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ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of July 13, 2016 No. 391

About approval of the acts regulating calculation of the size and procedure for provision from the government budget of subsidies to the heatsupplying companies

(as amended on 31-12-2021)

For the purpose of streamlining of provision from the government budget of subsidies to the heatsupplying companies, according to articles 13, of the 17th constitutional Law of the Kyrgyz Republic "About the Cabinet of Ministers of the Kyrgyz Republic" the Cabinet of Ministers of the Kyrgyz Republic decides:

1. Approve:

- Temporary procedure for provision of subsidies to the heatsupplying companies from the government budget on covering of the losses resulting from state regulation of rates for the heat energy released to the population for needs of heating and hot water supply according to appendix 1;

- Method of calculation of the size of subsidies for covering of the losses resulting from state regulation of rates for the heat energy released to the population for needs of heating and hot water supply according to appendix 2.

2. To the heatsupplying companies, in case of creation of the reporting on the received subsidies to be guided by the acts specified in Item 1 of this resolution.

3. This resolution becomes effective after ten days from the date of official publication and is effective till December 31, 2025.

4. To impose control of execution of this resolution on management of control of execution of decisions of the President and the Presidential Administration Cabinet of Ministers of the Kyrgyz Republic.

Prime Minister

S. Zheenbekov

Appendix 1

Temporary procedure for provision of subsidies to the heatsupplying companies from the government budget on covering of the losses resulting from state regulation of rates for the heat energy released to the population for needs of heating and hot water supply

1. General provisions

1. This Temporary procedure determines:

- rules of provision of subsidies from the government budget to the heatsupplying companies developing and distributing heat energy for the population for the purpose of financial provision (compensation) of the uncovered losses resulting from state regulation of rates for the heat energy released to the population for needs of heating and hot water supply;

- criteria for provision of subsidies for covering of expenses to the heatsupplying companies providing to the population services of heat energy in the rates which are not providing expense recovery;

- purposes and conditions of provision of subsidies;

- procedure for provision and return of subsidies, in case of violations of the conditions established by their provision.

2. In this Temporary procedure the following basic concepts are applied:

subsidy to the heatsupplying company - the money allocated from the government budget for compensation of difference between the actual, economically reasonable costs of the heatsupplying companies developing and realizing heat energy for the population and the holiday rate for heat energy for the population established by authorized state body on fuel and energy complex regulation;

deferred expenses (the subsidy relating to assets) - government subsidies on covering of costs on acquisition of the current and non-current assets made in the prior and reporting periods which are subject to inclusion in product cost in subsequent periods;

regulated rates - the rates for heat energy for needs of heating and hot water supply established for the population by authorized state body on regulation of fuel and energy complex for the corresponding period;

economically reasonable costs - set of the costs in terms of money made in the course of development and realization of heat energy including taxes and the profitability established by authorized state body on regulation of fuel and energy complex, the heatsupplying companies developing and distributing heat energy for the population in the corresponding period;

expenses of the preparatory period - the costs made in preceding period, which are subject to inclusion in product cost in subsequent periods.

2. Purpose and criteria of provision of subsidies

3. The purpose of provision of subsidies is creation of conditions for steady work of the heatsupplying companies for uninterrupted and high-quality providing the population with heat energy for needs of heating and hot water supply.

4. Subsidies are provided to the heatsupplying companies developing and realizing heat energy for the population on non-paid and irretrievable basis, for the purpose of compensation of the uncovered losses arising in connection with development and realization of heat energy to the population for needs of heating and hot water supply on the regulated rates which are not providing compensation of the actual economically reasonable costs and deferred expenses.

3. Conditions of provision of subsidies

5. Conditions of provision of subsidies are:

1) settlement of a tariff by authorized state body on regulation of fuel and energy complex on heat energy for the population for needs of heating and hot water supply;

2) excess of actually made, economically reasonable costs on development and realization of heat energy for the population, taking into account taxes and profitability, over the regulated rate for heat energy for needs of heating and hot water supply for the population established by authorized state body on fuel and energy complex regulation;

3) availability of uncompensated deferred expenses in the balance sheet of the heatsupplying company, including:

- costs for preparation and development of production (repair work) by heating season;

- advance payment for gas according to the agreement;

- seasonal and emergency fuel reserve;

- stocked (reserve) of consumable materials for repair work and elimination of emergencies;

- the unamortized cost of the fixed assets belonging to the heatsupplying company, by the end of the reporting period;

- acquisition of the current and non-current assets.

4. Procedure for provision and return of subsidy

6. Financing of uncovered losses from the government budget is performed on the basis of expense budgets according to budgetary funds.

