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Coal is looking for a place in wagons
The proposal of Russian Railways to refuse to conclude an agreement on coal exports to regions without Kuzbass and the eastern direction in 2025 did not find support in the Ministry of Energy. They prefer to extend contracts across the board and increase volumes from the current approximately 100 million tons. According to experts, the lobbying presence of Russian Railways is currently quite strong, Kuzbass can also achieve its goals, but with other regions it will have to negotiate behind closed doors.
Energy Minister Sergei Tsivilev said he supports the unconditional extension of coal export quotas to the eastern regions in 2025. "The ministry's position is fundamental: for each coal-mining region that signed a contract this year, all without exception must sign it next year," TASS reports. "We need to increase this number."
The region's coal export quotas will be in effect from 2021. Initially, they were allocated only to Kuzbass in accordance with the order of Russian President Vladimir Putin to increase coal exports from the region to the east by 30% by 2024 compared to 2021 (see Kommersant of March 2, 2021). The quota for 2021 was set at 53 million tons. The number of regions gradually increased: Buryatia, Khakassia, and Tuva joined them in 2022, and Yakutia and the Irkutsk Region in 2024.
The total distribution volume across the six regions in 2024 will be approximately 100 million tons.
Under these agreements, coal is primarily transported east by rail, which affects the movement of other cargo, given the limited capacity in the eastern region. This year, Novosibirsk Oblast also demanded a quota of 10 million tons to the east and 20 million tons to the northwest, while Khakassia insisted on increasing the quota from 6.5 million tons to 10 million tons (see Kommersant, August 12).
On October 2, the head of Russian Railways, Oleg Belozerov, suggested to Vladimir Putin not to enter into agreements with coal-mining regions in 2025, stating that he would maintain the quota only for Kuzbass at 55.3 million tons. We export not only coal, but also other goods. Mr. Belozerov stated that extending the contract could lead to underfunding of the investment program of Russian railways, the loss of up to 30,000 jobs, delays in construction projects, and would not achieve the country's goal of increasing non-resource exports. (See Kommersant of October 8). Kuzbass representative Ilya Seredyuk told Russian Energy Week (REW) in late September that the region had applied for quotas for 2025, which should be at least 68 million tons. The authorities of other regions, in particular Khakassia and Tuva, opposed the termination of the contract.
In a letter to Prime Minister Mikhail Mishustin, who is against the upcoming indexation of Russian Railways tariffs, the heads of Kuzbass, Khakassia and Novosibirsk reported in early October that coal companies in their regions suffered losses totaling 13 billion rubles. In the first half of the year. A profit of 184 billion rubles was recorded. 1 year ago. Coal exports from the three regions fell by 18% over seven months, and production by the end of the year could fall by 12%, or 32 million tons, the letter says. Coal production in Kuzbass fell by 8%, or 12.9 million tons, according to the regional Ministry of Coal Industry.
As Mr. Seredyuk told REN, based on the results of eight months, the region received a shortfall of 33.7 billion rubles. Your income compared to the same period in 2023. "This is a decrease of 18% from the 2023 level and the largest decrease in income among the regions of the Russian Federation in absolute and relative terms," the head of Kuzbass explained.
According to Mr. Serdyuk, tax revenues from the coal industry in the first half of 2024 amounted to 21 billion rubles, a decrease of 61% compared to the same period last year.
Today, Russian Railways has a powerful administrative resource to resist the coal lobby, says Pavel Ivankin, director of the National Center for Transport and Infrastructure Research. "But Kuzbass has the support of the country's president," says the expert. In this regard, Kuzbass quotas will certainly be preserved. "The overall increase in capacity is increasing." In his opinion, other regions will be able to receive their quota only at the level of a direct agreement.