgr Manufacturing Sugar ofd Manufacturing Food products, not elsewhere classified b_t Manufacturing Beverages and tobacco products tex Manufacturing Textiles wap Manufacturing Wearing apparel lea Manufacturing Leather products lum Manufacturing Wood products ppp Manufacturing Paper products, publishing p_c Petrcoal Petroleum, coal products chm Manufacturing Chemical products bph Manufacturing Basic pharmaceutical products rpp Manufacturing Rubber and plastic products A2–2 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Table 2A.1. Continued Old code New code Description nmm Manufacturing Mineral products, not elsewhere classified i_s Manufacturing Ferrous metals nfm Manufacturing Metals, not elsewhere classified fmp Manufacturing Metal products ele Manufacturing Computer, electronic and optic eeq Manufacturing Electrical equipment ome Manufacturing Machinery and equipment, not elsewhere classified mvh Manufacturing Motor vehicles and parts otn Manufacturing Transport equipment, not elsewhere classified omf Manufacturing Manufacturing, not elsewhere classified ely ely Electricity gdt gas Gas manufacturing, distribution wtr Water Water cns Construction Construction trd Trade Trade afs Accommodation Accommodation, food and service otp Transport Transport, not elsewhere classified wtp Transport Water transport atp Transport Air Transport whs Transport Warehousing and support activities cmn Communication Communication ofi Financial services Financial services, not elsewhere classified ins Financial services Insurance rsa Real estate Real estate obs Business services Business services, not elsewhere classified ros Recreation Recreational and other services osg Public administration Public administration and defense edu Education Education hht Health services Human health and social work dwe Business services Dwellings Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–3 Annex 2B. Results of Scenario 1 Table 2B.1. Percentage change in output by sector and region—Scenario 1 Central East Far North Volga- West Output Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.17 0.31 0.41 0.22 0.51 0.86 0.42 0.29 0.24 0.74 1.46 0.21 0.08 Coal 0.43 −0.03 −0.38 −0.07 0.94 0.84 1.18 −0.06 −0.25 0.93 2.49 −0.19 0.20 Oil −4.99 −4.10 −4.31 −4.73 −4.50 −2.11 −4.91 −3.93 −3.74 −2.50 −2.84 −4.55 0.19 Gas 7.38 8.67 8.53 8.84 4.94 −3.23 7.94 9.18 9.53 −1.18 −1.77 9.76 −0.33 Other extracts 0.24 0.51 0.84 0.49 1.03 0.92 0.85 0.44 0.35 0.77 2.42 0.30 0.08 Manufacturing 0.27 0.55 1.00 0.63 1.23 1.12 1.08 0.49 0.39 0.83 2.79 0.34 0.20 Oil products 0.03 −1.47 −0.30 −1.17 1.69 −0.56 −2.37 −1.42 −1.31 −0.37 0.30 −1.31 −0.08 Electricity 0.09 −0.18 0.56 −0.68 0.57 0.63 −0.01 −0.67 −0.75 0.45 −0.93 −1.10 −0.09 Water 0.22 0.35 0.68 0.27 0.69 0.69 −0.01 0.32 0.32 0.68 0.68 0.22 0.17 Construction −0.33 −0.66 −0.23 −0.37 −0.10 −4.39 0.04 −0.78 −0.91 −1.72 −0.92 −0.51 −0.19 Trade −0.16 0.30 1.14 0.44 1.03 0.01 0.42 0.38 0.38 0.04 −0.29 0.29 −0.02 Accommodation 0.32 0.58 0.82 0.41 0.76 1.31 0.59 0.59 0.56 1.30 1.71 0.45 0.11 A2–4 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Transport 0.12 0.19 0.37 0.14 0.56 0.49 0.13 0.14 0.14 0.55 1.07 0.08 0.09 Communication 0.59 0.47 0.88 0.42 0.71 0.70 0.51 0.44 0.41 0.91 1.50 0.43 0.15 Financial services 0.27 −0.02 −0.03 −0.07 0.01 0.61 0.14 −0.08 −0.07 0.11 0.37 −0.08 0.03 Real estate 0.20 0.46 0.52 0.32 0.40 0.89 0.25 0.44 0.43 0.98 1.18 0.35 0.08 Business services 0.52 0.15 0.52 0.21 0.41 0.12 0.25 0.17 0.14 0.23 0.62 0.21 0.07 Recreation 0.18 0.36 0.12 0.21 0.07 0.98 0.21 0.35 0.31 1.09 1.11 0.23 0.04 Public administration 0.22 0.45 0.42 0.31 0.33 1.24 0.26 0.43 0.40 1.21 1.59 0.31 0.10 Education 0.19 0.41 0.35 0.25 0.26 1.17 0.20 0.38 0.36 1.16 1.48 0.25 0.10 Health services 0.19 0.41 0.37 0.27 0.29 1.25 0.17 0.39 0.37 1.20 1.49 0.26 0.10 Table 2B.2. Percentage change in exports by sector and region—Scenario 1 Central East Far North Volga- West Export Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.19 0.19 −0.08 0.16 −0.33 1.03 1.14 0.16 0.28 1.22 0.58 0.10 0.09 Coal 0.67 1.63 −0.40 0.40 0.89 3.29 1.19 1.42 1.44 3.05 2.69 0.83 0.26 Oil −7.78 −9.07 −7.89 −8.55 −8.27 −8.00 −4.91 −8.97 −9.21 −7.65 −7.98 −9.25 0.25 Gas 8.82 9.47 9.11 9.39 5.96 −9.86 8.72 9.53 9.65 −3.10 −2.96 9.79 −2.35 Other extracts 0.23 0.2 0.07 −0.05 0.26 0.68 0.90 0.15 0.18 0.76 0.26 0.07 0.05 Manufacturing 0.33 1.94 2.59 1.38 2.99 4.36 1.89 1.60 1.61 4.08 8.4 0.61 0.37 Oil products −0.04 −3.58 −0.59 −1.97 2.01 −1.36 −3.03 −3.67 −3.69 −0.47 −0.47 −2.52 −0.13 Electricity 0.13 −2.30 1.06 −5.5 0.87 3.52 −1.19 −6.05 −6.48 2.94 −7.10 −8.21 −0.69 Water 1.12 2.01 1.91 1.17 1.92 3.77 0.77 1.62 1.51 3.44 4.85 0.83 0.50 Construction 1.12 1.98 2.21 1.58 1.8 2.77 2.19 1.93 1.83 2.55 7.00 1.41 0.42 Trade 1.76 2.67 3.20 2.18 2.42 3.05 1.88 2.68 2.53 2.87 8.78 2.17 0.53 Accommodation 1.62 2.52 2.95 2.03 2.26 3.15 2.74 2.53 2.41 2.87 8.09 2.02 0.58 Transport 0.5 0.89 1.05 0.78 1.45 1.26 0.19 0.83 0.75 1.58 4.39 0.48 0.23 Communication 1.41 2.34 2.67 1.84 2.02 2.96 2.31 2.30 2.17 2.74 7.89 1.73 0.54 Financial services 1.05 1.96 1.97 1.48 1.53 2.59 1.1 1.94 1.82 2.42 6.99 1.26 0.46 Real estate 1.80 2.66 3.18 2.02 2.39 3.14 3.89 2.59 2.46 2.92 8.48 2.03 0.59 Business services 1.21 2.11 2.27 1.61 1.77 2.77 1.00 2.06 1.94 2.55 7.23 1.51 0.51 Recreation 0.93 1.87 1.81 1.26 1.56 2.83 0.76 1.76 1.66 2.53 6.33 1.27 0.47 Public administration −0.29 0.16 0.11 −0.11 −0.06 1.79 −0.16 0.13 0.07 1.64 2.43 −0.12 −0.18 Education 0.76 1.59 1.38 1.04 1.05 2.34 1.40 1.49 1.38 2.22 6.01 1.01 0.44 Health services 0.78 1.62 1.49 1.11 1.18 2.40 1.03 1.54 1.44 2.27 5.93 1.03 0.44 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–5 Table 2B.3. Percentage change in imports by sector and region—Scenario 1 Central East Far