TIMOPHEI NIZHEGORODTSEV: PROBLEMS ON THE MARKET OF MEDICAL SERVICES CAN BE SOLVED WITHOUT “DOUBLE LICENSING”

27-09-2019 | 16:30

Participants of the medical services market and regulators evaluated assessed a proposal of the Russian Ministry of Healthcare to introduce “double licensing” for private clinics

“Some employees of the Healthcare Ministry were talking in this direction a long time ago but nobody expected that it will touch, first of all, medical services”, started his speech Head of FAS Department for Control over Social Sphere and Trade, Timophei Nizhegorodtsev at an event organized by the “Vademecum” magazine for representatives of small medical business. Discussing “double licensing” proposed by theMinistry of Healthcare, Head of FAS Department suggested to start with understanding the causes or problems that motivated the Ministry to put forward the initiative and “try to find more considerate solutions with regard to private investments in the healthcare sector”.

Timophei Nizhegorodtsev highlighted three key issues on the today’s market of medical services. First, he stressed possibility of unconditional participation of medical organizations of different scale, but offering the same types of aid, in the mandatory medical insurance system.

“There are relatively high-margin and low-margin types of medical aid. In large in-patient clinics they are compensated through cross-subsidizing, while private clinics can focus only on high-margin medical assistance.  If funds are redistributed to private clinics, however, then large in-patient clinics do not have finances to compensate low-margin types of medical aid that are nevertheless necessary for the population. It can lead to financial misbalance of the system”, explained Head of FAS Department.

To resolve the issue, Timophei Nizhegorodtsev suggests putting requirements to clinics that can participate in the mandatory medical insurance system. These requirements should concern public at large and apply to public as well as private clinics.

Second, the market is experiencing lack of effective consumer demand. As a result, both private and public clinics face reduced consumption of more expensive medical services and seriously rely only on demand supported by state programmes.

“That is why the rivalry between them is intensifying: all players are competing for public financing, when the prime costs of medical services often are estimated inadequately”, says Head of FAS Department. “The public entities receive subsidies while private do not get them. It leads to a mutual desire of both private and public clinics to attempt to use administrative resources and squeeze competitors from a shrinking financial pie”.

Third, the speaker focused on a shortage of medical staff.

“Today the funds that in general are allocated for salaries are redistributed to benefit administrative staff and chief medical officers. As a consequence, doctors leave public clinics for private facilities or combine jobs”, described Timophei Nizhegorodtsev. “Private clinics today are the system-saving agents that not only support doctors, paying them decent salaries but, what’s the most important, enabling them to stay in the profession”.

The issue can be resolved setting the requirements for clinics in view of restrictions for combining jobs (i.e., doctors can work either in private or in public clinics) and regularizing the staff issue and the gap in salaries of chief medical officers in hospitals and in-line doctors.

“Overall, FAS does not support administrative regulation of opening and closing private clinics. We believe that the issues, that this measure targets can be resolved by other methods”, summed up Timophei Nizhegorodtsev.

FAS is in favor of “territorial planning” of public and municipal medical facilities as a necessary measures for state guaranteed of free medical assistance.

Earlier FAS reported that it did not support the initiative ofthe Russian Ministry of Healthcare of introducing “double licensing”.

13-09-2019 | 18:32

The companies are suspected of concluding anticompetitive agreements on the market of single-mode optical fiber

On 10 September 2019 FAS opened a case ¹ against “Corning Inc.”, “Altail-Cable” Ltd., “OKS 01” Ltd., “Saranskcable-Optica” Ltd., and “Incab” Ltd. upon elements of violating² the Federal Law “On Protection of Competition”.

The companies concluded agreements obligating to purchase optical fiber manufactured by “Corning”.

The case was opened upon a statement from “Optic fiber systems” JSC.

Having analyzed materials and data, FAS established that “Corning Inc” and at least four plants manufacturing optic-fiber cables had concluded agreements for guaranteed purchase of optical fiber made by “Corning Inc.” to cover 85-100% of own needs, and the right of “Corning Inc.” on priority supplies.

