Banker says Russian electricity is 10X cheaper than that of the U.K., at least 4X cheaper than the EU’s

10/19/2023 / By Zoey Sky

A leading banker from PJSC Sberbank (formerly Sberbank of Russia) said electricity costs for Russian consumers are about 10 times lower than in the U.K. and at least four times less than in the European Union (EU). The banker was referring to prices for households and businesses.

Anatoly Popov, deputy chairman of the board of Russia’s largest lender, disclosed this during a speaking engagement at the Russian Energy Week forum in Moscow.

According to Popov, electricity is cheap in Russia. “If you take the price in Russia and the price that British industries pay, I do not know if there is any industry left with such prices, but the price is almost 10 times lower in Russia than in the U.K.,” added Popov.

He also explained that in the EU, prices for industrial consumers are “four times higher per kilowatt/hour.” For households, prices can also be four or 4.5 times higher, said Popov. (Related: Electricity prices in Italy surge 30% IN A WEEK as another winter without cheap Russian gas approaches.)

According to the British government’s website, floor unit prices for electricity for households averaged £0.34 ($0.41) per kilowatt hour (kWh) over the past year.

Meanwhile, Russian consumers only pay $0.04 per kWh on average.

Russia’s March energy income drops 43% year on year

According to the Russian Ministry of Finance, Russia’s federal budget revenues from oil and gas, the lifeblood of the country’s economy, fell 43 percent year on year (YOY) in March, while a quarterly profit-based tax held revenues back from a monthly drop.

Moscow relies on energy revenue, which was around 11.6 trillion rubles ($146 billion) last year, to fund government spending. However, Moscow was forced to sell foreign reserves to cover a deficit stretched by the cost of its military operation in Ukraine.

Based on the finance ministry’s estimates, budget income from oil and gas sales reached 688.2 billion rubles ($8.67 billion) in September, compared to 521.2 billion in February and 1.21 trillion rubles in March 2022.

March revenues increased due to 220.6 billion rubles in quarterly payments for a profit-based tax on hydrocarbon extraction.

The mineral extraction tax (MET) on oil was 63.6 billion rubles lower than in February, while the MET on natural gas, was 12.9 billion rubles lower.

Tax and customs revenue from energy sales has been gradually recovering since January, when it hit its lowest level since August 2020 due to Western sanctions on Russia’s exports amid the Russia-Ukraine war.

Russia’s budget for 2023 foresees a deficit of two percent of gross domestic product (GDP). The finance ministry has budgeted for a 23 percent reduction in oil and gas revenues this year to 8.95 trillion rubles.

The ministry recently gave a notional price of $47.85 a barrel for Russian Urals crude oil in March, which is lower than February’s $49.56 and significantly lower compared to the March 2022 price of $88.95.

Total 2022 energy revenues of 11.6 trillion rubles increased by 27.9 percent compared to 9.1 trillion rubles in 2021.

Russia restricts electricity supplies to China

Russian state energy holding InterRAO announced on Oct. 2 that it had started restricting electricity supplies to China while negotiations about price rises are ongoing.

InterRAO previously said it would raise electricity prices by seven percent for customers in some countries due to new export duties that came into force on Oct. 1. It also announced that it would limit, or cut off, supplies if customers refused to accept.

Affected countries include China, Mongolia, Azerbaijan and the breakaway Georgian region of South Ossetia.

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