North Volga- West Imports Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.09 0.21 0.72 0.13 0.86 −0.11 −0.24 0.18 0.17 −0.33 1.13 0.15 0.12 Coal 0.09 −1.18 −0.42 −1.12 2.04 −1.35 0.36 −1.82 −0.95 −1.56 −0.11 −1.17 −0.09 Oil 3.77 −8.34 −4.86 −5.34 −6.03 7.70 −4.91 −6.37 −5.35 7.81 −9.86 −5.62 −0.13 Gas −2.01 −6.35 −2.91 −5.85 0.39 3.28 −0.07 −4.96 −4.08 −0.48 2.58 −3.91 −0.67 Other extracts 0.15 0.41 0.68 0.32 0.78 0.46 0.77 0.29 0.21 0.18 1.91 0.21 0.15 Manufacturing −0.3 −0.69 −0.8 −0.24 −0.97 −1.92 −0.5 −0.62 −0.63 −1.82 −2.32 −0.37 −0.10 Oil products 0.04 0.75 0.55 0.33 0.20 0.81 0.56 1.23 1.13 0.09 1.06 0.42 0.01 Electricity 0.05 1.04 0.08 2.22 0.24 −2.83 0.02 2.56 2.70 −2.36 3.17 3.33 0.32 Water −0.29 −0.13 −0.13 0.02 −0.2 −0.15 0.30 −0.12 −0.38 −1.08 −1.42 0.06 −0.13 Construction −1.02 −1.86 −1.42 −1.26 −1.07 −9.35 −1.18 −1.99 −2.21 −4.96 −4.47 −1.40 −0.65 Trade −0.63 −0.25 −1.5 −0.99 −1.11 −0.73 −0.07 −1.29 −1.15 −2.61 −3.18 −0.07 −0.04 Accommodation −0.48 −0.63 −0.75 −0.6 −0.49 −1.63 −0.79 −0.64 −0.62 −1.41 −2.03 −0.55 −0.16 Transport −0.36 −0.54 −1.05 −0.57 −1.17 −1.77 −0.12 −0.65 −0.57 −1.69 −2.06 −0.54 −0.08 A1–6 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Communication 0.00 −0.56 −0.78 −0.51 −0.63 −1.56 0.08 −0.6 −0.57 −1.38 −2.19 −0.32 −0.13 Financial services −0.24 −0.79 −1.00 −0.64 −0.7 −1.75 0.06 −0.87 −0.82 −1.96 −2.86 −0.55 −0.17 Real estate −0.27 −0.86 −0.98 −0.64 −0.72 −1.78 −0.87 −0.85 −0.77 −1.88 −2.74 −0.65 −0.20 Business services −0.11 −0.46 −0.89 −0.39 −0.68 −1.43 0.11 −0.48 −0.46 −1.15 −1.87 −0.20 −0.09 Recreation −0.25 −0.42 −0.35 −0.34 −0.33 −1.35 −0.11 −0.39 −0.36 −1.16 −1.49 −0.29 −0.13 Public administration 0.02 0.3 0.04 −0.32 0.08 −1.34 0.26 0.30 0.27 0.89 −1.80 0.20 −0.02 Education 0.06 −0.01 0.32 0.23 0.49 0.03 0.13 0.35 −0.01 −0.35 1.51 0.24 0.03 Health services −0.01 −0.11 0.57 0.45 0.68 0.1 0.22 −0.03 −0.09 −0.53 −0.09 0.18 0.17 Table 2B.4. Percentage change in private consumption by sector and region—Scenario 1 Private household Central East Far North Volga- West consumption Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.05 0.12 0.14 0.05 0.09 0.41 0.13 0.11 0.12 0.42 0.33 0.07 0.02 Coal 0.25 0.85 0.62 0.48 0.22 1.51 0.53 0.58 0.93 0.59 1.93 0.69 0.15 Oil 0.01 0.07 −0.30 −0.07 −0.58 1.13 −0.39 0.05 −0.09 0.07 0.41 0.38 0.07 Gas −0.37 2.20 2.11 2.83 0.77 −9.10 0.32 4.57 3.04 −0.59 −0.37 4.27 −0.69 Other extracts 0.06 0.20 0.28 0.07 0.24 0.76 0.15 0.20 0.20 0.76 0.57 0.13 0.03 Manufacturing 0.11 0.26 0.39 0.13 0.35 0.46 0.19 0.23 0.23 0.44 0.93 0.13 0.03 Oil products 0.01 −0.46 −0.02 −0.04 0.43 1.22 −0.37 −0.53 −0.49 0.17 0.65 0.02 0.06 Electricity 0.10 −0.07 0.41 −0.68 0.20 2.47 0.09 −0.68 −0.77 1.20 −0.44 −1.05 0.01 Water 0.19 0.42 0.49 0.21 0.42 1.36 0.22 0.38 0.35 1.26 1.06 0.23 0.09 Construction 0.24 0.50 0.62 0.32 0.49 1.41 0.44 0.50 0.47 1.32 1.61 0.35 0.10 Trade 0.37 0.67 0.84 0.45 0.64 1.64 0.12 0.67 0.63 1.55 0.61 0.51 0.14 Accommodation 0.33 0.63 0.78 0.42 0.60 1.64 0.56 0.63 0.60 1.52 1.89 0.47 0.13 Transport 0.16 0.34 0.44 0.20 0.46 1.12 0.14 0.33 0.31 1.10 1.27 0.21 0.06 Communication 0.06 0.46 0.61 0.30 0.46 1.29 0.11 0.48 0.46 1.21 1.55 0.28 0.09 Financial services 0.23 0.53 0.61 0.32 0.47 1.42 0.29 0.52 0.49 1.34 1.68 0.35 0.11 Real estate 0.22 0.61 0.76 0.39 0.58 1.52 0.11 0.60 0.56 1.43 1.82 0.44 0.12 Business services 0.07 0.39 0.53 0.23 0.48 0.89 0.12 0.47 0.44 1.12 1.65 0.24 0.08 Recreation 0.22 0.52 0.59 0.29 0.48 1.52 0.24 0.50 0.47 1.39 1.60 0.34 0.11 Public administration 0.21 0.51 0.57 0.29 0.44 1.42 0.27 0.49 0.46 1.34 1.63 0.34 0.11 Education 0.19 0.47 0.52 0.25 0.40 1.36 0.26 0.45 0.42 1.29 1.55 0.30 0.05 Health services 0.13 0.47 0.54 0.27 0.42 1.38 0.26 0.46 0.43 1.31 1.54 0.30 0.11 Annexes to Chapter 1. Quantifying Energy Subsidies in Russia | A1–7 Table 2B.5. Percentage change in government expenditures by sector and region—Scenario 1 Government Central East Far North Volga- West consumption Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.03 0.03 −0.03 0.03 −0.09 0.43 0.26 0.03 0.05 0.51 0.11 0.01 0.01 Coal 0.36 0.75 0.54 0.43 0.64 1.11 0.49 0.40 0.72 1.13 1.25 0.42 0.36 Oil 0.05 0.19 0.17 0.11 0.12 0.74 −0.38 0.18 0.16 0.62 0.77 0.11 0.2 Gas −0.82 −0.50 1.26 0.50 0.79 −1.59 0.97 1.81 −0.49 −0.11 0.66 0.71 −0.66 Other extracts 0.04 0.1 0.03 −0.04 0.14 0.63 0.27 0.07 0.09 0.78 0.14 0.02 −0.01 Manufacturing 0.11 0.25 0.34 0.13 0.38 0.97 0.18 0.22 0.22 0.95 1.05 0.07 0.02 Oil products 0.04 0.07 0.15 0.06 0.19 0.67 0.06 0.01 0.01 0.57 0.72 0.10 0.2 Electricity 0.11 0.25 0.24 0.17 0.19 0.81 0.12 0.24 0.23 0.69 0.83 0.18 0.27 Water 0.21 0.36 0.34 0.21 0.35 1.37 0.14 0.29 0.27 1.25 0.86 0.15 0.10 Construction 0.28 0.51 0.57 0.40 0.46 1.46 0.56 0.5 0.47 1.34 1.79 0.36 0.10 Trade −0.01 0.17 −0.01 −0.01 −0.01 0.47 0.04 −0.01 −0.01 0.00 0.02 0.02 0.00 Accommodation 0.41 0.64 0.75 0.52 0.58 1.65 0.70 0.65 0.62 1.50 2.06 0.51 0.14 Transport 0.19 0.28 0.33 0.23 0.46 1.11 0.06 0.26 0.24 1.12 1.38 0.18 0.04 A2–8 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Communication 0.36 0.60 0.69 0.47 0.52 1.56 0.60 0.59 0.56 1.45 2.01 0.44 0.13 Financial services 0.26 0.50 0.50 0.38 0.39 1.36 0.28 0.5 0.47 1.27 1.78 0.34 0.11 Real estate 0.46 0.68 0.82 0.52 0.61 1.65 0.99 0.67 0.63 1.53 2.16 0.52 0.14 Business services 0.30 0.54 0.58 0.41 0.45 1.46 0.25 0.53 0.50 1.34 1.84 0.39 0.12 Recreation 0.23 0.48 0.46 0.32 0.39 1.48 0.18 0.45 0.42 1.32 1.61 0.32 0.11 Public administration 0.22 0.46 0.43 0.32 0.34 1.32 0.28 0.44 0.41 1.24 1.66 0.31 0.11 Education 0.19 0.40 0.35 0.26 0.26 1.23 0.35 0.38 0.35 1.17 1.53 0.25 0.1 Health services 0.19 0.41 0.38 0.28 0.29 1.26 0.26 0.39 0.36 1.19 1.51 0.26 0.10 Table 2B.6. Percentage change in market prices by sector and region—Scenario 1 Central East Far North