Reference:

¹ Case No. 11/01/11-29/2019

²  Part 4 Article 11 of the Federal Law “On Protection of Competition”.

Construction of the electric grid objects for Elga Coal Complex’s off-site power supply has thus completed its first stage. FGC UES constructed the 220-kW Elgaugol Substation and 1,080 supports, expanded its 220-kW substation Prizeiskaya. The power line originates at Prizeiskaya Substation located in Amur Region’s Verkhnezeisk village, and stretches over 270 kilometers to reach Elgaugol Substation.

In the future, FGC UES will construct the 220-kW Prizeiskaya-Elgaugol second power line and expand Elgaugol Substation’s capacity. FGC UES’s investment will total 17.5 billion rubles.

As part of the project’s first stage, Mechel in its turn provided the energy infrastructure at Elga Coal Complex’s site, including 35-kW Alpha and Beta Substations, 159 supports and 26 kilometers of distribution circuits. Mechel Group’s investment totaled 470 million rubles.

The project was launched in 2010, with the second stage due to be completed in 2023.

The power line’s launch will ensure reliable electricity supply to Elga’s production and amenity facilities and enable the complex to stop using diesel generators.

“Setting up an energy supply grid for Elga Coal Complex is part of the complex plan for modernization and expansion of energy infrastructure, developed by the Russian government for implementing the President’s so-called May decree. This is one of Federal Grid Company’s largest projects in the Far East, and the region as a whole will be our investment priority in the next five years,” FGC UES’s Chairman of the Board Andrey Murov said.

“The launch of electrical supply to Elga Coal Complex is by all means a historical moment that Mechel’s team has long striven for. The power line will take us to a new production level, increased output and higher quality of life for our personnel living at Elga’s rotation village,” Mechel Mining Management OOO’s Chief Executive Officer Igor Khafizov noted.

“Completion of this construction and linking Elga Coal Complex to a power line opens vast horizons for the deposit’s further development. We have already begun acquiring more efficient mining equipment and will transfer our washing plant to electricity. As a result, the entire project will benefit economically, as transfer to an electrical supply means reducing our energy costs more than five times. This completes yet another stage of our strategy of creating a competitive, world-class production complex,” Mechel PAO’s Chief Executive Officer Oleg Korzhov commented.

The Elga deposit of high-quality coking coal is Russia’s largest and is located in Southern Yakutia, in a remote area 415 kilometers away from Neryungri. The facility’s staff totals over 1,600 people. In 2018, Elgaugol produced 4.9 million tonnes of coal.

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Mechel PAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com

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Mechel is an international mining and steel company. Its products are marketed in Europe, Asia, North and South America, Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products.

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Elgaugol is developing one of the world’s largest deposits of high-quality coking coal, with reserves estimated at 2.2 billion tonnes according to JORC. The deposit is located in South-East Yakutia. Mining at the deposit began in 2011. Traffic on Mechel-built 321-kilometer railroad linking the deposit with Baikal-Amur Mainline was launched in the same year.

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Federal Grid Company of Unified Energy System (FGC UES) is one of the largest global electricity transmission companies based on the length of transmission lines. Those include some 145,900 kilometers of high-voltage power lines and 958 substations with the total power capacity of over 351,900 MVA. The company provides reliable electricity supply to customers in 79 Russian regions, servicing an area of some 15.1 million kilometers. It is part of Rosseti PSJC, Russia’s largest energy holding which owns 80.13% of FGC’s shares.

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Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.

17.09.2019

FAS COMMENTS ANTIMONOPOLY VIOLATIONS ON THE MARKETS OF RAILWAY WHEELS

11-09-2019 | 17:34

The first antimonopoly case on signs of monopolistically high prices for railway wheels in 2017 – 2018. FAS initiated the proceedings in October 2018 which was reported on FAS official web-site.

The investigation was completed on 18 July 2019 after the antimonopoly authority had carried out a comprehensive market analysis. It was ascertained that in H2 2017 and the entire 2018 consumer demand for the products increased considerably, which is an objective and economically justified reason for the price growth for railway wheels. There was no cause-and-effect relation between the dominant position of “VMZ” OJSC and increased priced for whole-rolled wheels in 2017-2018.