By expense budget by budgetary funds it is determined:

- size (amount) of subsidy;

- quarterly distribution of the size (amount) of subsidy.

7. Provision of subsidies to the heatsupplying companies is performed on the following types of service:

- provision of heat energy to the population for needs of heating;

- provision of heat energy to the population for needs of hot water supply.

8. The size of subsidies to the heatsupplying companies is determined as difference between the actual and economically reasonable costs connected with development and realization of heat energy for the population taking into account taxes and profitability, and also, deferred expenses and the amount of the payments for amount shown to the population it is useful for the released heat energy on regulated rates.

9. Calculation of the size due to the heatsupplying company of subsidy is perfromed according to the Method of calculation of the size of subsidies for covering of the losses resulting from state regulation of rates for the heat energy released to the population for needs of heating and hot water supply (further - the Technique), and it is represented in authorized financial body.

10. The report on use of the provided subsidy is constituted by the heatsupplying company according to the Technique.

11. Based on data of the annual statement, the provided forms of the reporting and analysis of indicators of financial and economic activities following the results of financial year of the companies developing and realizing heat energy for the population, the authorized financial body makes refining of amount of subsidies for the current financial year. Surplus or insufficient funding of subsidies in the accounting period is set off in the amount of financing of the next accounting period. Surplus of financing is not subject to withdrawal in the income of the government budget.

In case of establishment of violations of conditions of use of subsidy by the heatsupplying company, adjustment of the amount of subsidy for future period by reduction of its size by the amount of the revealed violations is made.

Appendix 2

Method of calculation of the size of subsidies for covering of the losses resulting from state regulation of rates for the heat energy released to the population for needs of heating and hot water supply

1. Introduction

1. This Technique determines procedure for report generation, calculations, disaggregations, data separately by each heatsupplying company developing and distributing heat energy.

2. Main objective of this Technique - providing complete covering of expenses of the heatsupplying companies on development and realization to the population of heat energy for needs of heating and hot water supply, taking into account limit of profitability and deferred expenses.

3. Conditions of provision of subsidies to the heatsupplying companies on development and realization to the population of heat energy for needs of heating and hot water supply are determined in Item 3 of the Temporary procedure for provision of subsidies to the heatsupplying companies from the government budget on covering of the losses resulting from state regulation of rates for the heat energy released to the population for needs of heating and hot water supply.

2. Characteristic of expenses on development and realization of heat energy

4. Costs for development and realization of heat energy join in cost of heat energy of that accounting period to which they belong, irrespective of time of origin and payment.

5. Costs concerning which it is impossible to establish precisely what accounting period they treat, and also expenses of seasonal nature and expenses of the period (indirect costs), join in production costs according to the approved rates.

6. Due to the discrepancy of the periods of the financial reporting (from January 1 to December 31) and heating season (from October 1 of the current year to March 31 of the next year) (on acquisition, modernization, reconstruction and capital repairs) in the heatsupplying companies deferred expenses arise decrease in leave of heat energy or its complete cessation in summertime, obligatory stock availability (reserve) of consumable materials and fuel, advance payment for natural gas according to the agreement, capitalization of expenses on fixed assets. In financial accounting of the heatsupplying companies according to the International accounting standards accepted in the Kyrgyz Republic according to the Law of the Kyrgyz Republic "About financial accounting" deferred expenses are subject to inclusion in product cost in income periods from the acquired current and non-current assets. Before inclusion of these expenses in cost of heat energy, deferred expenses are capitalized in balance of the heatsupplying company as asset.

Treat deferred expenses:

- costs for preparation for heating season and development of production (repair work);

- seasonal reserve of fuel;

- stocked (reserve) of consumable materials and fuel on elimination of emergencies;

- advance payment for gas according to the agreement;

- unamortized cost of fixed assets.

Deferred expenses in case of development and realization of heat energy by the heatsupplying companies join:

- in planned cost - during the corresponding planning heating period;

- in actual cost - during the accounting period in which there is development and realization of heat energy, but not in which they occurred.

This approach of the expense accounting on development and realization of heat energy provides in proportion uniform, timely and complete distribution of all costs in cost of the developed heat energy.

7. Nature of forming of cost of heat energy at the heatsupplying companies is determined by accurate division of costs for variables and constants.

Variable costs - cost type which size, unlike fixed costs, changes with scope change of the developed and implementable heat energy.

The main sign determining variable costs is their disappearance in case of stop of development and realization of heat energy.

Fixed costs - costs which do not change with scope change of development and realization of heat energy. They are connected with fixed expenses during every period of time, that is depend not on production volume, and on time.

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