Volga- West Market price Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture −0.03 −0.03 0.03 −0.03 0.09 −0.43 −0.26 −0.03 −0.05 −0.51 −0.11 −0.01 −0.01 Coal −0.12 −0.29 −0.38 −0.14 −0.16 −1.07 −0.21 −0.25 −0.25 −0.99 −1.03 −0.15 −0.04 Oil 1.31 1.88 1.33 1.44 1.39 2.57 0.85 1.85 1.93 2.46 1.34 1.96 0.06 Gas −1.45 −3.52 −1.86 −2.91 −0.86 9.89 −1.53 −4.06 −4.08 0.75 1.46 −4.1 0.30 Other extracts −0.13 −0.11 −0.03 0.04 −0.14 −0.75 −0.52 −0.07 −0.09 −0.83 −0.14 −0.02 −0.02 Manufacturing −0.16 −0.30 −0.37 −0.19 −0.41 −1.17 −0.32 −0.26 −0.25 −1.10 −1.22 −0.13 −0.04 Oil products 0.09 0.99 0.29 0.58 −0.42 0.78 0.85 1.05 1.01 0.35 0.28 0.73 0.11 Electricity 0.00 0.44 −0.17 1.03 −0.14 −1.22 0.23 1.14 1.22 −1.02 1.34 1.57 0.14 Water −0.21 −0.36 −0.34 −0.21 −0.34 −1.35 −0.14 −0.29 −0.27 −1.24 −0.85 −0.15 −0.10 Construction −0.28 −0.51 −0.57 −0.4 −0.46 −1.44 −0.56 −0.49 −0.47 −1.33 −1.76 −0.36 −0.10 Trade −0.47 −0.7 −0.84 −0.58 −0.64 −1.62 −0.50 −0.70 −0.67 −1.53 −2.20 −0.57 −0.15 Accommodation −0.41 −0.64 −0.75 −0.51 −0.57 −1.62 −0.70 −0.64 −0.61 −1.48 −2.01 −0.51 −0.14 Transport −0.19 −0.28 −0.33 −0.23 −0.46 −1.1 −0.06 −0.26 −0.24 −1.1 −1.36 −0.18 −0.04 Communication −0.36 −0.60 −0.68 −0.47 −0.52 −1.54 −0.59 −0.59 −0.56 −1.43 −1.97 −0.44 −0.13 Financial services −0.26 −0.50 −0.5 −0.37 −0.39 −1.34 −0.28 −0.49 −0.46 −1.26 −1.75 −0.33 −0.11 Real estate −0.46 −0.68 −0.81 −0.52 −0.61 −1.62 −0.99 −0.66 −0.63 −1.51 −2.11 −0.52 −0.14 Business services −0.30 −0.54 −0.58 −0.41 −0.45 −1.44 −0.25 −0.53 −0.49 −1.32 −1.81 −0.38 −0.12 Recreation −0.23 −0.47 −0.46 −0.32 −0.39 −1.46 −0.18 −0.44 −0.42 −1.31 −1.59 −0.32 −0.11 Public administration −0.22 −0.46 −0.43 −0.32 −0.34 −1.30 −0.28 −0.44 −0.41 −1.23 −1.63 −0.31 −0.11 Education −0.19 −0.40 −0.35 −0.26 −0.26 −1.21 −0.35 −0.38 −0.35 −1.15 −1.51 −0.25 −0.10 Health services −0.19 −0.41 −0.38 −0.28 −0.29 −1.24 −0.26 −0.39 −0.36 −1.18 −1.49 −0.26 −0.10 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–9 Annex 2C. Results of Scenario 2 Table 2C.1. Percentage change in macroeconomic indicators by region—Scenario 2 Government Private Region GRP Investment Export Import consumption consumption Central 0.69 0.13 −0.05 0.24 0.77 0.90 Central Black Soil 0.19 −1.14 0.07 −1.12 0.21 0.17 East Siberian 0.02 −0.22 −0.58 −0.84 0.16 0.18 Far Eastern 0.04 −0.51 0.22 −0.36 0.14 0.00 Kaliningrad 0.32 −0.76 0.41 −0.33 0.28 0.22 Moscow 0.07 −0.27 0.09 0.07 0.10 0.08 North Caucasus 2.72 −1.18 −0.73 1.13 2.80 2.15 Northern 0.01 −0.27 −0.61 −0.64 0.15 0.20 Northwestern 0.03 −0.14 0.07 −0.41 0.15 0.03 Ural 0.09 −1.52 0.06 −1.15 0.16 0.13 Volga 0.09 −1.21 0.05 −1.10 0.17 0.14 Volga-Vyatka 2.61 6.44 4.17 9.60 2.94 2.34 West Siberian 1.00 −1.41 1.92 −1.46 1.43 1.13 Total Russia 0.55 −0.67 0.41 −0.07 0.58 0.73 A2–10 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Table 2C.2. Percentage change in output by sector and region—Scenario 2 Central East Far North Volga- West Output Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.27 0.53 0.8 0.27 0.76 0.77 0.14 0.54 0.44 −0.55 1.22 0.29 0.08 Coal 0.09 0.74 0.62 0.09 1.35 0.41 0.80 0.70 0.74 −3.34 1.97 0.00 0.27 Oil −5.38 −3.82 −4.16 −4.56 −4.07 −2.75 −5.06 −3.65 −3.46 −5.93 −2.87 −4.50 0.19 Gas 8.81 −0.34 −8.62 8.20 −8.84 1.24 7.16 1.81 2.53 9.97 −0.16 8.86 −3.09 Other extracts 0.16 0.96 1.51 0.72 0.92 0.70 0.62 0.96 0.82 −0.81 2.07 0.51 0.14 Manufacturing 0.31 1.04 1.81 0.93 1.14 0.86 0.83 1.06 0.89 −0.60 2.39 0.58 0.35 Oil products 0.31 −1.33 −0.12 −0.9 2.32 −0.82 −2.49 −1.23 −1.14 −0.88 0.25 −1.26 0.33 Electricity 0.73 −0.39 0.74 −0.76 0.73 0.38 −0.20 −0.93 −1.07 0.92 −0.92 −1.11 0.08 Water 0.73 0.31 0.91 0.18 1.01 1.20 0.01 0.30 0.29 1.25 0.45 0.23 0.18 Construction 0.18 −0.83 −0.09 −0.4 −0.15 −0.67 −0.01 −0.88 −1.03 4.61 −1.13 −0.52 −0.09 Trade −0.4 0.26 1.53 0.42 1.62 0.19 0.23 0.37 0.37 0.68 −0.46 0.3 −0.04 Accommodation 0.87 0.31 0.71 0.25 0.9 2.20 0.33 0.27 0.26 2.50 1.62 0.37 0.09 Transport 0.49 0.23 0.78 0.12 0.66 0.68 0.02 0.18 0.17 0.40 0.87 0.11 0.15 Communication 0.42 0.50 1.09 0.39 1.18 1.42 0.29 0.43 0.39 1.15 1.30 0.43 0.14 Financial services 0.71 0.07 0.48 −0.07 0.27 0.69 −0.07 0.06 0.06 0.00 0.12 −0.02 0.07 Real estate 0.52 0.25 0.31 0.20 0.32 1.66 0.06 0.21 0.20 1.98 1.08 0.30 0.06 Business services 0.31 0.28 0.89 0.22 0.73 0.20 0.08 0.26 0.25 0.20 0.38 0.25 0.08 Recreation 0.85 0.10 0.09 0.04 −0.01 2.32 0.02 0.06 0.05 2.80 0.95 0.17 0.05 Public administration 0.78 0.20 0.16 0.13 0.15 2.73 0.08 0.16 0.15 2.92 1.36 0.28 0.09 Education 0.83 0.19 0.21 0.06 0.21 2.64 0.01 0.14 0.13 2.82 1.19 0.24 0.10 Health services 0.77 0.16 0.13 0.08 0.10 2.77 0.03 0.12 0.12 2.98 1.23 0.23 0.09 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–11 Table 2C.3. Percentage change in exports by sector and region—Scenario 2 Central East Far North Volga- West Export Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture −0.88 1.10 0.13 0.47 0.62 −1.18 0.48 0.89 1.26 −9.4 0.34 0.09 0.09 Coal −0.12 3.15 0.65 0.57 1.22 −0.10 0.81 2.92 3.00 −9.54 2.14 1.09 0.29 Oil −8.55 −9.19 −7.73 −8.4 −7.93 −9.07 −5.06 −9.44 −9.73 −9.82 −7.99 −9.79 0.16 Gas 8.67 0.56 −9.69 7.81 −9.62 7.95 8.34 4.18 5.41 9.98 0.20 8.54 −3.93 Other extracts −0.11 0.34 −0.08 −0.02 0.00 −0.37 0.66 0.17 0.31 −4.01 0.41 0.00 0.06 Manufacturing −0.36 4.28 4.29 2.12 2.83 −0.01 1.54 3.73 3.96 −9.07 7.52 1.36 0.62 Oil products −0.15 −3.07 −0.46 −1.48 2.75 −2.75 −3.14 −3.21 −3.16 −8.67 −0.49 −2.47 0.39 Electricity 2.02 −2.59 1.20 −5.49 1.17 −0.08 −1.54 −7.27 −7.71 −8.8 −6.56 −8.40 0.56 Water −0.02 4.28 3.61 1.80 4.17 0.26 0.46 3.80 3.90 −8.98 4.09 1.29 0.53 Construction −0.16 3.47 3.34 2.05 3.45 0.20 1.57 3.32 3.38 −9.32 6.41 1.64 0.41 Trade −0.4 4.25 3.82 2.81 4.22 0.20 1.58 4.07 4.08 −9.99 8.69 2.38 0.42 Accommodation −0.29 4.04 3.68 2.61 3.93 0.29 2.27 