Accessibility links

Breaking News

Russia: Scheme Aims To Break St. Petersburg Debt Cycle

St. Petersburg, 9 July 1997 (RFE/RL) - St. Petersburg city hall says a figurative check is in the mail to the city from the Russian federal government for the equivalent in rubles of $10.3 million - funds for repair of the city''s crumbling infrastructure and, above all, to pay its back energy bills.

Lentransgaz, the city's local subsidiary of Gazprom, says the city owes the utility $714 million for gas, and that agencies and enterprises financed from the local budget owe another $390 million.

The chairman of the city administration's Finance Committee, Igor Artemev, met in Moscow recently with Alexei Kudrin, Russia's deputy finance minister, and the two struck a deal.

Kudrin, a former St. Petersburg finance chairman, and Artemev worked out an accounting solution. Upon receipt - on paper - of the funds from Moscow, St. Peterrsburg will make - on paper - payments of part of its arrears to Lentransgaz. When Lentrransgaz - again on paper - then pays its arrears to its parent Gazprom, Gazprom presumably will apply the credits to taxes it owes the federal government.

Thus, according to the plan, the current cycle of unpaid creditors lacking funds to pay their debts will be replaced by a cycle of payments begetting payments - with no actual currency ever leaving Moscow..

But Anatoli Savenkov, director of Lentransgaz public relations, told our correspondent that his company remains determined to discipline customers, including the city, who are not paying their bills. And Lentransgaz Director Sergei Solovyev says that the Artemev-Kudrin scheme seems to be only a temporary measure. He says the city is budgeting for next year only a little over half the money that will be needed for its gas usage. He says his company is convinced that the only way to keep debt from continuing to rise is to impose an increased sense of responsibility on errant customers.

"Free cheese," he said in a recent interview, "can only be found in a mousetrap."