Russian Energy Ministry Orders State Companies to Lower Costs

Russia’s Energy Ministry gave state- owned energy companies, including the world’s largest gas producer OAO Gazprom (GAZP) and the country’s leading oil company OAO Rosneft (ROSN), a month to prepare cost-cutting plans.

The state companies were ordered to prepare a unified system for accounting for the cost of goods and services and measures of efficiency, the ministry said in a statement on its website today, following a Jan. 20 meeting with ministry and company officials. Management from Russia’s oil pipeline operator OAO Transneft (TRNFP), overseas oil company OAO Zarubezhneft (ZRNFT) and power grid operator Federal Grid Co. also attended the meeting.

President Dmitry Medvedev last year ordered state energy companies to reduce the annual average cost of a purchased good or service by 10 percent within three years, accounting for inflation. Medvedev and Prime Minister Vladimir Putin are also pushing state energy companies to disclose information about offshore affiliates and managers’ incomes as they seek to fight graft.

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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