3.89 3.93 −9.77 7.88 2.22 0.48 Transport 0.01 1.91 1.74 1.21 1.64 −0.06 0.17 1.78 1.78 −6.63 4.04 0.64 0.36 Communication −0.22 3.91 3.73 2.36 4.14 0.27 1.77 3.74 3.76 −9.63 7.42 1.97 0.45 A2–12 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Financial services −0.13 3.61 3.59 1.93 4.01 0.27 0.85 3.52 3.54 −9.44 6.21 1.59 0.42 Real estate −0.27 4.22 3.89 2.62 4.39 0.30 3.21 3.96 3.97 −9.92 8.38 2.25 0.49 Business services −0.17 3.67 3.55 2.09 3.89 0.27 0.76 3.52 3.55 −9.48 6.66 1.79 0.45 Recreation −0.09 3.4 3.13 1.72 3.21 0.30 0.56 3.21 3.26 −9.46 5.65 1.54 0.44 Public administration −0.42 1.33 1.32 0.44 1.48 −0.06 0.05 1.27 1.29 −9.80 2.34 0.42 0.04 Education 0.01 3.34 3.53 1.39 3.90 0.29 0.76 3.23 3.25 −9.46 4.79 1.47 0.45 Health services −0.05 3.27 3.34 1.48 3.59 0.29 0.78 3.18 3.23 −9.42 4.90 1.42 0.43 Table 2C.4. Percentage change in imports by sector and region—Scenario 2 Central East Far North Volga- West Import Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.66 0.13 1.22 0.04 0.54 1.35 −0.13 0.15 0.05 7.51 0.99 0.25 0.20 Coal 0.48 −1.58 −0.56 −0.92 2.48 0.02 −0.08 −2.45 −1.41 8.60 −0.05 −1.29 0.30 Oil 4.46 −9.18 −5.51 −5.4 −5.44 9.07 −5.14 −7.35 −6.16 9.87 −9.27 −5.86 0.31 Gas −1.56 0.13 4.22 −3.26 1.24 −0.99 0.27 −0.45 −0.21 −9.93 0.47 −3.15 0.57 Other extracts 0.32 0.85 1.37 0.37 0.80 0.82 0.54 0.59 0.43 2.03 1.56 0.39 0.27 Manufacturing 0.49 −1.51 −1.25 −0.49 −1.03 0.88 −0.49 −1.30 −1.48 9.09 −2.29 −0.42 −0.07 Oil products 0.39 0.59 0.74 0.24 0.27 1.94 0.25 1.15 0.98 8.44 0.99 0.47 0.09 Electricity −0.36 1.09 0.20 2.18 0.27 0.39 −0.42 3.08 3.17 9.06 2.87 3.46 −0.10 Water 0.59 −0.67 −0.56 −0.20 −0.83 1.16 −0.01 −0.67 −1.30 8.61 −1.34 0.00 −0.12 Construction 0.19 −2.80 −1.85 −1.53 −1.95 −1.43 −0.90 −2.8 −3.14 9.702 −4.41 −1.52 −0.47 Trade 0.86 −1.01 −1.65 −1.39 −2.01 2.41 −0.17 −2.12 −2.07 9.377 −3.31 −0.21 −0.04 Accommodation 1.03 −1.66 −1.44 −1.05 −1.48 2.21 −0.81 −1.64 −1.67 9.369 −2.01 −0.73 −0.14 Transport 0.54 −1.25 −1.21 −0.90 −1.29 1.10 −0.23 −1.34 −1.33 9.15 −2.03 −0.62 −0.09 Communication 0.74 −1.45 −1.27 −0.88 −1.45 1.92 −0.07 −1.49 −1.54 9.23 −2.1 −0.47 −0.11 Financial services 0.32 −1.36 −1.33 −0.84 −1.69 −0.01 −0.28 −1.44 −1.46 9.26 −2.76 −0.62 −0.12 Real estate 0.86 −1.78 −1.42 −1.06 −1.71 1.59 −0.86 −1.70 −1.7 9.283 −2.81 −0.79 −0.17 Business services 0.61 −1.21 −1.29 −0.69 −1.47 1.08 −0.07 −1.32 −1.34 9.075 −1.77 −0.34 −0.08 Recreation 0.95 −1.46 −1.35 −0.76 −1.39 2.41 −0.23 −1.42 −1.45 9.351 −1.32 −0.05 −0.13 Public administration 0.10 0.01 −0.99 −1.51 −0.06 1.50 0.03 −0.02 −0.01 3.47 −2.70 0.14 −0.01 Education 0.49 −0.46 0.04 0.18 −0.58 1.58 −0.09 0.69 −0.11 6.70 1.31 0.38 0.05 Health services 0.85 −0.82 0.70 0.67 0.51 0.81 −0.14 −0.55 −0.77 5.42 −0.03 0.23 0.32 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–13 Table 2C.5. Percentage change in government expenditures by sector and region—Scenario 2 Government Central East Far North Volga- West consumption Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.56 −0.47 −0.71 −0.19 −0.68 2.14 −0.01 −0.5 −0.42 4.03 0.06 −0.12 0.00 Coal 1.06 0.21 0.09 0.25 0.09 2.98 0.17 −0.07 0.17 5.74 1.13 0.30 0.07 Oil 0.71 −0.27 −0.33 −0.13 −0.38 2.64 −0.66 −0.3 −0.31 5.32 0.66 0.03 −0.08 Gas 1.09 0.08 −1.71 0.15 −1.97 3.70 2.64 0.09 0.06 9.67 0.83 0.55 0.28 Other extracts 0.77 −0.48 −0.78 −0.31 −0.82 2.29 −0.01 −0.59 −0.53 4.00 0.24 −0.15 −0.02 Manufacturing 0.79 −0.18 −0.17 −0.1 −0.45 2.65 0.03 −0.23 −0.19 4.26 0.94 −0.03 0.03 Oil products 0.70 −0.37 −0.35 −0.16 −0.29 2.50 −0.21 −0.45 −0.45 4.69 0.61 0.02 −0.07 Electricity 0.78 −0.20 −0.26 −0.06 −0.31 2.72 −0.2 −0.23 −0.24 5.39 0.73 0.10 −0.01 Water 0.81 0.08 −0.08 0.04 −0.08 2.78 −0.02 −0.01 −0.01 3.16 0.72 0.10 0.09 Construction 0.75 0.22 0.14 0.24 0.07 2.77 0.29 0.17 0.17 3.05 1.64 0.29 0.09 Trade 0.79 −0.4 −0.73 −0.3 −0.81 2.68 −0.08 −0.69 −0.70 8.35 0.02 −0.11 −0.01 Accommodation 0.71 0.36 0.22 0.38 0.19 2.81 0.47 0.31 0.30 2.77 2.00 0.43 0.10 Transport 0.77 −0.06 −0.18 0.07 −0.3 2.55 −0.07 −0.10 −0.11 3.2 1.27 0.09 0.07 Communication 0.74 0.33 0.23 0.32 0.25 2.81 0.34 0.28 0.26 2.87 1.9 0.38 0.10 A2–14 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Financial services 0.76 0.25 0.2 0.21 0.22 2.8 0.10 0.22 0.21 2.98 1.59 0.29 0.09 Real estate 0.72 0.41 0.27 0.39 0.31 2.82 0.70 0.33 0.31 2.69 2.13 0.45 0.11 Business services 0.75 0.27 0.19 0.25 0.18 2.80 0.08 0.22 0.21 2.95 1.7 0.33 0.10 Recreation 0.77 0.20 0.07 0.15 0.01 2.81 0.02 0.13 0.13 2.95 1.44 0.26 0.09 Public administration 0.77 0.22 0.16 0.14 0.15 2.81 0.1 0.17 0.17 2.93 1.42 0.28 0.10 Education 0.79 0.18 0.18 0.06 0.18 2.81 0.08 0.14 0.13 2.96 1.23 0.24 0.10 Health services 0.78 0.16 0.13 0.09 0.10 2.81 0.08 0.13 0.12 2.98 1.25 0.23 0.09 Table 2C.6. Percentage change in market prices by sector and region—Scenario 2 Central East Far North Volga- West Market price Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.24 −0.20 −0.02 −0.10 −0.13 0.49 −0.01 −0.18 −0.28 4.21 −0.06 −0.01 −0.01 Coal 0.02 −0.56 −0.65 −0.17 −0.22 0.01 −0.14 −0.52 −0.53 4.48 −0.87 −0.19 −0.05 Oil 1.44 1.77 1.30 1.41 1.33 3.32 0.87 1.75 1.82 6.17 1.34 1.95 0.08 Gas −3.40 −0.15 2.55 −1.67 2.48 −4.95 −1.19 −0.64 −0.81 −9.57 −0.44 −3.41 0.49 Other extracts 0.07 −0.20 0.05 0.02 0.01 0.41 −0.38 −0.09 −0.17 4.60 −0.24 0.02 −0.03 Manufacturing 0.01 −0.61 −0.61 −0.3 −0.39 0.00 −0.25 −0.54 −0.58 4.75 −1.11 −0.18 −0.08 Oil products 0.11 0.85 0.24 0.45 −0.6 1.46 0.87 0.94 0.87 4.49 0.28 0.71 −0.03 Electricity −0.34 0.48 −0.2 1.03 −0.2 0.03 0.29 1.37 1.46 3.32 1.23 1.60 −0.09 Water −0.01 −0.76 −0.64 −0.33 −0.73 −0.13 −0.09 −0.67 −0.69 5.08 −0.72 −0.24 −0.10 Construction 0.05 −0.89 −0.86 −0.53 −0.88 −0.12 −0.41 −0.85 −0.87 5.20 −1.62 −0.42 −0.10 Trade 0.09 −1.1 −0.99 −0.74 −1.09 −0.15 −0.42 −1.06 −1.06 5.57 −2.18 −0.63 −0.12 Accommodation 0.09 −1.03 −0.94 −0.67 −1.00 −0.16 −0.58 −0.99 −1.00 5.48 −1.97 −0.57 −0.12 Transport 0.03 −0.61 −0.55 −0.36 −0.52 0.1 −0.04 −0.58 −0.59 5.05 −1.25 −0.23 −0.08 Communication 0.06 −1.00 −0.95 −0.61 −1.06 −0.16 −0.46 −0.96 −0.96 5.39 −1.86 −0.51 −0.11 Financial services 0.04 −0.92 −0.92 −0.49 −1.03 −0.15 −0.21 −0.90 −0.91 5.27 −1.57 −0.42 −0.10 Real estate 0.08 −1.08 −0.99 −0.67 −1.12 −0.17 −0.82 −1.01 −1.01 5.56 −2.09 −0.58 −0.12 Business services 0.05 −0.94 −0.91 −0.54 −0.99 −0.15 −0.19 −0.9 −0.91 5.30 −1.68 −0.46 −0.11 Recreation 0.03 −0.87 −0.8 −0.44 −0.82 −0.16 −0.14 −0.82 −0.83 5.30 −1.43 −0.39 −0.11 Public administration 0.03 −0.89 −0.88 −0.43 −0.96 −0.16 −0.21 −0.86 −0.87 5.32 −1.41 −0.41 −0.11 Education 0.01 −0.85 −0.9 −0.35 −0.99 −0.16 −0.19 −0.82 −0.83 5.29 −1.21 −0.37 −0.11 Health services 0.02 −0.83 −0.85 −0.38 −0.91 −0.16 −0.19 −0.81 −0.82 5.27 −1.24 −0.36 −0.10 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–15 Annex 2D. Results of Scenario 3 Table 2D.1. Percentage change in macroeconomic indicators by region—Scenario 3 Government Private Region GRP Investment Export Import consumption consumption Central 0.82 0.02 −0.47 −1.71 0.44 0.1 Central Black Soil 0.58 1.08 −1.57 −0.7 0.57 0.53 East Siberian 0.66 0.44 0.42 −0.8 0.54 0.57 Far Eastern 0.39 0.92 −0.48 −0.05 0.46 0.39 Kaliningrad 0.56 0.60 −0.61 −0.20 0.45 0.39 Moscow 0.62 2.17 −0.15 −0.92 0.24 0.16 North Caucasus 0.65 11.04 −2.70 1.30 0.55 0.55 Northern 0.73 0.34 0.67 −0.79 0.59 0.62 Northwestern 0.57 −0.14 1.59 −0.85 1.07 0.61 Ural 0.46 1.71 −1.43 −0.38 0.50 0.46 Volga 0.50 1.21 −1.10 −0.30 0.52 0.50 Volga-Vyatka 1.52 1.32 −2.58 −0.75 1.47 1.33 West Siberian 0.04 0.06 −2.59 −1.34 1.73 1.38 Total Russia 0.55 0.75 −0.80 −0.93 0.67 0.51 A2–16 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Table 2D.2. Percentage change in output by sector and region—Scenario 3 Central East Far North Volga- West Output Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.32 0.77 0.98 0.66 1.04 1.01 1.19 0.78 0.65 1.18 1.91 0.83 0.43 Coal 0.84 0.83 0.65 1.62 2.93 0.37 4.17 0.89 0.73 1.29 3.53 1.29 0.91 Oil −4.56 −3.69 −3.97 −4.26 −3.93 −2.61 −3.72 −3.52 −3.35 −2.45 −2.47 −3.94 0.56 Gas 9.254 −0.5 −8.89 −7.62 −9.06 −3.32 −4.7 −7.09 −4.6 −9.83 −9.268 −6.51 4.71 Other extracts 0.4 1.27 1.94 1.49 1.63 1.71 1.76 1.30 1.11 1.40 3.18 1.43 0.38 Manufacturing 0.49 1.53 2.43 2.01 2.07 2.02 2.17 1.60 1.37 1.65 3.8 1.76 0.61 Oil products −0.48 0.12 2.09 1.19 5.01 −0.26 1.42 0.17 0.20 0.03 2.09 0.88 −0.12 Electricity −1.17 0.00 1.28 −0.05 1.40 0.63 0.27 −0.21 −0.43 0.48 −0.56 −0.33 −0.61 Water 0.29 0.54 1.35 0.82 1.46 0.38 0.68 0.52 0.48 0.89 1.44 0.44 0.29 Construction −0.18 0.69 0.17 0.58 0.07 7.06 −0.09 0.8 1.14 0.84 −0.10 0.35 1.11 Trade 1.42 0.66 1.47 0.77 1.53 0.34 1.02 0.7 0.69 0.39 0.09 0.67 0.44 Accommodation 0.56 0.72 0.99 0.59 1.14 0.59 1.27 0.69 0.66 1.56 1.85 0.59 0.31 Transport 0.22 0.67 1.4 0.68 1.44 0.62 1.1 0.62 0.59 0.99 1.64 0.67 0.51 Communication 1.09 0.77 0.99 0.7 1.06 0.92 1.2 0.71 0.69 1.28 1.75 0.66 0.54 Financial services 0.45 0.36 0.61 0.37 0.55 0.34 0.83 0.33 0.32 0.36 0.82 0.38 0.2 Real estate 0.54 0.58 0.61 0.49 0.65 0.46 0.56 0.55 0.53 1.20 1.31 0.48 0.27 Business services 0.88 0.57 0.90 0.61 0.77 0.57 0.77 0.55 0.54 0.62 0.97 0.56 0.42 Recreation 0.32 0.64 0.44 0.53 0.31 1.05 0.70 0.61 0.60 1.48 1.41 0.48 0.43 Public administration 0.40 0.57 0.53 0.47 0.58 0.62 0.93 0.53 0.50 1.46 1.69 0.45 0.25 Education 0.30 0.50 0.44 0.41 0.49 0.61 0.80 0.46 0.44 1.37 1.56 0.37 0.21 Health services 0.39 0.53 0.50 0.43 0.54 0.59 0.63 0.49 0.47 1.43 1.60 0.41 0.23 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–17 Table 2D.3. Percentage change in exports by sector and region—Scenario 3 Central East Far North Volga- West Export Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 1.60 0.92 −0.04 0.71 0.24 0.17 3.37 0.48 0.73 1.81 0.99 0.38 0.45 Coal 1.77 3.03 0.57 2.03 2.69 1.90 4.20 2.65 2.63 4.30 3.68 2.27 1.27 Oil −6.2 −9.134 −8.50 −8.884 −8.66 −7.92 −3.72 −9.12 −9.159 −6.01 −8.3 −9.238 0.91 Gas −8.587 −7.226 −8.238 −8.135 −8.25 −9.69 −5.53 −8.667 −8.696 −9.97 −8.99 −8.271 −8.188 Other extracts 0.55 0.31 0.45 −0.01 0.62 −0.21 1.89 0.18 0.25 0.97 0.44 0.1 0.28 Manufacturing 1.06 4.36 5.61 3.76 4.89 2.42 3.85 3.89 3.8 5.78 9.81 3.09 0.87 Oil products −0.14 −0.02 2.44 1.69 6.31 −0.31 1.76 −0.1 −0.12 1.44 2.54 1.04 −0.02 Electricity −9.91 −2.40 2.78 −2.46 2.90 2.55 1.50 −4.19 −6.04 2.17 −6.01 −5.11 −6.66 Water 1.51 2.49 4.37 4.3 4.72 1.41 4.42 2.16 1.94 3.98 8.22 1.71 0.63 Construction 2.15 2.58 2.62 2.08 2.73 1.27 4.64 2.45 2.35 3.15 7.44 2.05 0.88 Trade 3.55 2.98 2.87 2.37 3.11 1.34 4.61 2.83 2.74 3.39 8.75 2.42 1.40 Accommodation 3.33 2.97 2.92 2.39 3.09 1.42 5.65 2.81 2.75 3.43 8.28 2.41 1.43 Transport 0.85 2.14 2.86 2.15 3.06 0.72 1.74 1.96 1.84 2.26 5.77 1.58 0.94 Communication 2.73 2.69 2.53 2.15 2.8 1.29 5.45 2.56 2.45 3.25 8.02 2.14 1.30 A2–18 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Financial services 2.04 2.29 2.08 1.89 2.44 1.11 3.58 2.21 2.10 2.89 7.18 1.83 1.27 Real estate 3.33 2.97 2.85 2.32 3.11 1.42 8.09 2.78 2.63 3.42 8.47 2.39 1.42 Business services 2.39 2.54 2.38 1.98 2.60 1.24 2.85 2.39 2.29 3.07 7.44 2.02 1.21 Recreation 1.91 2.58 2.68 2.15 2.83 1.24 3.02 2.37 2.26 3.10 7.07 2.08 1.19 Public administration 0.02 0.31 0.24 0.12 0.35 0.24 1.14 0.22 0.18 2.02 2.52 0.09 0.06 Education 1.26 1.82 1.63 1.49 1.85 0.91 4.45 1.64 1.55 2.56 6.14 1.40 0.72 Health services 1.55 2.03 1.94 1.64 2.10 0.97 3.15 1.86 1.77 2.68 6.28 1.58 0.86 Table 2D.4. Percentage change in imports by sector and region—Scenario 3 Central East Far North Volga- West Import Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture −0.44 0.49 1.54 0.32 1.08 1.58 −0.94 0.56 0.47 −0.32 