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A Chechen Court Ruled To Forgive $135 Million In Gas Debt. Gazprom Isn't Happy


"Considering...the previous wars, when practically no one used gas, the prosecutor-general took this step -- correct and in the interests of the Chechen people," says Dzhambulat Umarov, a regional Chechen minister. (illustrative photo)

A district court's ruling that Chechnya's $135 million gas debt should be written off because collecting it could lead to social unrest has left other Russian regions wondering why they shouldn't get the same deal, and has prompted the local Gazprom affiliate to fight back.

On January 22, the federal Prosecutor-General's Office weighed in on Mezhregiongaz's appeal, arguing that the Chechen court had overstepped its authority in the first place. This, in turn, prompted a regional minister to claim the North Caucasus republic was owed debt forgiveness because of the two wars Moscow had waged against Chechen separatists in the 1990s and early 2000s.

The back-and-forth continued, with an official from the Russian gas giant Gazprom noting that the debt in question was not accrued during either of the two conflicts, and slamming the Chechen district court for violating legal norms.

And as four Russian regions followed Chechnya's lead by seeking their own debt amnesties, the Kremlin officially straddled the fence on the issue as new polls revealed that public trust in Russian President Vladimir Putin is hovering at near-record lows.

Forgiving Mood...

The Chechen gas-debt debate was lit on January 18 when the Zavodskoy district court in Grozny ruled in favor of Chechnya's Prosecutor-General's Office, which had filed a case arguing that the local Gazprom affiliate, Mezhregiongaz, should forgive some 9 billion rubles ($135 million) in gas debt.

The Chechen prosecutors cited two factors for their reasoning. One, they said the "statute of limitations" had run out for Gazprom to collect the debt, describing it as "nonrecoverable."

The second was that efforts to collect the money had "created social tensions in society, and could lead to protests by the population."

...And Not So Forgiving

Mezhregiongaz quickly appealed the ruling with support from its parent company and Russian authorities.

On January 22, Valery Golubev, a deputy chairman of the board at Gazprom, said the Chechen district court’s decision "contradicts all existing legal norms and will be interpreted by paying customers as unfair."

Gazprom's offices in Grozny
Gazprom's offices in Grozny

The same day, Russia's Prosecutor-General's Office argued that the Chechen court had no right to determine whether the debt was recoverable or not, saying it was up to the debt holder -- in this case, Mezhregiongaz -- to make that decision.

"The Russian Prosecutor-General's Office has ordered the prosecutor of the Chechen Republic to support the rationale behind the claim filed by Gazprom Mezhregiongaz Grozny LLC in the appellate court," the office said.

Two Wars, No Debt...

But that wasn't the last word.

Dzhambulat Umarov, a regional Chechen minister whose portfolio includes media and nationality politics, cheered the local prosecutors' case and local court backing, explaining that Chechnya had suffered through two wars against Russia.

"The republic has no special rights regarding the federal center. But, considering the specifics of our region, and in particular the previous wars, when practically no one used gas, the [regional] prosecutor-general took this step -- correct and in the interests of the Chechen people," Umarov said on January 22.

He said the region should not be forced to pay debts accrued during the period of the conflicts.

He also had advice for other regions of Russia facing similar debt dilemmas.

"If it's necessary and justified, then other regions should follow [our] example. Write, contact the courts, the prosecutor-general," Umarov said. "It’s your right."

Chechnya was the scene of two bloody conflicts with Russian forces: one from 1994 to 1996 and another from 1999 to 2000.

...No Connection, Pay Up

Gazprom's Golubev said the gas debt in question did not date back to either of the Chechen conflicts.

"The period when the debt arose, and which is under discussion, is not connected with the conflicts on the republic’s territory, as some commentators have stated," Golubev said on January 22.

Mezhregiongaz has said the unpaid gas debt accrued by consumers and businesses pertains to January 1, 2007, to September 30, 2015.

Golubev explained what he considers the root of the problem: "The debt arose because of the poor financial discipline of the population."

Natalia Zubarivich, a regional expert, said that most of the North Caucasus region of Russia is swimming in consumer debt, including Ingushetia, Daghestan, and Kabardino-Balkaria.

Speaking to the Novaya gazeta newspaper on January 18, Zubarivich also offered her take on why Chechnya may be getting special treatment.

"Why only for Chechnya?... Because it is Chechnya. Daghestan and Ingushetia residents will not take to the streets," Zubarivich said. "Meanwhile, to put it mildly, Chechnya has 30,000 to 40,000 armed men, and the issue has nothing to do with the likelihood of people's protests. It turns into a thing that is simply called 'blackmail.'"

'No Position'

The Kremlin appears wary about weighing in on the dispute.

Kremlin spokesman Dmitry Peskov on January 21 would only say it was a "very complex matter" and that the Kremlin "has not taken a stance."

"These matters cannot be considered without the company’s interests or without taking into account the interests of simple citizens at the same time. The matter is very complex, and in this case, the Kremlin does not have any position," Peskov said.

It's just the latest problem facing Putin as public trust in the Russian leader has fallen to its lowest level in 13 years, according to a state pollster.

The poll, by the Public Opinion Research Center (VTsIOM) released on January 17, found that trust in Putin had fallen to 33.4 percent, its lowest level since 2006. The president's popularity has suffered in recent months, highlighted by nationwide protests that broke out in 2018 over the government's plans to raise the age of eligibility for pensions.

According to Current Time, the Russian-language network led by RFE/RL in cooperation with VOA, several other Russian regions have demanded that Gazprom drop their gas debts, including the regions of Chuvashia and Bashkortostan, as well as the oblasts of Smolensk and Ryazan.

Three Communist lawmakers of the regional Smolensk Duma sent a letter to the regional prosecutor's office on January 18 asking it to examine the Chechen case and consider taking similar action.

One of the letter's signers, Andrei Shaposhnikov, wrote on Facebook: "I wonder, is social discontent only happening in Chechnya? Are people who live in other regions somehow different?"

Written by Tony Wesolowsky, with reporting by Current Time
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