The Duma adopted a draft on the “take or pay” principle for long-term gas supplies

The State Duma adopted in the third reading a bill that enshrines the “take or pay” principle in long-term gas supplies, as follows from the initiative card on website lower house of parliament. The “take or pay” principle obliges the buyer to pay the cost of supplied gas in the billing period, even if consumers do not produce gas. In this case, the supplier is assigned an obligation to reimburse the cost of shortfalls. An exception to the principle is the occurrence of force majeure circumstances.

The document was submitted to the State Duma in December 2021 by the Duma Committee on Energy. The head of the committee, Pavel Zavalny (United Russia), explained the need to adopt the initiative by the desire to increase the pace of social gasification and attract investors to gas processing and gas chemical projects. The bill introduces amendments to the Federal Law “On Gas Supply”, as well as Art. 5.2 and 52.1 of the Town Planning Code.

According to the initiative, Russian industrial companies selected by the government are added to the list of gas buyers who have a preferential right to conclude supply contracts. Currently, buyers who satisfy state, municipal, household and social needs, as well as buyers in respect of whom existing gas supply agreements are being extended, have a preemptive right to conclude gas supply agreements.

In addition, the bill gives the government the authority to approve the rules for technological connection to main gas pipelines. The regional executive authority receives the right to approve the transfer of consumers to alternative fuels. The document also proposes to allow the developer or technical customer to request information on the possibility of connecting capital construction projects to promising utility networks. If adopted by the Federation Council and the President, the law will come into force on April 1, 2024.

Erdni Kagaltynov