Not that long ago, Gazprom was feared as an unstoppable titan of the energy industry, with expansion plans to nearly all continents. But lately, performance has not kept pace with expectations. It’s interesting to see the Financial Times indirectly point to the high prices the company pays to build pipelines – usually through companies owned by businessman Arkady Rotenberg:
But Mr Rotenberg’s business in building pipelines and supplying pipes for Gazprom is coming under increasing scrutiny, especially now that the state gas group is under pressure amid sinking demand at home and abroad.
Investors point to Gazprom’s ever increasing spending on pipes and pipelines as a key source of concern, while the gas giant’s rapidly inflating costs are a big reason why it demands increases in domestic gas tariffs.
The escalating costs could one day backfire for the president and become a political issue, critics say. “Gas price hikes are very strongly connected to the growth of inflation in the country,” says Vladimir Milov, a former deputy energy minister who is now an opposition leader.
The issue is coming more and more into the spotlight. For the first time, Mr Putin faced a public question about Mr Rotenberg at an investment forum last month, when an investor questioned why Gazprom procured pipes through an intermediary owned by Mr Rotenberg and his brother which, according to an analysis by Interfax, makes margins of 30 per cent.
Mr Putin responded by saying any corrupt officials at Gazprom should be thrown in jail. “We are more and more often hearing complaints about how Gazprom does business; that there are corrupt elements. There probably are, but the police should catch them and throw them in prison,” he said.
Usually when Mr. Putin threatens to throw someone in jail, he means it. In this case, it is laughably improbable that anybody at Gazprom would ever face consequences for corruption.