State regulation of tariffs (prices) in Azerbaijan

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1 TARIFF (Price) COUNCIL of THE AZERBAIJAN REPUBLIC State regulation of tariffs (prices) in Azerbaijan Secretariat of the AR s Tariff (Price) Council E. Asadov Secretary of the Azerbaijan Republic s Tariff (Price) Council

2 Regulatory and Legal Framework For Regulation of Tariffs (Prices) * Charter of the AR s Tariff (price) Council (ORDINANCE No. 341 dated 26 December 2005 of the AR s President) * Rules of Ensuring State Control Over Setting and Applying the Tariffs (Prices), To Which State Regulation Is Applied (DECISION No. 247 dated 30 December 2005 of the AR s Cabinet of Ministers) * List of Goods (Works and Services), Prices (Tariffs) of Which Are Regulated By the State (DECISION No. 178 dated 28 September 2005 of the AR s Cabinet of Ministers) * On Reinforcement of Antiinlationary Measures in the Azerbaijan Republic (ORDINANCE No. 242 dated 31 May 2005 of the AR s President) Laws - AR s Law on Regulated Prices (AR s President, May 2003) - AR s Law on Natural Monopolies (AR s President, 2 March 2001) - AR s Law on Electric-Power Industry (AR s President, 3 April 1998) - Other laws

3 Structure of the Azerbaijan Republic s Tariff (price) Council Chair of the Azerbaijan Republic s Tariff (Price) Council Members of the Azerbaijan Republic s Tariff (price) Council - AR Deputy Ministers of Finance, Taxes, Justice, Industry and Energy, Transport, Telecommunications and Information Technologies, Agriculture, Health, Education, Labour and Social Protection of Population, Deputy Chairs of the AR s Customs Committee and State Committee for Construction and Architecture Secretary of the Azerbaijan Republic s Tariff (price) Council Regulatory Department Monitoring, Analysis, and Supervision Department Sector for Regulation of Transport, Telecommunication, Industrial, and Utility Services Sector for Regulation of Services on Agriculture and Natural Resources Sector for Regulation of Education, Health, and Other Services Sector of Methodology and Information Sector of Monitoring and Analysis Sector for Financial, Economic, and General Affairs

4 Basic Areas and Monopolies That Are Regulated By the State Utilities Azersu OJSC Energy Azerenerji OJSC Industry SOCAR Azerigaz OJSC Transport Education Telecommunications Public health Etc.

5 Tariff (Price) Regulation GOALS Ensuring balance between interests of natural monopoly entities and consumers; Ensuring effective activity of natural monopoly entities; Arrangement of necessary conditions for attraction of investments in development of strategic areas; Formation of prices and tariffs and ensuring state control over their application.

6 Information That Must Be Presented To the Tariff (price) Council By Entities For Provision of State Regulation Certificate reasoning necessity of price revision; Accounting of goods and services provided by the entity; Expenditure items for the previous year and last accounting period; Forecasted prime cost (declaration of expenditures connected with production (service)) and profit; Taxes and other payments; Declaration of receivables and payables; Auditor s opinion on activity of economic agent; Comparison table of new and existing prices; Level of relevant prices for several regional countries.

7 Tariff (Price) Approval Stages According to the Decision No. 247 dated 30 December 2005 of the AR s Cabinet of Ministers, entities should regularly submit report materials to the Tariff (price) Council by 1 March of every year; If consideration of tariffs (prices) is required, the prepared draft must be considered within 1 (one) month. The Secretariat of the Council must inform the entity on drawbacks of the draft within 5 (five) working days; The entity must submit alterations within 5 (five) working days. Relevant references should be presented to the Council members for informing on attitude to the issues that are to be submitted for discussion; Decisions are taken at the Council meeting in accordance with the agreed agenda; The taken decision is published by - The website - Mass media

8 The Taken Decisions During the years 2006 and 2007, 9 meetings of the Tariff (price) Council will be held: There have been 28 Decisions taken on the following: - Retail and wholesale prices of some oil products and adjustment of excise amounts; - Prices of intracity passenger transport service; - Tariffs for services rendered by the Bureau of Technical Inventory of Property at the Azerbaijan Republic s State Committee for State-Owned Property Management; - Tariffs for Internet and special telecommunication services provided by the Special State Guard Service of the Azerbaijan Republic; - New natural gas processing tariffs for the Azerbaijan Gas Processing OJSC; - Tariffs for services of the AR s State Real-Estate Register Service; - Paid water-use services rendered by the Azerbaijan Melioration and Water Economy OJSC; - Services rendered by the AR s Agency of Standardization, Metrology, and Patents; - New services rendered by the State Real-Estate Register Service at the AR s Cabinet of Ministers; - Paid services rendered by the Ministry of Agriculture of the Azerbaijan Republic in the Republican Control Toxicological Laboratory; - Electric power tariffs in the territory of the Azerbaijan Republic; - Services rendered to legal entities and individuals by the State Traffic Police Administration of the AR s Ministry of Internal Affairs; - Retail tariffs for natural gas in the territory of the Azerbaijan Republic; - Services of the Azersu JSC concerning water use and sewage disposal; - Works carried out at the AR s State Land and Cartography Committee

9 International Relations and Support *Cooperating organizations ERRA (Energy Regulators Regional Assosiation ) (Participation in activities of the tariff setting and licensing committees and rights workgroup); EMRA (Energy Market Regulatory Authority); NARUC (National Association of Regulatory Utility Comissioners); *Support World Bank (Providing the Tariff (price) Council with technical assistance and advices under the Project PO96213); European Bank of Reconstruction and Development (The project of technical assistance to the Tariff (price) Council); USAID/Azerbaijan;

10 Projected Plans (Works) Improvement of regulatory and legal framework and existing structures for state regulation of prices (tariffs) in accordance with the international experience; Establishment of a bank of local and international experts for areas related to state regulation; Strengthening personnel potential of the Secretariat and holding events for study of international experience (professional and language courses, workshops, meetings, trainings, twinnings, and continual supply of area-related information); Information and public relations support to the Secretariat; Preparation of the concept for the Azerbaijan Republic s state tariff (price) policy in Secretariat of the AR s Tariff Council

11 AKNOWLEDGEMENTS USAID NARUC ERRA EMRA Regional Center for Energy Policy Study Lithuanian National Control Commission for Energy and Prices SPECIAL THANKS TO * Erin Skootsky * Martina Schwartz