1.38 0.71 0.29 Coal −1.20 −0.60 1.02 0.30 4.28 −1.00 −0.48 −1.58 −0.42 −2.52 0.80 −0.21 −1.14 Oil 1.40 −9.12 −5.94 −6.19 −6.15 6.84 −4.61 −8.83 −7.25 5.30 −9.75 −7.63 −1.39 Gas −8.73 −9.10 1.24 4.15 1.75 1.7 −0.16 1.09 −5.87 9.866 8.941 2.65 −7.43 Other extracts 0.07 1.01 1.37 0.89 1.01 1.53 1.49 0.83 0.65 0.59 2.33 1.01 0.33 Manufacturing −0.40 −0.61 −1.3 −0.22 −1.38 1.67 −1.00 −0.34 −0.32 −1.39 −2.32 −0.25 0.41 Oil products −0.45 0.18 0.28 0.32 −0.09 0.02 0.03 0.30 0.50 −1.48 0.87 0.27 −0.33 Electricity 4.07 1.29 −0.04 1.29 0.09 −1.78 −1.17 2.07 2.78 −1.73 2.97 2.48 2.92 Water −0.55 −0.21 −0.6 −0.23 −0.80 −0.02 −0.49 −0.21 −0.34 −1.29 −2.51 −0.02 −0.08 Construction −1.37 −0.57 −1.23 −0.49 −1.38 9.20 −2.67 −0.38 0.16 −2.15 −3.81 −0.73 1.37 Trade −1.40 −0.23 −0.90 −0.64 −1.22 −0.10 −0.15 −0.75 −0.64 −2.28 −2.68 −0.06 −0.05 Accommodation −1.08 −0.73 −0.59 −0.6 −0.52 −0.71 −1.53 −0.69 −0.69 −1.68 −1.99 −0.6 −0.41 Transport −0.67 −0.89 −1.64 −0.88 −1.88 −0.07 −0.83 −0.83 −0.8 −2.06 −2.38 −0.77 −0.18 Communication −0.02 −0.60 −0.63 −0.49 −0.82 −0.58 0.20 −0.62 −0.61 −1.61 −2.13 −0.36 −0.28 Financial services −0.51 −0.66 −0.51 −0.5 −0.74 −0.65 −0.75 −0.73 −0.69 −2.24 −2.63 −0.51 −0.48 Real estate −0.54 −0.98 −0.72 −0.65 −0.87 −0.85 −1.79 −0.92 −0.82 −2.22 −2.69 −0.76 −0.52 Business services −0.15 −0.44 −0.75 −0.32 −0.86 −0.29 0.26 −0.49 −0.47 −1.31 −1.82 −0.21 −0.18 Recreation −0.60 −0.61 −0.61 −0.53 −0.65 −0.56 −0.69 −0.55 −0.54 −1.44 −1.64 −0.51 −0.32 Public administration −0.39 0.39 0.16 0.13 0.13 0.02 0.42 0.37 0.37 1.08 −1.81 0.28 0.06 Education −0.03 0.29 0.98 0.69 0.64 0.80 −0.02 1.17 0.67 −0.10 2.10 1.17 0.10 Health services −0.13 −0.03 1.10 1.52 1.01 1.37 −0.42 0.16 0.02 −0.14 0.08 0.61 0.38 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–19 Table 2D.5. Percentage change in private consumption by sector and region—Scenario 3 Private household Central East Far North Volga- West consumption Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.13 0.18 0.14 0.14 0.17 0.16 0.36 0.15 0.16 0.54 0.40 0.12 0.04 Coal 1.09 1.18 0.79 0.73 0.23 1.62 0.89 0.76 1.50 1.94 2.32 0.89 1.03 Oil 0.71 0.31 −0.38 −0.11 −0.9 1.19 −0.52 0.22 0.39 1.34 0.58 0.43 0.98 Gas −7.19 −5.62 −1.95 −1.36 −2.04 −9.28 0.15 −2.21 −3.97 −9.642 −9.074 −1.41 −7.03 Other extracts 0.04 0.24 0.3 0.18 0.35 0.18 0.35 0.24 0.23 0.91 0.66 0.18 0.07 Manufacturing 0.13 0.40 0.55 0.30 0.52 0.21 0.42 0.32 0.34 0.50 1.13 0.24 0.06 Oil products 0.69 0.53 0.74 0.55 1.07 1.25 0.48 0.53 0.83 1.41 1.62 0.65 0.98 Electricity −1.15 0.10 0.62 −0.20 0.21 2.09 0.37 −0.21 −0.27 2.11 −0.11 −0.45 −0.24 Water 0.22 0.52 0.73 0.64 0.79 0.58 0.45 0.47 0.43 1.47 1.48 0.37 0.15 Construction 0.38 0.64 0.67 0.50 0.71 0.65 0.99 0.61 0.57 1.59 1.76 0.50 0.21 Trade 0.64 0.77 0.77 0.60 0.83 0.75 0.31 0.73 0.69 1.82 0.7 0.61 0.33 Accommodation 0.58 0.75 0.76 0.58 0.81 0.74 1.21 0.71 0.67 1.79 2.01 0.58 0.31 Transport 0.24 0.61 0.76 0.54 0.82 0.63 0.65 0.58 0.55 1.47 1.59 0.49 0.19 Communication 0.05 0.55 0.58 0.43 0.63 0.58 0.26 0.54 0.52 1.42 1.64 0.36 0.21 A2–20 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Financial services 0.37 0.62 0.61 0.49 0.69 0.63 0.86 0.60 0.56 1.58 1.79 0.50 0.28 Real estate 0.33 0.70 0.70 0.53 0.76 0.69 0.28 0.66 0.61 1.66 1.9 0.54 0.29 Business services 0.05 0.47 0.53 0.37 0.67 0.40 0.30 0.54 0.50 1.32 1.77 0.33 0.18 Recreation 0.36 0.68 0.71 0.54 0.76 0.67 0.78 0.63 0.59 1.66 1.80 0.53 0.27 Public administration 0.31 0.61 0.61 0.48 0.67 0.60 0.49 0.57 0.53 1.57 1.76 0.47 0.23 Education 0.25 0.55 0.54 0.43 0.60 0.57 0.47 0.51 0.47 1.49 1.65 0.41 0.10 Health services 0.18 0.59 0.59 0.46 0.64 0.58 0.47 0.55 0.51 1.53 1.68 0.45 0.22 Table 2D.6. Percentage change in government expenditures by sector and region—Scenario 3 Government Central East Far North Volga- West consumption Central Black Soil Siberian Eastern Northern Caucasus Northwestern Volga Ural Vyatka Siberian Kaliningrad Moscow Agriculture 0.37 0.17 −0.01 0.17 0.06 0.08 0.79 0.11 0.16 0.77 0.22 0.09 0.11 Coal 0.60 0.91 0.70 0.61 0.87 1.06 0.92 0.48 0.87 1.79 1.39 0.54 2.32 Oil 0.22 0.26 0.24 0.2 0.26 0.64 −0.03 0.24 0.22 1.19 0.82 0.20 2.16 Gas −8.98 −8.30 −1.48 −0.1 −1.21 −7.11 −1.63 −1.98 −8.41 −7.56 −0.99 −0.15 −6.98 Other extracts 0.12 0.18 0.26 0.00 0.36 −0.20 0.57 0.10 0.15 1.00 0.26 0.04 0.02 Manufacturing 0.19 0.52 0.73 0.34 0.63 0.55 0.36 0.50 0.51 1.34 1.34 0.29 0.07 Oil products 0.23 0.27 0.34 0.36 0.45 0.62 0.79 0.23 0.28 1.28 1.06 0.20 2.15 Electricity 0.22 0.26 0.25 0.21 0.27 0.65 0.40 0.24 0.23 1.2 0.83 0.21 2.17 Water 0.29 0.47 0.79 0.78 0.85 0.56 0.80 0.41 0.37 1.47 1.45 0.33 0.14 Construction 0.56 0.68 0.69 0.55 0.72 0.68 1.20 0.64 0.62 1.67 1.91 0.54 0.23 Trade −0.01 0.20 0.00 0.00 0.00 0.21 0.12 0.00 0.00 0.01 0.02 0.03 0.03 Accommodation 0.86 0.77 0.75 0.62 0.80 0.75 1.45 0.73 0.71 1.80 2.11 0.62 0.37 Transport 0.37 0.72 0.95 0.68 1.02 0.73 0.74 0.67 0.65 1.66 1.83 0.65 0.26 Communication 0.71 0.70 0.66 0.56 0.73 0.69 1.41 0.67 0.64 1.72 2.05 0.56 0.34 Financial services 0.52 0.60 0.54 0.49 0.63 0.59 0.93 0.57 0.55 1.53 1.84 0.51 0.33 Real estate 0.86 0.77 0.74 0.60 0.81 0.75 2.04 0.72 0.68 1.80 2.16 0.62 0.37 Business services 0.62 0.66 0.62 0.51 0.67 0.66 0.74 0.62 0.59 1.62 1.90 0.53 0.31 Recreation 0.49 0.67 0.69 0.56 0.73 0.65 0.78 0.61 0.59 1.62 1.81 0.54 0.31 Public administration 0.42 0.57 0.53 0.46 0.59 0.53 1.00 0.52 0.50 1.47 1.74 0.45 0.24 Education 0.32 0.47 0.42 0.38 0.48 0.48 1.15 0.42 0.40 1.34 1.57 0.36 0.18 Health services 0.40 0.52 0.50 0.42 0.54 0.51 0.81 0.48 0.46 1.4 1.61 0.41 0.22 Annexes to Chapter 2. General Equilibrium Effects of Energy Subsidy Reform | A2–21 Table 2D.7. Percentage change in consumer price index by region Region Scenario 1 Scenario 2 Scenario 3 Central −0.17 0.76 −0.55 Central Black