Russia orders jet fuel supplier probe

[Pieter C. 5]

Russia Orders Jet Fuel Supplier Probe

 

October 18, 2008

President Dmitry Medvedev has ordered the Russian government to investigate a possible cartel among aviation fuel suppliers, whose pricing policy has grounded dozens of planes and left thousands of passengers stranded.

 

As a meeting with proceeded with Deputy Prime Minister Sergei Ivanov in Medvedev's residence outside Moscow, Prime Minister Vladimir Putin sacked the head of Federal Aviation Transport Agency Yevgeny Bachurin.

 

"We cannot tolerate the situation any longer," Medvedev said in televised comments.

 

"I order the government to sort out the problem, identify what kind of collusion there is and take decisive anti-monopoly measures."

 

"Those could be fines, but if any criminal action is proven, criminal persecution should be used," he told Ivanov. "This should be done fast."

 

In the past few weeks several airline companies cancelled flights, including long-range routes to remote far eastern regions, citing high kerosene prices for making their operations unprofitable.

 

Television reports about people stranded in airports have sent warning signals to a government struggling to calm public discontent amid a global financial crisis.

 

"The situation with aviation fuel is outrageous," the normally reserved Medvedev told Ivanov, who oversees aviation among other things in the government.

 

"We remember that just few months ago fuel cost USD$140 per barrel and now it costs half of that, but this has not been reflected in any way on kerosene prices," he said.

 

In Russia, whose territory stretches across 10 time zones and some of whose regions do not have ground links, civil aviation is a crucial means of transport.

 

Medvedev and Putin have promised several times to make air flights affordable for the majority of Russians whose average monthly wage is less than USD$1,000. However their attempts have yielded little result.

 

Earlier on Thursday, Russia's FAS anti-monopoly authority warned major oil firms they will take legal action if the prices on oil products stay high.

 

FAS sent a letter to Gazpromneft, Lukoil, Rosneft, Surgutneftegaz and Tatneft telling them to reduce prices for oil products, a press release said.

 

(Reuters)