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In Murmansk, a tussle over energy supplies

Murmansk gets a lion's share of its heating from mazut. Photo: Atle Staalesen/BarentsObserver

A troubled regional economy and a high level of dependency of heating oil forces Murmansk into negotiations with the federal Ministry of Energy.

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Regional authorities in Murmansk are calling on federal authorities to introduce a fixed price level on the heating oil (mazut) supplied to the region. In a recent meeting between regional Governor Marina Kovtun and federal Minister of Energy Aleksandr Novak, the governor called for the introduction of a one million ton quota on mazut for a fixed price of 5 651 RUB per ton, the regional government reports in a press release.

A main underlying reason for the situation is the high prices on heating oil, which currently exceed the tariffs payed by the regional households. At the same time, the heating tariffs are among the highest in Russia.

Murmansk Oblast is one of the least gasificated regions in Russia and the regional industry and housing sector consequently depend heavily on mazut as energy source.

The troublesome situation with heating oil comes in addition to the region’s problems within the electricity sector. As previously reported, the Kolenergosbyt, the by far biggest electricity grid company in the region, has accumulated as much as five billion RUB of debts. Also here, a major reason for the problem is a disproportionate relation between prices on supply and tariffs.

The troubled energy situation in Murmansk is paradoxical seen in the light of the major electricity generating capacities of the region. Over a number of years, the region has produced significant volumes of surplus energy from its generating facilities, first of all the Kola Nuclear Power Plant and the hydropower stations owned by TGK-1.

As described in the latest Barents Monitoring report, Murmansk Oblast is currently facing general economic hardships following stagnating industrial output and falling tax revenues