Soil −0.53 −0.76 −0.68 East Siberian −1.39 −1.63 −1.5 Far Eastern 0.22 −0.03 −0.06 Northern −0.88 −1.20 −1.07 North Caucasus −1.45 3.52 −1.44 Northwestern −0.04 0.08 −0.38 Volga −0.56 −0.83 −0.69 Ural −0.48 −0.86 −0.61 Volga-Vyatka −1.80 11.12 −1.70 West Siberian −0.31 −0.59 −0.40 Kaliningrad −0.29 −0.26 −0.46 Moscow −0.15 −0.24 −0.12 Total Russia  −0.61  1.41 −0.72 A2–22 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes ENERGY SUBSIDIES IN RUSSIA Size, Impact, and Potential for Reform Chapter 3. Pipeline Gas and Electricity Subsidies in Russia: The Distributional Effect of Subsidies for Households Annex Annex 3A. Formulas for welfare changes For this chapter, the formulas for the computation of welfare changes due to consumer price changes are taken from the book “Prices and Welfare. An introduction to the Measurement of Wellbeing when Prices Change” by A. Araar and P. Verme, 2019. Formally, the formulas for the general population distributional impacts are: (partial) (general) where LV refers to the Laspeyres Index of welfare change, p stands for price, X stands for consumption quantity, h stands for household, g for pipeline gas, e for electricity, d for rest of goods and services, and i for initial. Alternatively, if assuming a Cobb-Douglas utility function, the Consumer Surplus formulas for partial and general analysis are: respectively, where CS refers to Consumer Surplus change of welfare, M stands for consumption expenditure, stands for the share of consumption expenditure, i for initial, and f for final. Finally, if not willing to accept the assumption of a Cobb-Douglas utility function, an alternative approximation of the Consumer surplus, using elasticity estimates from secondary sources, would be: where is the direct price-elasticity of demand for gas appropriate for household “h.” In this case, estimates of long- term own-price elasticities of -0.56 for pipeline gas and -0.43 for electricity from international studies can be used. Since an elasticity for the rest of goods and services is not being adopted, the third component of the last equation assumes no change in quantities purchased. National estimates of the welfare impact are then obtained by aggregating these household estimates for every house- hold “h,” and more granular distributional effects by aggregating households by family type, rural/urban, economic region, and deciles of disposable income. The elasticity estimates come from a survey for several countries by Dahl and Roman (2004) as cited in Huntington, Barrios, & Arora 2017, 26. A more recent survey including more than a thousand estimates (Dahl 2011) reports an aver- age long-term elasticity of electricity at −0.51 (with the median at −0.37). These estimates are in the mid-point of other country-specific long-term estimates reported in the same study by Huntington and co-authors: −1.03 in Brazil and −1.88 in China, for residential natural gas, and −0.08 in Mexico and −0.32 in China, for residential electricity (see pages 19 and 20). Country-specific estimates in the recent literature for Russia are at the lower end of the spectrum: −0.03 for gas by (Kuzovkin & Yatsenko 2011, 44); for electricity, −0.165 in urban households and −0.28 in rural households, Na- hata, Izyumov, Busigin, & Mishura 2007, 112–113), although the data refers only to the Novosibirsk region in the 1990s. The price change, that is, the subsidy to pipeline gas and household electricity consumption, is computed using the price-gap approach comparing actual consumer tariffs with production costs (this method has been applied in World Bank 2018 and originates from Kaplow 2019). These gaps are computed in studies specially commissioned for this report (see Chapter 1) for pipeline gas and electricity services. However, this method ignores implicit subsidies due to other tax exemptions or preferential pricing for inputs to public utility companies, or else to consumers. It makes use of data A3–2 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes approximations concerning the actual cost of production of the service. The latter may be difficult to collect due to the absence of accurate data on the companies and difficulties in gauging the opportunity cost of some of these utilities, which are seldom traded in international markets. That is partly why no specific studies were commissioned for district heating, and hence no estimates for this service are included in this chapter. Finally, the price change of the remaining goods and services (i.e., in the formulas above) is taken from inflation projections from the computable general equilibrium exercises of Chapter 2. Changes in price and consumption levels can lead to households crossing the poverty line, whereby adjustments in subsidies may impact this welfare measure. However, in the case of Russia, the welfare aggregate for computing poverty is based on household incomes rather than consumption expenditures. Since the focus of the analysis is direct welfare impacts through consumption, and as the indirect impact on incomes from labor or capital is not explored, the welfare impact through monetary poverty measures is not assessed. Annexes to Chapter 3: Pipeline Gas and Electricity Subsidies in Russia: The Distributional Effect of Subsidies for Households | A3–3 ENERGY SUBSIDIES IN RUSSIA Size, Impact, and Potential for Reform Chapter 4. Reforming Russia’s Energy Subsidies for Consumers: Political Economy Analysis Annex Annex 4A. Guide to the focus group “Reform of Energy Subsidies and Housing Services” Block Question Greeting Warm-up, 1. Do you live in an apartment or private house? satisfaction 2. What energy utilities and housing services does your home receive? • Cold and hot water • Electricity • Heating • Gas supply • Garbage disposal • Maintenance and current repair of common property in the multi-family units How satisfied are you with the quality of each of these services? On a 5-point scale 3. Name the most “problematic” of your utilities and housing services 4. If there are problems with the provision of services, who do you think is responsible for solving them? Service providers 5. Do you know the name of the company that provides you with: and quality of • Electricity service • Gas • Heating • Garbage disposal • Maintenance and repair of common property in the multi-family units? 