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Russia’s Audit Chamber to inspect Gazprom first time in five years

Russia’s Audit Chamber to inspect Gazprom first time in five years
Russia’s Audit Chamber will carry out its first inspection in five years of state-run gas major Gazprom, the results of which promise to be “interesting,” officials said.

“Many speak of the closed nature of this company, but I’d like to emphasize that Gazprom fully cooperates with the auditors of the Audit Chamber, providing them with all the necessary papers,” Audit Chamber head Sergey Stepashin said.

Plans to carry out a thorough audit of Gazprom were announced earlier this year, and is due to be over by November.

“It’s the first checkup in 5 years, we had planned an overall examination of Gazprom… the company’s efficiency, incidental expenses, including the questions regarding the pipes and other issues,”
Stepashin was quoted as saying in January. “By law, we ought to do it. We took a pause because international contracts were signed [at the time], and we didn’t want to be an elephant in a china shop.”

Russia’s Federal Antimonopoly Service (FAS) has repeatedly voiced concerns over Gazprom’s mechanisms for holding tenders for high-diameter pipes.  

According to FAS, current procedures leave no room for competition between pipe manufacturers. Gazprom’s lots during the auctions exceed pipe manufacturers’ opportunities in production and delivery, so they engage intermediate parties that assemble them and then supply them to Gazprom.

“There’s no price-related competition between pipe manufacturers right now; only two or three mediators who don’t compete with each other take part; oftentimes only one North European Pipe Project [takes part]. In our book, pipe manufacturers must take part in the tenders, not mediators,” FAS said, according to Interfax.

President Vladimir Putin has previously criticized Gazprom for buying pipes through third parties, often at margins of up to 30 percent: “Complaints about how Gazprom runs business can be heard more and more often, saying there are corruptive elements. Probably there are, but the police must catch and take to prison for this. And I think, it would be the right thing to do.”

Earlier this month, Gazprom said it managed to save $1 billion in foreign contracts in 2012 by negotiating better prices with foreign clients. According to the company’s 2012 report, for the first nine months of the year the gas major set aside about $4.3 billion for retroactive payments but spent only $3.3 billion.

According to Gazprom CEO Aleksey Miller, in January 2012 Gazprom gave a 10 percent discount to France’s GdF Suez, Germany’s Wingas, Slovakia’s SPP, Italy’s Sinergie Italiane and Austria’s Econgas.