Make public spending more transparent

The Supreme Council adopted amendments to the Law of the PMR "On Prices (Tariffs) and Pricing" in the first reading today. The changes relate to the financing of the inter-tariff difference for enterprises of natural monopolies. The group of parliamentarians who came up with this legislative initiative considers that the changes and additions will not only regulate the regulatory framework, but will also simplify the understanding of the process.

The deputies noted, there is no concept of "economically justified tariff" in the current version of the law-in-draft. According to the Speaker of the Parliament Alexander Korshunov and one of the authors of the law-in-draft, this leads to discrepancies in the law at different levels of Government, including in the real sector of the economy.

“Deputies of the Supreme Council consider that it is necessary to prescribe in the current legislation the conceptual apparatus of what an “economically justified tariff” is, to prescribe the principle of forming an economically justified tariff and to prescribe control over the spending of these funds. In this regard, a group of our colleagues, deputies of the Supreme Council including myself participated in this process, developed two draft laws that regulate these relations,” commented Alexander Korshunov, Chairman of the Supreme Council of the Pridnestrovian Moldavian Republic.

The system of financing the inter-tariff difference for enterprises of natural monopolies from the republican budget began to work in 2019. It is aimed at maintaining utility tariffs for the population at a certain level, which cannot but affect the profitability of enterprises of course. Inflationary processes and rising prices for raw materials led to the fact that the cost of services grew, although for the consumer it remained unchanged. Public utilities did not have money for development and major repairs, they could hardly cope with accidents on networks, the number of which grew from year to year.

The inter-tariff difference financing from the republican budget allowed the enterprises of natural monopolies carrying out repairs under investment programs. Public utilities have received tens of millions of rubles as part of the inter-tariff difference for the past three years. The amount is growing every year. So, 86 million rubles were planned in the republican budget for these purposes in 2019, and 194 million in 2022. Now the number of accidents on the networks has decreased significantly. As the deputies noted, the salaries of employees increased, the outflow of personnel potential was stopped.

The deputies consider that the funds that the state allocates today within the framework of the inter-tariff difference should go to the implementation of investment programs.

“We stand on the positions of transparent spending of any budgetary funds. Financing the inter-tariff difference is also an expense of the republican budget. Accordingly, the deputy corps must see and understand where and how such serious sums from our budget are spent. There are a number of proposals reflected in the law-in-draft in this regard, the control and efficiency of spending these funds as we see. There are disputes from the position of the Government, but I think that we will overcome all the roughness and friction in the second reading, we will find a middle ground so that financial resources of a sufficiently large amount go to enterprises and legislators see how efficiently and rationally this money is spent,” said one of the authors of the changes in laws, Speaker of the Parliament Alexander Korshunov.

“We have created a group in the Supreme Council that worked together with the PMR Accounts Chamber, with the PMR Prosecutor. We have identified this issue. We found that the level of control over economically justified costs, which then form the basis of the tariff, is not entirely objective. Therefore, this law-in-draft law sets certain boundaries through which a natural monopoly entity will not be able to influence the tariff or increase this tariff,” said Vadim Kravchuk, Deputy Chairman of the Economic Policy Committee.

Other parliamentarians agreed with the opinion of the authors of the legislative initiative.

“The main essence of the law-in-draft is ensuring the transparency of this issue first of all. In my opinion, this is the most important thing that exists because, on the one hand, there are control functions of the Supreme Council. On the other hand, every penny counts in the environment in which we have been living for several years. It is necessary to carefully consider everything, fix it, review it and react flexibly, if necessary. It seems to me that this law-in-draft solves this problem. Of course, this does not remove the need to discuss in the second reading,” said Andrey Safonov, Deputy Chairman of the Committee on Education, Science, Culture, Public Associations, Sports, Information and Youth Policy.

Parliamentarians adopted legislations to clarify the mechanism of the inter-tariff difference in the first reading today. As part of the second reading, work will continue to reach a common opinion with the Government and the heads of the natural monopoly enterprises.