6. Can you change the service providers as you wish? If so, which ones? Would you like to replace suppliers? Explain. Cost of services, 7. How much do you pay monthly for: price increase • Electricity? • Heating? • Gas supply? • Garbage collection? • Maintenance and current repair of common property in apartment buildings? Can you remember the exact amount? (you can ask to bring payments for the last month) 8. Do you have a clear understanding of how your bill is calculated for: • Electricity and gas supply? • Garbage collection? • Maintenance and current repair of common property in apartment buildings? Do you get a reduced rate? If so, for what services? A4–2 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes Block Question 9. How do you usually learn about tariffs, changes in housing and communal services? Where do you read the news? 10. Which energy utilities and housing services had especially high tariff increases over the past year? And for 5 years? 11. How do you think the tariffs for energy utilities and housing services will change in the next 12 months? Will they be higher, or will they stay at the current level? If they grow, it will be faster, slower, or the same as in the last 12months? Why do you think that? • Electricity and gas supply? • Waste collection? • Maintenance of and repair of common property in apartment buildings? Trust in the 12. Do you think the tariffs of energy utilities and housing services are fair? utilities and • Electricity and gas supply? housing services • Waste collection? • Maintenance of and repair of common property in apartment buildings? Awareness of 13. Do you think the tariffs of energy utilities and housing services higher or lower than electricity and gas the cost of services borne by utilities? (specify: the cost of production of services subsidies including a reasonable rate of profit)? Do you think that your expenses are paid for by someone other than you, that is, subsidized, so that the supply of services would be profitable? If so, whom by? • Electricity and gas supply? • Waste collection? • Maintenance of and repair of common property in apartment buildings? Housing and Let’s move on to the issues of reforms of the utilities and housing services … utilities reform 14. Show vignette 1A to illustrate that energy utility consumers don’t pay fully for electricity. 34% of the final electricity price for homes is a subsidy. The same applies to gas supply. Show vignette 1B that Russia is one of the main countries subsidizing energy for consumers. Russia ranks fourth in terms of fossil fuel subsidies. Who do you think bears the cost of subsidizing electricity and gas for households? • The state (federal budget; regional budget), • Large energy consumers (factories, plants, agro-industry) and small and medium-sized businesses that pay higher tariffs? • Utilities—suppliers of electricity and gas, which incur losses? 15. Clarify that most of the burden of energy subsidies for households falls on large industrial consumers and medium and small businesses. Ask FG participants who should bear the costs of energy subsidies for households? Annexes to Chapter 4. Reforming Russia’s Energy Subsidies for Consumers: Political Economy Analysis | A4–3 Block Question 16. Show vignette 2A and discuss the selection of FG members: You are given several options for reforming energy subsidies: • Keep the situation as it is; • Stop subsidizing households by enterprises and allow tariffs to grow, but the state should provide more other services (education, health, security); • Stop subsidizing households by enterprises and allow tariffs to grow and provide money as compensation for increased costs for low-income households; • Stop subsidizing households by enterprises and allow tariffs to grow, but receive state support to improve energy efficiency at home (free energy-saving light bulbs, discounts on energy-efficient electric stoves and refrigerators); • Halve the tariff for low consumption of electricity and gas (up to 300 rubles) but double the tariff for large consumption of electricity and gas (above 1000 rubles). Why? Explain your choice 17. Now imagine that the choice of “keep the situation as it is” is no longer possible. Which of the remaining options do you choose? Why? Probable reaction 18. If we imagine that prices for utilities and communal services will grow by a quarter (by of FG members to 25%), then how will people react to this? tariff increases • Reducing utility consumption as much as possible (e.g., electricity and gas) • Reduce other costs • Will not pay • Join the protests against the increase in tariffs • Will vote for opposition candidates in the next election Trust in 19. How much would you trust the government with the reform of subsidies in energy government utilities and housing services? 20. If the state starts reforming energy utility tariffs, will this reform be carried out successfully? Why do you think so? Do you think low-income households will get help? 21. If the tariff reform leads to savings for the state budget, where will the savings go? A4–4 | Energy Subsidies in Russia: Size, Impact, and Potential for Reform: Annexes