An objective case consideration was supported by a representative survey of consumer, including railway transport operators as well as involvement of “Russian Railways” and the Union of Railway Operators in the case.

FAS received a statement from “URALCHEM-TRANS” Ltd. on bringing it into the proceedings as an interested person on 27 June 2019, three weeks before the statutory deadline for finalizing the case. On 18 July 2019, FAS also received a statement from “Balakhontsy Wagon Depot” Ltd., which, like “URALCHEM-TRANS” Ltd., is a member of the Group of “Uralkali” PJSC.

Head of FAS Department for Industry Control, Nelli Galimkhanova, explained:  “The antimonopoly authority made a decision to dismiss the companies’ claim because the evidence regarding actions of the respondent in Q2 2017 - the end of 2018 had been obtained by that time by FAS through a series of surveys of consumers at large”.

At the same time, the statements of “URALCHEM-TRANS” Ltd. received during the case investigation contain information about possible violations committed by “VMZ” JSC on the market of railway wheels in 2019. Therefore, FAS, that has recently opened a new case upon elements of an antimonopoly violation on the rail wheel market in 2019, has brought the company in the investigation as a person that possesses evidence, back in July 2019, opening the proceedings. The first meeting of the Commission is scheduled on 12 September 2019. In the course of the investigation, FAS will give a comprehensive assessment of a recent price growth spiral in 2019, hear and analyze the arguments of the persons involved into the proceedings and arguments of other persons if submitted to FAS.

The meeting took place during the 21st Mendeleyev Congress on General and Applied Chemistry.

Excerpts from the transcript:

Dmitry Medvedev: Ladies and gentlemen, colleagues, friends,

First of all, I would like to sincerely thank all of you for your tremendous work during the International Year of the Periodic Table of Chemical Elements. On the initiative of the UN General Assembly, the entire world is marking the 150^th anniversary of the brilliant discovery, made by Dmitry Mendeleyev. And Russia views the 21^st Mendeleyev Congress on General and Applied Chemistry, due to open right after our meeting, as a landmark event.

I am delighted to have this opportunity to thank you, famous scientists, who have gathered here today, as well as academicians, professors and world-famous researchers. Your participation in the events marking this anniversary graphically confirms that the academic elite of the entire world is paying tribute to the merits of our great Russian scientist. For the past 150 years, his work has been serving as a foundation for new research, and his example inspires those who view science as their calling, and who are ready to dedicate themselves to this cause. And, perhaps, this is the most important aspect of our compatriot’s legacy.

Acting in line with the events dedicated to marking the International Year of the Periodic Table of Chemical Elements, we, the Russian Federation, contacted UNESCO and suggested instituting an international prize for outstanding achievements in the field of chemistry, physics, mathematics and biology that would be named in honour of Dmitry Mendeleyev. This is the first time that Russia is submitting such a request to UNESCO. I am confident that this prize can become a good incentive for talented researchers and teams, motivating them to conquer new academic heights. And, of course, it can have special significance for young researchers. Financial support is not the only important aspect for scientists, even if such support is substantial. I hope that the Mendeleyev Prize will be quite handsome; as per our proposal, its two winners will be entitled to $250,000 each. So, this prize is quite weighty. But this is not the only thing that matters.

The recognition of their merits at the highest international level and their affiliation with the global academic elite is an especially unique value. I hope that the UNESCO Secretariat will support our initiative, and that we will be able to congratulate the first winners of the Dmitry Mendeleyev Prize in the near future.

I would like to once again wish all of you present here every success [during the congress], interesting discussions, conversations and a fruitful exchange of ideas.

Thank you very much for coming to the Russian Federation, to St Petersburg with its wonderful weather.

We have an opportunity to exchange various opinions. I would like to ask some of our colleagues to take the floor. Let’s start with Mr Zhou Qi-Feng,  President of the International Union of Pure and Applied Chemistry. Esteemed Mr Qi-Feng, you have the floor.

More to be posted soon...